Hardware Wallet Market

Market Overview

The global hardware wallet market size was valued at USD 245 million in 2021. It is projected to reach USD 1,725 million by 2030, growing at a CAGR of 24.2% during the forecast period (2022–2030). 

Hardware wallets are specialized cryptocurrency wallets to keep users' private keys on a safe, encrypted hardware device. To protect sensitive data, hardware wallets are designed to let users store private keys in a secure location on a microcontroller. A software wallet's data may be stolen or damaged by computer viruses, whereas hardware devices are designed to be immune to these threats. The user can authenticate the entire functionality of the gadget using the hardware wallet running open-source software.

The hardware wallet gadget connects to electronic apps using Bluetooth and near-field communication technologies. Due to the increase in demand for trading in cryptocurrencies and digital currencies, this gadget is widely used on a business basis. Additionally, the wallet programs are built with an improved theft-free and hacker-proof module to make devices vulnerable to potential threats. During the projection period, it is anticipated that the increased security provided by these devices over software, paper wallets, and web wallets would promote market growth.

Market Dynamics

Drivers: Development of New Technologies

Advancements in principal technology and digital payment methods have broadly fueled the adoption of digital currency such as bitcoin. Digital payment has gained high traction in the market for transactions and trade. Furthermore, the emergence of new digital payment technology and ledger system such as Hashgraph ledger technology to achieve faster and more secure transactions across the globe is anticipated to propel market growth. In addition, the rise in demand for a new digital trading platform such as cryptocurrency is influenced. 

Drivers: Transparency of Distributed Ledger Technology

A cryptocurrency public ledger system is a record-keeping system. The distributed ledger technology is designed to record transactions of assets and its detail in multiple places simultaneously. This system is intended to maintain transparency among users to reduce human errors, financial loss of data, or machine errors. Furthermore, the public Ledger maintains data related to identities anonymously, its cryptocurrency balance, and records genuine transactions to reduce manipulation during the transaction process, which is anticipated to drive the growth of the cryptocurrency market, thereby influencing the development of the hardware wallet market.

Restraint: Lack of Consumer Awareness about Buying and Selling Cryptocurrencies

Lack of consumer awareness regarding buying and selling cryptocurrency is one of the key restraints of the market. Although the consumer knowledge related to cryptocurrency is limited, the understanding of cryptocurrency is growing rapidly. For instance, the Seventh INK International survey for new technology in Europe found that 82% of European respondents had an idea about cryptocurrency but had minimal knowledge related to buying and selling cryptocurrency, influencing the growth of the global cryptocurrency market. This, subsequently, acts as a hurdle for developing the hardware wallet market.

Opportunities: High Market Growth Potential Across Developing Economies

The surge in demand for cryptocurrencies such as bitcoins, dogecoin, and Ethereum across the developing economies such as India, China, and Brazil is expected to offer a significant opportunity for the growth of the hardware wallet market, owing to the rise in inflation and potential for safe-haven assets. For instance, developing countries such as India, China, Japan, and Brazil possess some of the largest IT populations and are experiencing a surge in digital currency trade. This has led to a rise in awareness levels of cryptocurrencies, which is expected to create remunerative opportunities for expanding the global hardware wallet market during the forecast period.

Segmental Analysis

The global hardware wallet market share is segmented into connection type, end-user, and distribution channel.

• Insights into Connection Type

Based on connection type, the global hardware wallet market is segregated into Near-Field Communication (NFC), Bluetooth, and USB.

The USB connection type is the highest contributor to the market and is estimated to grow at a CAGR of 23.4% during the forecast period. USB is one of the most advanced technologies in cryptocurrency due to its ease of use, seamless connectivity, and lower power consumption. In addition, cryptocurrency mining requires a lot of computational power due to complex mathematical problems. For instance, Ledger, a French-based company, developed maximum security UBS hardware wallet to protect crypto. The Ledger Nano S is among the most advanced wallets that can store multiple cryptocurrencies simultaneously. Therefore, these factors collectively are expected to drive the adoption of USB-based hardware wallet devices, propelling market growth in the coming years.

NFC is the fastest-growing segment. It is a convenient and versatile system able to make payments over a short distance. This technology is used across the banking sector for seamless communication between devices. The growing demand for a secure theft-free crypto trading network has propelled the demand for NFC. In addition, the NFC system is expected to portray significant market traction due to its emerging multiple cryptocurrency applications. For instance, Landon-based consultancy firm, Zerado developed a new prototype of an access control system using blockchain, NFC, and the Internet of Things (IoT).

• Insights into End-User

Based on end-user, the global hardware wallet market is bifurcated into Commercial and Individual.

