The global hardware wallet market was valued at USD 202.40 million in 2020, and it is expected to be valued at USD 795.32 million by 2026 and grow at a CAGR of 26.72% over the forecast period (2021-2026). 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, a lot of new users gained knowledge about blockchain and cryptocurrency and started exploring the same. Thus, there has been a huge and rapid rise in the blockchain and cryptocurrency wallet users.

- 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, in comparison with software, web wallets, and paper wallets, is also impacting the growth of the market studied.

- With the investments in the market studied increasing, companies are focusing on innovation, with devices supporting multiple currencies and wireless technologies. Recently, 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, with the growing concerns regarding cyber attacks are posing challenges to the market's growth. Recently in July 2020, Bitcoin hardware wallet maker Ledger revealed that its e-commerce database was hacked in June 2020, leaking 1 million emails and some personal documents. No user funds were influenced by the breach.

- The rapidly growing demand for cryptocurrency during the pandemic has influenced the market for the hardware wallet positively. Cryptocurrencies such as bitcoin are gradually making a transition from uncertain investment instruments to payments. Specific attention to payment habits and the financial life cycle has arose as the COVID-19 pandemic has led to more calls for dematerialization of payments.

Key Market Trends

NFC Type to Hold Significant Share

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- 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 convenient 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 an everyday way of payment, and it works just by pairing with a mobile app.

- By utilizing NFC, payment is allowed even if either the payee or payer is not connected to the Internet, depending on the type of payment request. This scheme is particularly useful 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.​
- Over the next few years, NFC may be one of the key technologies, especially in the context of conducting transactions and exchanging digital content, as it enables seamless functioning (with just a touch gesture), thus, driving the market growth for cryptocurrency transactions over NFC technology.

Asia-Pacific Expected to Witness Significant Growth

- Asia-Pacific is the fastest-growing market for hardware wallets, owing to the growing adoption of cryptocurrency in the region, as well as due to the increasing trend of the digital and cashless economy in countries, like India, Japan, and South Korea.​
- Though the ban on digital currency exchange in China can hinder the 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 in the region. These countries are also among the ones where the most adoption of hardware wallets is taking place in the region.

- Southeast Asia is also evolving into a digital currency competition among governments. For instance, the Cagayan Special Economic Zone and Freeport in the northern Philippines are building the ‘Crypto Valley of Asia,’ a USD 100 million blockchain hub. This also offers a huge opportunity for the hardware wallet market in the region.

- The growing number of cyber attacks in the cryptocurrency market in the region is also fueling the growth of the regional hardware wallet market. For instance, in June 2018, hackers stole around USD 30 million, in crypto, from Bithumb, South Korea's leading virtual currency exchange, prompting the exchange to suspend all deposits and payments temporarily. This is also forcing vendors to adopt hardware wallets, to have a more secure process.​

Competitive Landscape

The hardware wallet market is moderately fragmented. The market studied comprises of several global and regional players, vying for attention in a fairly-contested market space. As the market studied poses low barriers to entry for new players, several new entrants have been able to gain traction in the market, by offering products, which are rich in features, at competitive prices. The market studied is characterized by increasing levels of product penetration, moderate/high product differentiation, and high levels of competition. Some of the recent developments in the market are:

- April 2020 - ShapeShift announced the acquisition of Portis, an Israeli startup that built the leading Web3 wallet SDK for developers of crypto applications to easily integrate wallet functionality into their product.

- March 2020 - CoolBitX Limited announced that it has closed USD USD 16.75 million in its Series B funding round, led by Japan 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 presence beyond the APAC region as the first-to-market FATF-compliant solution for virtual asset service providers (VASPs) around the world.

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