How Bitcoin wallets generate revenue? Anybody?

[5W-KILO]

I have always praise Satoshi Nakamoto for his great innovation called Bitcoin and I always believe that no one is doing as great as he is right now but something else stroke my mind.

In the past I have created a topic asking how wallet makers make money and I found out that the likes of Electrum wallet did it all for free, they sacrife their time to add to the cause of Bitcoin future, this people deserves some accolades too.

It seems like hardware wallet manufacturers are the ones making the most money here since they have to sell their hardware wallets to the whole world.

If the likes of Electrum wallet comes up with Bitcoin hardware wallet some day I will no doubt support them but do you believe that somehow this people are not making money? hardware wallet makers have something to sell but what about software wallet makers like Electrum and Blue wallet?

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

[OmegaStarScream]

I'm not sure about Blue wallet but I believe I read somewhere that the developers behind Electrum do have full time jobs elsewhere and if that's the case, I can see how they can manage to continue to develop this wallet without the need of donations or implementing features to earn from.

For other wallets that are not open source such as Exodus for example then I'm pretty sure they easily generate millions of dollars a month. A lot of users want convenience and rather just swap using the built in feature inside the wallet rather than sending the funds to a CEX even if it cost them a bit more. No DEX is used though, these wallets usually use instant exchanges such as CHangelly, GOdex, etc. to process the swaps.

[Satofan44]

It seems like hardware wallet manufacturers are the ones making the most money here since they have to sell their hardware wallets to the whole world.

Their total addressable market is limited. Sure they make a lot of money but they can also spend too much and then start considering bad revenue sources to stay alive. This happened with Ledger. They killed their reputation over a small subscription service.

If the likes of Electrum wallet comes up with Bitcoin hardware wallet some day I will no doubt support them but do you believe that somehow this people are not making money? hardware wallet makers have something to sell but what about software wallet makers like Electrum and Blue wallet?

How does any open source software make money? You are going with the wrong assumption that it has to make money, which is not true. Plenty of people develop things to share with others and occasionally leave methods for donation, but other times they don't even provide a means to donate to them. Wallets which are open source like Electrum and security focused (not feature focused and shitcoin focused) do not have any significant means of making money.

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

Shitcoin wallets that accept everything are making a lot of money. For example, the Phantom Wallet extension has a direct swap feature with a fee. A lot of users use it because it is faster and safer. Why wouldn't they? You need to do a dig down research into swap fee revenues of DEXes, swap services and wallets and you will find out the answers that you are looking for. On good days the fees are in millions of dollars per day.
A case reason why many Bitcoin and crypto ventures fail is because people want the project to pay them good salaries as soon as possible, afterwards they blame the market or a local of adoption by the population for their failure. This is significantly more worse in the shitcoin space. Projects raise many millions and then half-brained twats give themselves all kinds of management positions and believe that they are the next Sam Altmans or Elon Musks. A project like Electrum is the extreme opposite of those money-seeking ventures. That is why it is a great project and it has outlasted 99.99% shitcoins that received funding.

[Jawhead999]

Read in this thread Where does electrum financial source come from?

The direct source is from their 2FA implementation.

[Karl_3000]

If the likes of Electrum wallet comes up with Bitcoin hardware wallet some day I will no doubt support them but do you believe that somehow this people are not making money? hardware wallet makers have something to sell but what about software wallet makers like Electrum and Blue wallet?

The wallet developers are not complaining.

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

They do not complain to the extent that they do not have the dex exchanges and they do not support any other coins than bitcoin.

Read in this thread Where does electrum financial source come from?

The direct source is from their 2FA implementation.

And you thinking they are really generating money with the 2FA? I doubt that.

Bluewallet does not have 2FA.

[Z-tight]

The direct source is from their 2FA implementation.

TrustedCoin is not run by electrum, it is a different service. So it is not correct to say that's where their direct source of funding comes from. However, since Electrum wallet integrates TrustedCoin's API, then Electrum developers get some of the fee they charge, but i am sure that it is insufficient to cover 100% of their expenses.

TrustedCoin will charge a BTC-denominated cosigning fee. This fee is shared with the developers of Electrum and appears as an extra output on your outgoing transaction.

[Cookdata]

I have always praise Satoshi Nakamoto for his great innovation called Bitcoin and I always believe that no one is doing as great as he is right now but something else stroke my mind.

In the past I have created a topic asking how wallet makers make money and I found out that the likes of Electrum wallet did it all for free, they sacrife their time to add to the cause of Bitcoin future, this people deserves some accolades too.

Electrum is free but they have a third party company that offer extra layer of security for multisig users. The company is called Trustedcoin, they act as a cosigner for people that want to use their service for multisig transactions through electrum 2FA, you have to pay some fee to be use this service. I believe they may also get some fundings but probably lowkey to support what they have been building.

