All crypto wallets regardless of source type should come complete with thorough documentation for users. An excess of substandard wallets exists in the marketplace because developers fail to be straight-up about device or software limitations.
Inferior and outdated wallets on the market are typically easy to identify and avoid. The wallet developers that are not transparent regarding the limitations of inferior wallets are generally the same ones who need to cover-up flaws.
Closed-sourced wallets should not be automatically rejected and dismissed just because the code is not open to community scrutiny. An abundance of options, documentation, modern features, interoperability, and recoverability can make a close-sourced wallet just as desirable as an open-sourced variety.
Coinomi, and EXODUS may not be open-sourced, but they do closely follow industry standards and offer many customization options. Coinomi can generate three types of Bitcoin addresses. The Bech32 'BC1' type address is the default. SegWit and Legacy are the remaining alternatives a user can choose with a touch of a button. The mixed case base58 addresses beginning with the number '1' somehow still exist today. The seed from an Exodus or Coinomi wallet can be easily used on other devices and is all that is necessary for total recoverability. Atomic wallet in sharp contrast fails miserably at following any standards and yet somehow is managing a presence in the crypto space.
Atomic uses a non-standard derivation path for non-BTC coins making future recovery difficult if not impossible. The keys generated by the Atomic wallet create addresses that would be difficult or impossible to reproduce on another wallet. The fact that Atomic wallet offers only legacy Bitcoin addresses indicates a severe lack of progress in development.
Only some elements of the Trust wallet are fully open-source code. Trust wallet also offers Bech32 'BC1' type Bitcoin addresses. Segregated Witness is more commonly known as SegWit. The Segregated Witness Bitcoin upgrade was implemented to primarily increase efficiency and security. Security is increased by segregating the main transaction data from the transaction signatures. Modern wallets should all offer a SegWit option, but many developers still procrastinate. The SegWit addresses essentially reduces network fees in a more efficient process creating smaller segregated files that are transmitted more quickly. SegWit also deals with an issue of malleability where hackers were able to change a user ID before transactions could be confirmed on the BTC network.
Whether a wallet is deterministic or non-deterministic is another important consideration. It is beyond the scope of this article to fully describe the difference, but here is a quick explanation.
A deterministic wallet provides a greatly increased recoverability than what a non-deterministic can offer. The non-deterministic variety generate private/public keys independently of each other while the deterministic wallets only require a single backup that is permanent. There is also a remote chance of key loss if the key pool buffer is exhausted during generation of a new key that was not already backed up previously. All subsequently generated addresses are determined in advance. Key-pairs are generated in either a hierarchical or sequential method in a deterministic wallet.
The key takeaway here is that non-deterministic type wallets may cause recoverability issues, are obsolete, and should not be used.
A wallet that is difficult or impossible to restore to another mainstream wallet is dangerous and useless. Developers of wallets may or may not follow industry standards. Flexibility of options and key generation may limit recovery of a wallet to a different wallet type.
A guarantee that a software wallet can properly reproduce wallet addresses during a recovery process should be at the top of the list. Many wallets offer sufficient flexibility and transparency but some of them do not.
The Exodus and Coinomi wallets both accurately reproduced the same BECH32 'BC1' type addresses as was generated using the Ian Coleman tool using the same seed making them perfect for recovery. Trust wallet also generates the same address but is not shown here..
Exodus
Coinomi
Ian Coleman Tool
Software and hardware wallets greatly vary in standards they follow for derivation path address generation. Not all wallets offer the same options for the actual crypto addresses they generate. A universal standard for address generation would solve many problems but unfortunately does not exist.
A newly initialized wallet gives a seed phrase that will be converted to private keys. Wallets vary in the flexibility they offer determining the resulting addresses. The seed phrase on one wallet may not be able to appropriately generate the necessary keys on another wallet. Recovery may be impossible to a different wallet type in some cases. Wallets that do not follow standards are clearly a source of problems.
A method to ensure that future recovery is possible can be accomplished by generating a new seed and checking if the wallet addresses can be properly reproduced. Checking address outputs with Mnemonic Code Converter by Ian Coleman's BIP39 tool can confirm if the addresses are even reproducible.
I used the tool previously while checking for compatibilities between hardware and software wallets. The KeepKey, LEDGER Nano, Coinomi, Exodus all worked as expected. The flexibility and extra features offered by Coinomi is what makes it indispensable.
Some of the open-sourced wallets worth consideration are Sparrow, Wasabi, Green, Blue, Edge, Specter, Electrum, and Natrium. I still mostly use Coinomi, Exodus and Trust, but will be looking more closely into some of the ore popular mainstream open-source wallets.
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