According to several studies, the hardware crypto wallet industry may grow faster than cryptocurrency exchanges.

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The current bear market has accelerated the development of the cold wallet industry while many centralized crypto exchanges have struggled to keep things going. According to a report by business intelligence firm Vantage Market Research, global crypto trading platforms generated $330 million in revenue in 2021.

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Released July 21 report offers that by 2028, the global crypto exchange market revenue will reach $675 million at a compound annual growth rate (CAGR) of 12.7%. According to other reports, this is at least half of the average annual growth rate associated with the growth of the hardware wallet industry.

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The global hardware wallet market is reported to reached value of $252 million in 2021 and is expected to reach $1.1 billion by 2022, or a CAGR of 27.2%.

The concept of hardware or cold wallets has become increasingly popular in recent years, with large centralized crypto exchanges restricting access to some users’ funds for various reasons. Hardware wallets have become even more popular amid the ongoing crypto winter, which has forced some crypto platforms and exchanges to stop withdrawing funds.

This is another major use case for cold wallets compared to crypto exchanges and lending platforms, where the user does not actually control the private keys and therefore has no control over the funds. Unlike centralized crypto exchanges, hardware crypto wallets are not vulnerable to external manipulation since cold wallet assets cannot be frozen. However, such wallets are still subject to other risks such as theft, destruction or loss.

According to some industry experts, relying only on hardware wallets or solely on exchanges is not the best solution for cryptocurrency holders.

“It looks like hardware wallet vendors are capitalizing on this fiasco and I hope more people eventually explore the many ways to self-service. I think that’s a reasonable lesson to learn from all of this,” Mati, CEO of Quantum Economics, told Cryptooshala.

What happens if you lose or break your hardware crypto wallet?

Greenspan noted that keeping all the money on the exchange is certainly a risk, but history knows many stories from people who tried to save their funds and also lost their funds. He added:

“Self-storage is important, but not as important as diversification. The only way to really reduce risk is to diversify.”

Itay Avnery, COO and Deputy CEO of digital asset platform INX, believes that the crypto hardware wallet industry will continue to grow, “especially when more centralized and trusted exchanges fail to protect customer funds due to hacks or misuse.” He noted that innovative firms are working on self-storage solutions that eliminate the risk of a customer losing or forgetting their private keys.

“This will make the process of storing your keys more convenient and reduce the main barrier for the mass retail market to join the crypto economy. Ideally, this should be as simple as creating an email,” Avnery added.