“It started as a hobby project — we wanted to make a couple of hardware wallets for our friends. But soon we realized that we had found a big market gap.” — Marek “Slush” Palatinus, CEO of SatoshiLabs
In the early days of Bitcoin, hardware wallets were primarily created by computer engineers who wanted to protect their coins from hackers or other attacks. For everyday users, however, these wallets were not as intuitive. People also kept forgetting their passwords and losing wallets — not much of an issue because Bitcoin’s value was little to none back then. It was only when Bitcoin’s price skyrocketed in 2014 that holders became anxious about finding secure ways to store their Bitcoin.
Xapo was the first hardware wallet to hit the market in 2014. It mainly catered to exchanges and wasn’t a consumer-grade provider. Then came Trezor, or “vault” in Czech, largely considered the first consumer hardware wallet. Ledger Nano was also released in 2014 and continues to be one of the most prominent names in the arena of hardware wallets. Several more wallet providers have cropped up in the years since then, providing cryptocurrency holders with a bevy of options and features.
2022 saw hardware wallet providers focus on innovating and finding new ways to secure crypto assets. Ledger, for instance, committed to using $100 million to grow and improve its offerings. It also obtained $380 million in a Series C financing round, upping its value to $1.5 billion.
The wallet space was not without its hurdles in 2022, as August saw over $8 million worth of cryptocurrency stolen from the wallets of 8,000 Solana investors, throwing a shadow of doubt over Solana’s security protocols and the safety provided by hot wallets. This led to digital advisers doubling down on advice concerning wallets: Investors should only keep what they immediately need in hot wallets and store larger holdings in cold (hardware) wallets for better security.
Several entrepreneurs are already trying to address this gap between hot and cold storage in order to provide cryptocurrency holders with a way to harness both technologies’ benefits. For example, Coinkite released the Tapsigner hardware wallet that integrates self-custody cold storage via near-field communication card integration.
Research shows an expected growth of 28.4% in the hardware wallet industry from 2023 to 2028. Riding on the heels of the pandemic, the public demand for digital modes of payment is higher than ever.
As cryptocurrency regulations continue to be adopted globally, the demand for cryptocurrency and wallet usage is projected to escalate. Digital currency adoption is skyrocketing in the Asia-Pacific region, with countries such as India, Japan and South Korea leading the charge. As such, this region is experiencing one of its highest growth rates within the hardware wallet market. The increasing rate of cryptocurrency adoption globally has also led to a multitude of scams in the space, leading consumers to seek out secure solutions such as hardware wallets and cold storage to protect their assets.