The Individual segment is the highest contributor to the market and is estimated to grow at a CAGR of 24.6% during the forecast period. The rise in disposable income in the era of the Internet of Things is acting as a significant driver for the cryptocurrency market. Enhanced devices such as cold and hot wallets are enabled with safety & security, reliability, storage, and private keys, acting as a driver for the demand for digital currencies among individuals. For instance, WazirX claims to have hit a USD 5.4 billion crypto transaction in which prime share is held at the individual level, which is opportunistic for market growth.

The Commercial segment is the fastest growing. Commercial sectors such as offices, real estate, and e-payment have witnessed an enormous surge in the adoption of digital currency such as cryptocurrencies. The significant improvement in digital infrastructure and adoption of digital currency across major commercial sector players such as JPMorgan, Tesla, Square, Microsoft, BMW, and XBOX for a reliable or flexible next-generation payment solution is propelling the market growth. In addition, the rise in digital infrastructure for digital payment options is driving the adoption of hardware wallets in the commercial sector.

• Insights into Distribution Channel

Based on the distribution channel, the global hardware wallet market is fragmented into Online and Offline.

The Online distribution channel is the highest contributor to the market and is estimated to grow at a CAGR of 25.5% during the forecast period. The online distribution channel will likely enable e-commerce platforms and company websites to offer more reliable purchasing solutions to end-users. Major online distribution channels such as Alibaba, Ubuy, Ledger, and Amazon provide advanced hardware wallet solutions worldwide, enabling users to purchase devices from around the world. Additionally, the internet distribution channel has expanded the consumer base, and as a result, it has developed into a significant source of income for many businesses.

The Offline distribution channel is the second-largest segment. The rapid expansion of offline distribution channels for hardware wallet devices globally is attributed to the surge in demand for secure cryptocurrency storage devices. Furthermore, the rise in investment by major players in retail outlets has propelled the growth of offline distribution channels. For instance, Ledger, a leading developer and seller of hardware wallets, has set up offline distribution channels to boost the sale of hardware wallet devices. This initiative is expected to drive the growth of the hardware wallet market.

Regional Analysis

Region-wise, the global hardware wallet market share is analyzed across North America, Asia-Pacific, Europe, and LAMEA.

Asia-Pacific Surpasses the Rest of the World

Asia-Pacific holds the highest market share and is projected to grow at a CAGR of 24% during the forecast period. The growth of the hardware wallet market in Asia-Pacific is driven by the trend for secure encrypted pin wallets and theft-free technology. In addition, the rapid surge in multiple cryptocurrencies worth in the recent decade is anticipated to significantly contribute to the growth of the hardware wallet market during the forecast period.

North America is the fastest-growing region. The ever-increasing demand for cryptocurrencies in the commercial sector in North America is one of the prime factors driving the growth of the hardware wallet market. The US and Canada contribute significantly to the hardware wallet market in this region, owing to government initiatives to legally adopt and monitor cryptocurrency systems across their commercial sectors. The US is leading in providing a legal and regulatory framework for monitoring cryptocurrency, which is further expected to offer significant opportunities for the growth of the hardware wallet market in this region.

Europe is the second-largest region and is projected to reach USD 625 million, growing at a CAGR of 25.7% during the forecast period. The European hardware wallet market is one of the leading adopters of cryptocurrency across the commercial sector, owing to a surge in various initiatives by governments and prime players in this region. For instance, according to a Reuters report, the European Union is expected to put in place a comprehensive framework to adopt distributed ledger technology and crypto-assets in the European Union financial sectors, which is anticipated to offer growth opportunities for the hardware wallet market in the coming years. 

Recent Developments

• April 2022 - Swan Bitcoin, a well-known Bitcoin onramp, and Invity.io, the company that provides the in-wallet trading platform for Trezor hardware wallets, announced new cooperation from the Genesis Stage of the Bitcoin 2022 conference to add recurring, direct-to-custody Bitcoin purchases to Trezor wallets. The easiest option for non-technical individuals to start accumulating value with Bitcoin while retaining complete control over their funds is through automated purchases within a cold wallet.
• January 2022 - Trezor, the original hardware wallet, received a new desktop application. The former Trezor Wallet interface has been completely replaced. The new program, Trezor Suite, is a significant advancement that helps protect cryptocurrency users against phishing attempts, one of the most pressing issues in modern crypto security. All Trezor users are advised to download the Trezor Suite desktop application and begin using the most incredible tool for their long-term security by SatoshiLabs.

Hardware Wallet Market Segmentation

By Connection Type

• Near Field Communication
• USB
• Bluetooth

By End-User

• Commercial
• Individual

By Distribution Channel

• Online
• Offline

By Regions

• North America
• Europe
• Asia-Pacific
• LAMEA