Hardware Wallet Market - Growth, Trends and Forecasts (2022 - 2027)

Hardware Wallet Market - Growth, Trends and Forecasts (2022 - 2027)

The global hardware wallet market was valued at USD 202.40 million in 2020. It is expected to be valued at USD 877.69 million by 2026, registering a CAGR of approximately 29.24% over the forecast period (2021-2026). The rapidly growing demand for cryptocurrency during the pandemic has positively influenced the market for the hardware wallet. Cryptocurrencies, such as Bitcoin are gradually making a transition from uncertain investment instruments to payments. There is growing attention to payment habits and the financial life cycle, as the COVID-19 pandemic has led to more calls for dematerialization of payments.

Key Highlights

• Hardware wallets are the physical devices that store private keys for cryptocurrencies offline in an encrypted device. Private keys in these wallets are required while spending cryptocurrencies, and the wallets enable traders to store the keys safely while protecting the information.
• With the expansion of the cryptocurrency market in December 2017, numerous new users gained knowledge about blockchain and cryptocurrency and started exploring the same. Thus, there has been a significant rise in blockchain and cryptocurrency wallet users. According to a survey conducted by Blockchain.com in 2021, there are more than 68.42 million blockchain wallet users. This number is expected to grow further as mobile accessibility improves rapidly.​
• Companies producing hardware wallets are experiencing an exponential increase in demand. With an increase in the number of people owning multiple cryptocurrencies, the demand for wallets is also increasing. The flexibility offered by these solutions, compared to software, web wallets, and paper wallets, impacts the growth of the market studied.
• Indiegogo launched HooFoo, the first app and hardware combination wallet that secures and simplifies cryptocurrency transactions. The recent numerous Bitcoin exchange hacks have driven the company to invent a safer cold storage Bitcoin wallet for cryptocurrency.
• Further, in February 2021, NEM Group and the NEM ecosystem announced that Ledger’s Nano S and Nano X hardware wallets now support the NEM NIS1 XEM token and are expected to support the XYM token on the launch of Symbol by NEM. The integration allows users to safely hold XEM and XYM assets by owning and securing their private keys with their ledger hardware wallets while using the NEM Nano Wallet to manage their tokens.
• Further, companies are gradually focusing on adding an extra layer of security to their products. For instance, in March 2021, the Goldpac Group selected IDEX Biometrics as its technology partner for its digital currency project in China. The company now plans to deploy IDEX’s fingerprint sensors in a new hardware-based digital wallet that may be compatible with the country’s new Digital Currency/Electronic Payment (DC/EP) program. DC/EP is essentially a digital version of the fiat CNY.
• Furthermore, some jurisdictions have gone further and imposed restrictions on investments in cryptocurrencies, the extent of which varies from one jurisdiction to another. Some countries (Algeria, Morocco, Nepal, Pakistan, Bolivia, and Vietnam) have banned all activities involving cryptocurrencies.

Key Market TrendsNFC Type to Hold Significant Share

• The adoption of cryptocurrencies in real-world stores is progressing slowly, even though it has the potential of being a convenient, fast, and secure way of paying for goods. Cryptocurrencies, such as Bitcoin, can be used in real-world environments in a timely matter without requiring a banking license. They can also be used to save merchant money and for safeguarding the privacy of customers.​
• NFC technology enables the flexible usage of cryptocurrency by providing means of storage. More importantly, it enables the usage of crypto assets in everyday purchases. By using this technology, cryptocurrency can be turned into a simple way of payment, and it works just by pairing with a mobile app.​
• By utilizing NFC, payment is allowed even if the payee or payer is not connected to the Internet, depending on the type of payment request. This scheme is beneficial for tourists who are not willing to pay high roaming fees or are at places where the Internet reception is unreliable or not present at all.​
• Additionally, BitPay is a company offering Bitcoin merchant solutions and end-user wallets. Similar to Apple, BitPay added NFC support to its PoS (Point of Sale) software in 2015, allowing users to pay bills with the aid of the Android wallet, with only a single tap.
• However, in BitPay, NFC is a mere way to transmit the data traditionally provided by a QR code containing the amount, payment address, and a transaction memo. The Android app does not transmit a complete Bitcoin transaction over NFC.

Asia Pacific Expected to Witness Significant Growth

• The Asia Pacific region has the fastest-growing market for hardware wallets, owing to the growing adoption of cryptocurrency in the region and the increasing digital and cashless economy trend in countries like India, Japan, and South Korea.​
• Though the ban on digital currency exchange in China can hinder regional growth, growing digital economy acceptance in the rest of the region, especially in India, Japan, Australia, and South Korea, is developing a massive market for cryptocurrencies. These countries are also among the ones where the most adoption of hardware wallets occurs in the region.​
• The growing number of cyberattacks in the cryptocurrency market in the region also fuels the growth of the regional hardware wallet market. For instance, in September 2020, KuCoin, a Singapore-based cryptocurrency exchange, disclosed a security incident that resulted in the unauthorized transfer of roughly USD 150 million in digital assets.
• In October 2020, Huawei announced that its upcoming Mate40 smartphone series might consist of a blended hardware wallet for China’s central bank digital currency, the digital Yuan. According to an official Huawei post on the Chinese microblogging website Weibo, this is anticipated to be the first smartphone to feature such a wallet on October 30. The post also guarantees that users will protect and control their anonymity and perform dual offline transactions. These allow mobile phone users to transfer funds by merely touching their devices together, even if both are offline. Such initiatives are anticipated to drive the other smartphone companies to adopt hardware wallets in their products.
• South Korea is emerging as one of the significant markets for a hardware wallet, thereby driving regional growth. Its top two crypto exchanges, Upbit and Bithumb, are among the top 25 exchanges globally and combine for over USD 200 million daily trading volume. The region is also innovating NFC hardware wallets, which are also emerging in the global market.
• For instance, a new hardware wallet has been launched by the South Korean financial tech firm, Keypair. The company’s Keywallet Touch has an unusual design, as it is shaped like a credit card and utilizes NFC technology. The company says that the device’s smart card chipset supports cryptocurrencies, like Bitcoin Cash, Ethereum, Bitcoin core, and Litecoin, while also providing FIDO Universal 2nd Factor Authentication (U2F).

Competitive Landscape

The hardware wallet market is highly consolidated due to several global and regional players vying for attention in a somewhat contested market space. As the market studied poses low barriers to entry for new players, several new entrants have gained traction in the market by offering products that are rich in features at competitive prices. The market studied is characterized by increasing product penetration levels, moderate/high product differentiation, and high levels of competition. Some of the recent developments in the market are:

• April 2020 - ShapeShift acquired Portis, an Israeli startup that built the leading Web3 wallet SDK for developers of crypto applications to integrate wallet functionality into their product.
• March 2020 - CoolBitX Limited received USD 16.75 million in its Series B funding round, led by Japan’s financial group SBI Holdings, with participation from the National Development Fund of Taiwan, Korean crypto exchange BitSonic, and another Japanese financial group Monex. With this funding, CoolBitX lays down its strategy of expanding the Sygna product line’s presence beyond the APAC region as the first-to-market FATF-compliant solution for virtual asset service providers (VASPs) around the world. ​

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

Ledger SAS
Satoshi Labs SRO
ShapeShift AG
Coinkite Inc.
CoolbitX Ltd.
SHIFT Cryptosecurity
Penta Security Systems Inc.

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