Hardware crypto wallet sales increase as centralized exchanges scramble


Blockchain analysis firm Glassnode recently described the 2022 bear market as the worst on record. It seems that events like war and rising inflation in Ukraine, as well as serious problems among centralized crypto exchanges.

Nevertheless, the bear market has not negatively affected all players in the crypto ecosystem. Hardware wallet providers seem to benefit from massive crypto withdrawals from centralized exchanges.


Pascal Gauthier, CEO of hardware wallet crypto firm Ledger, told Cointelegraph that the company’s revenue declined by about 90% during the 2018 crypto winter, but that hasn’t happened this year. he said:

“Every quarter we are making as much revenue as we did throughout 2020, which was a very good year for Ledger. Right now we are still up year-on-year, which tells us this bear market is different. Not a true bear market, but a bear market for centralized value propositions.”

To put this in perspective, Gauthier shared that the company shipped most units of the Ledger hardware wallet after Coinbase announced losses, which further suggested that users were not protected in case of bankruptcy. “After the release of this report, we generated $2 million in revenue per day, but this was just a peak because nothing really bad had happened to Coinbase. People just realized that their crypto was not secure, ” They said.

Gauthier elaborated that once Celsius froze users’ funds and rumors began to spread that BlockFi might do the same, Ledger again saw a huge boost in trading. “People were running to take our products somewhere safe. We are now seeing an almost six-fold increase in revenue week-on-week,” Gauthier said. Ariel Wengroff, Head of Global Communications & Marketing at Ledger, further told Cointelegraph that the company recently formed a partnership with Best Buy to allow consumers to purchase Ledger products directly in-store, thereby increasing sales as well. happened. “We’re launching 256 more stores this July,” she said.

Ledger is not the only hardware wallet provider to see revenue gains in this bear market. Trezor’s bitcoin (BTC) analyst Joseph Tetek told Cointelegraph that the firm has also seen significant growth in Trezor instruments. “People are finding that keeping their coins with exchanges and custodians can be very risky, so they are naturally looking for self-custodial options,” he said.

Tetek said Trezor believes that the liquidation cascades that centralized lenders and exchanges are undergoing have not yet fully played out. In return, he noted that Trezor is urging customers of exchanges and custodians to consider withdrawing their coins to their own wallets, at least for the time being. He added:

“As Warren Buffett famously said, we don’t know who’s swimming naked until the tide is out—and the outflow has just begun.”

Hardware wallet provider GridPlus has also seen an increase in sales, largely being generated by the non-fungible token (NFT) community. Justin Leroux, CEO of hardware wallet GridPlus, told Cointelegraph that the firm has struggled to meet consumer demand lately, noting that they are ramping up production. he explained:

“The NFT community has been the biggest constant source of growth for us: new users drawn to the application layer of crypto need to immediately jump into self-custody to participate in the NFT markets because centralized options are not readily available. ”

risk to consider

According to the findings of research firm Mordor Intelligence, the global hardware wallet market was valued at $202.40 million in 2020. This market is expected to be valued at $877.69 million by 2026, but today’s increasing demand for hardware wallets could impact this amount to equalize. More. While it is noteworthy to see the hardware wallet market flourish during a bear cycle, it is also important to mention that these products are not foolproof.

Alejandro Muoz-McDonald, a smart contract engineer at Immunefi – a bug bounty platform for Web3 products – told Cointelegraph that keeping funds in hardware wallets does not mean they are 100% secure. he said:

“A user can still be a victim of a phishing attack. They sign some transaction thinking it will do something else and then they steal their NFT or token. Another attack vector could be through an asynchronous approval that a user has made to the contract which is a critical vulnerability. If a negotiated contract allows your funds to be transferred, they’re as good as gone.”

Munoz-McDonald pointed out that Ledger and Trezor do a relatively good job of preventing attacks on users’ private keys. However, he added that hardware wallets are still vulnerable to physical attacks. “If an attacker gains physical access to your hardware wallet, it’s game over,” he said.

In addition, hardware wallets are also vulnerable to data breaches, allowing attackers to access user information. Ledger observed a data breach on June 17, 2020, that prompted competing popular hardware wallet provider Trezor to issue coupon codes for consumers who wish to transfer funds from Ledger to Trezor.