It seems like hardware wallet manufacturers are the ones making the most money here since they have to sell their hardware wallets to the whole world.

If the likes of Electrum wallet comes up with Bitcoin hardware wallet some day I will no doubt support them but do you believe that somehow this people are not making money? hardware wallet makers have something to sell but what about software wallet makers like Electrum and Blue wallet?

Why do you think so? Hardware wallet need some components, materials and some other elements to build a secure wallet that can be access without the internet. Software wallet can be build without much resources, don't compare the two.

If electrum developers decided to create a hardware wallet today, they ar going to sellout because of their reputation over the years but that requires intervention of investors, its not going to be an easy task to create a company like ledger and Trezor. You need millions of dollars to set that up, you think they are going to give the hardware wallet for free? They will not and they will sell out fast.

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

Software wallets that are used on dex are different from wallet that are used as stand alone wallet. You can use Metamask as dex tool but I'm not sure there is any concrete Bitcoin based wallet that allow dex on laptop and phone, not in Electrum, not in Bluewallet you mentioned, not in Sparrow have I seen. You may probably see the ones that support Bitcoin and other types of coins like ethereum, BSC and others but you can't swap Bitcoin directly on those wallets.

However, you can do that on wallet that has a combine wallet and exchange together. For instance, you can swap between Bitcoin and ethereum on Blockchain.com exchange and move your coin to Blockchain.com wallet later. You can't swap your coins directly on dex with Bitcoin because Bitcoin chain isn't like the rest of the chain where you can allow coins to be swap from one to another.

[Karl_3000]

The direct source is from their 2FA implementation.

TrustedCoin is not run by electrum, it is a different service. So it is not correct to say that's where their direct source of funding comes from. However, since Electrum wallet integrates TrustedCoin's API, then Electrum developers get some of the fee they charge, but i am sure that it is insufficient to cover 100% of their expenses.

TrustedCoin will charge a BTC-denominated cosigning fee. This fee is shared with the developers of Electrum and appears as an extra output on your outgoing transaction.

I read what pooya87 posted about it on the link Jawhead999 gave, I think Jawhead999 is correct

Electrum guys own a registered company and run service called TrustedCoin[1] (registered in 2013 in San Francisco) which is used in the 2FA wallet types which you can create using Electrum software. This service is also available to be used by other software as the secondary signer in multi-signature setups.
Each time a 2FA wallet user creates a transaction they are paying a small additional fee to this service (or rather every 20 transactions IIRC).

Keep in mind that the Electrum servers (except one) have nothing to do with the Electrum team, they are run by other volunteers which you can donate to independently.

[1] https://trustedcoin.com/

[100steeze]

There are different types of wallets out there like the software wallets,  hardware wallets,  exchange wallets,  custodial wallets and so on.  But I think there are different ways bitcoin wallets generate revenue.  These methods are
1. Transaction fees on the wallet
On-chain transaction fees: custodial services often charge withdrawal or on-chain sending fees

Swaping between cryptos and some in-app trades: wallets that let you swap between BTC and other coins usually apply a spread or a visible fee on top of the market rate. That spread is revenue.

Fiat on/off ramps: converting fiat to crypto or crypto to fiat via payment partners often carries fees or hidden charges. 

2. Lightning Network routing fees
Wallets on Lightning that route payments can earn small routing fees when they forward payments. This is typically small income and depends on channel liquidity and routing volume.

3.Premium features / subscriptions
Selling Pro features that supports portfolio analytics, tax reports, multi-account management, larger swap limits, advanced security features, behind is always a subscription or one-time unlock. This is also a cool way to generate revenue.

4. Ads & data
Some free wallets may run ads or monetize aggregated, non-identifying usage data. This raises privacy questions. I advise people all the time, to always read the T&Cs.

5. Payment & merchant services
Wallets that process merchant payments charge processing fees. They take a percentage + fixed fee or better still, offer subscription tiers or levels to businesses.

6. Staking / DeFi integrations especially for multi-asset wallets
Wallets that support staking or DeFi can take a commission on staking rewards or a cut from yield farming services they integrate.

7. Through lending and interest earning
Wallets can lend users holdings to institutional borrowers or use them in yield products, earning interest and keeping part of the yield as profit. This is a major revenue source but introduces counter party risk.

[pooya87]

Bitcoin wallets, the open source ones at least, are like any other "free" open source software that can be found out there. Like Linux. The developers aren't doing what they do to make money, they are usually passionate about their work which is why they open sourced it in the first place.
But a lot of them have "sponsors" who pay them for their work, again like Linux.

There are some other ways some of the wallet developers earn money like by using their software to get a job elsewhere and make money there. Some run certain services or cooperate with them (like the token swap things) to earn some revenue...

[SilverCryptoBullet]

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

You did not understand very basics about Bitcoin.

If you had known that Bitcoin is a Proof of Work blockchain, you would have not asked this non sense question. With a Proof of Work blockchain, people only can get bitcoins by doing work that is Bitcoin mining. Holding bitcoins in your wallets does not lead to any work and you can not receive more bitcoins by holding your bitcoins.

In addition, with a Proof of Work blockchain, you can not stake your bitcoins and receive staking rewards.

Let's be knowledgeable and clear about Bitcoin and Wrapped Bitcoin tokens that can be staked as they are not bitcoins, but tokens with peg value to bitcoin value. Risk is they can have depeg and by staking those tokens, you can lose your tokens to scam staking pools too.

[Nheer]

Some people said that some of these software wallets have built in dex or similar but I don't think it is enough to yield anything because if everyone can trade their coins in their very own wallet all exchanges will not be as important as they are today.

You did not understand very basics about Bitcoin.

If you had known that Bitcoin is a Proof of Work blockchain, you would have not asked this non sense question. With a Proof of Work blockchain, people only can get bitcoins by doing work that is Bitcoin mining. Holding bitcoins in your wallets does not lead to any work and you can not receive more bitcoins by holding your bitcoins.

In addition, with a Proof of Work blockchain, you can not stake your bitcoins and receive staking rewards.

Let's be knowledgeable and clear about Bitcoin and Wrapped Bitcoin tokens that can be staked as they are not bitcoins, but tokens with peg value to bitcoin value. Risk is they can have depeg and by staking those tokens, you can lose your tokens to scam staking pools too.

It's inappropriate to say someone's is asking non sense question when clearly it's you that don't understand what he is saying. Try to read through OP properly and understand before making a post.

This question is not related to proof of work or mining to get rewards the question is about how Bitcoin wallet software developers like Electrum and Blue wallet make money from their software when the fee involved is transaction fees which is clearly the reward for miners. While on the other hand Hardware wallet developers make money from the sales of their products.Their is no swap fees of any kind so donations are what they get when users appreciate their work and sometimes they get sponsorship.

[davis196]

If the likes of Electrum wallet comes up with Bitcoin hardware wallet some day I will no doubt support them but do you believe that somehow this people are not making money? hardware wallet makers have something to sell but what about software wallet makers like Electrum and Blue wallet?

AFAIK, Electrum was created by Thomas Voegtlin back in November 2011(this is according to the Electrum "About" page).
My two assumptions about the Electrum developers are:
1.They were early Bitcoin adopters(since Electrum was created 14 years ago) and now they are Bitcoin millionaires(if they managed to HODL their BTC in the last 14 years).
2.Donations. The Electrum Developers(Thomas Voegtlin and SomberNight) should have received crypto donations for their effort. I don't see a "Donations" page on the Electrum website, but I'm sure that they have received some donations throughout the years.

[Sticky Bomb]

There are some other ways some of the wallet developers earn money like by using their software to get a job elsewhere and make money there. Some run certain services or cooperate with them (like the token swap things) to earn some revenue...

Some of them are hired by well meaning organizations and are paid well to create and maintain such features within their sites. Some projects that have integrity such as electrum could serve as a good advertisement for it's developers for their skills and competence, furthermore their continuous upgrading the software shows their dedication to it and most times that's all a big company needs to give you a bigger contact to manage for them and from there you get good revenue.

You know earlier I was always thinking that providers of these free apps on app stores are paid well for downloads, but it's obvious that developers are the ones who actually create an avenue to make money within their apps. Electrum developers are geniuses for keeping their standards since 2011 and not falling for the temptation of turning it into a multi coin wallet and including swapping features for more profitability as can be seen in Trust wallet.

[OcTradism]

My two assumptions about the Electrum developers are:
1.They were early Bitcoin adopters(since Electrum was created 14 years ago) and now they are Bitcoin millionaires(if they managed to HODL their BTC in the last 14 years).
2.Donations. The Electrum Developers(Thomas Voegtlin and SomberNight) should have received crypto donations for their effort. I don't see a "Donations" page on the Electrum website, but I'm sure that they have received some donations throughout the years.

OP asked about wallet creates revenue, not about how their founders, developers get money so I think your answer is kind of off-topic.

About donation for Electrum founders and developers, I am not sure as I can not find any information in this Bitcoin developer donation portal but I don't exclude possibility that Thomas Voegtlin and Somber Night actually received bitcoin donation in the past.
https://bitcoindevlist.com/

[Ucy]

The "owners" who do free of charge can rely on voluntary donations from users and others.

By the way, the free ones are usually developed by community which is more suitable for Bitcoin and its ideals, than "private businesses" who are more likely to go against the cherished ideals.

We could however find a balance by getting the "private ones" to operate like the community projects or according to Bitcoin ideals without sacrificing on private ownership or the profitability