Munoz-McDonald still encourages users to self-custodial their funds, noting that hardware wallets are the best way to do so. “But, they also need to be educated on phishing schemes and have general online awareness,” he said.

Gauthier said that users should understand how Web3 works in order to securely self-detain their crypto assets. “Web3 gives ownership to users, whereas Web2 does not. Decentralization may sound daunting, but there is a price to be paid for self-sovereignty,” he said.

Highlighting this, Gauthier explained that although it may be easier for some crypto investors to buy and hold cryptocurrency through centralized exchanges, there may be fake underlying sentiments that are initially difficult to capture. “No one reads the fine print associated with these exchanges, so no one understood the Celsius business model to begin with. Scams are generally easy to use, so users need to be more careful. , “They said.

Fortunately, as more crypto investors migrate to hardware wallets, many providers have begun to place a bigger emphasis on user education. Adam Lowe, creator of cold storage wallet solution Arculus, told Cointelegraph that it has become clear that there are strong tailwinds driving the need for hardware wallets.

Given this, he believes that first-time crypto users should evaluate hardware wallets based on best-in-class security features and ease of use. “If it seems too complicated to use, you will either stop using it or, worse, lose access to your crypto,” he said. To help users navigate this, Lowe noted that Arculus has an extensive FAQ page, as well as how-to videos to help users get started.

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Leroux also said that the most important safety tool is education. According to Leroux, the common attack vectors for hardware wallet users are social engineering and phishing attempts, rather than sophisticated technical approaches. “While we’ve seen browser extension scripts that hijack a user’s wallet, it’s far more common to see users commit fundamental missteps such as tricking users into improperly storing their seed phrase or sharing it.” lose money through,” he said.

While a lot of this may seem daunting, it’s important to point out that many providers offer 24/7 help centers in addition to educational materials. It is also worth mentioning that both Ledger and Trezor wallets allow users to access their wallets via a seed phrase using another hardware wallet. This feature can be extremely helpful if a user gets lost or their wallet is stolen. If this happens, the user can recover their funds to any other Ledger, Trezor or SafePal hardware wallet.

SafePal CEO Veronica Wong told Cointelegraph that the firm stresses the importance of keeping private keys secure and that the centralized crypto firm’s troubles have seen a clear growth curve over the past 30 days. He added:

“As crypto penetration and user base continues to grow, the decentralized wallet will become the most important blockchain gateway for new users. In the long run, the wallet will be an on-chain, on-chain, secure platform, protecting all of your on-chain data and authorizations. Can also become an identity manager.”

adjusting to new growth

Risks aside, the phrase “not your keys, not your coins” has become clearer than ever to the crypto community. “The current challenges of accessing crypto on exchanges highlight the need for secure ownership of your private keys,” Lowe emphasized.

As a result, hardware wallet providers are preparing to accommodate the sudden increase in users. To do this, many are developing new products, while ensuring that existing facilities meet market demands. For example, Lowe shared that Arculus recently announced NFT support and WalletConnect integration, giving consumers the ability to browse NFTs and dApps within the Arculus ecosystem.

Gauthier also pointed out that Ledger is focused on developing its products for Web3, noting that the company has announced “explicit signature” technology for NFTs. While the Ledger Nano S Plus was designed with NFT collectors in mind, Gauthier explained that the explicit signature functionality was officially implemented during the “Ledger Op3n”, which took place on June 22 of this year in New York.

“No one is explicitly signing for NFTs – everyone is just blindly sending NFTs left and right, which is a terrible thing,” he remarked. The purpose of a clear signature is to provide all the details on the transaction. In turn, Gauthier said hardware wallet providers should focus on some of the features going forward such as bigger screens, more memory and additional connectivity.

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Adjusting to NFT development is important, while Tetech noted that Trezor is exploring options for its users to implement Lightning Network capabilities, which will help make bitcoin transactions faster and cheaper. According to a Trezor blog post, this will eventually make bitcoin more convenient to use as a means of payment.

It all boils down to the urgency for crypto investors to take personal security more seriously. “Financial self-sovereignty and self-custody are a fundamental requirement for using permissionless decentralized systems. If you are using exclusively centralized exchanges, you are not using crypto, you are using company databases. But there are only spot trading IOUs,” commented Leroux.