The Hardware Wallet Market is estimated to be valued at USD 282.1 million in 2024 and is expected to reach USD 1223.2 Million by 2031, exhibiting a compound annual growth rate (CAGR) of 23.3% from 2024 to 2031.
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Hardware wallets provide physical security for cryptocurrencies and other digital assets by keeping private keys and data offline on a secure element chip. They are designed to be more secure and easier to use than paper wallets or software wallets. The hardware wallet market is expected to grow substantially over the forecast period driven by the rising adoption of cryptocurrencies worldwide. As value of cryptocurrencies like Bitcoin continues to surge, there is growing demand for secure and trusted methods to store digital assets long term. Hardware wallets meet this need as they allow cryptocurrency investors and enthusiasts to maintain full control over their private keys without worrying about hacking or cyber threats. Various hardware wallet manufacturers are expected to launch more user-friendly and advanced products to capitalize on the growing market opportunity.
Growth in cryptocurrency usage and adoption
With the rise of cryptocurrencies like Bitcoin and Ethereum over the past decade, the need for secure and decentralized storage solutions has grown considerably. Unlike traditional currencies that exist primarily in digital form controlled by centralized banks and financial institutions, cryptocurrencies operate on blockchain networks that allow peer-to-peer transactions without an intermediate authority. However, this independence comes at the price of higher risks of theft and hacking if the private keys that authorize transactions are not properly protected. Hardware wallets provide an offline, physical key storage solution that has gained popularity among cryptocurrency users as a safer alternative to keeping their private keys on networked devices or online exchanges vulnerable to cyberattacks.
As the total market value of cryptocurrencies has ballooned to over USD 2 trillion and new users continue being attracted to the asset class, hardware wallets have emerged as a preferred option for experienced crypto investors looking to securely manage their holdings. Major hardware wallet manufacturers have ramped up production capacity to meet the needs of this fast-growing customer segment. As of March 2022, the World Economic Forum reports that there are 18,142 cryptocurrencies and 460 crypto-exchanges. The total market cap of cryptocurrencies is $1.7 trillion. Daily trading volume reaches $91 billion, with most trades involving Bitcoin or Ethereum.
Another driver strengthening the hardware wallet industry is the general preference among experienced cryptocurrency owners for non-custodial personally controlled storage of private keys rather than leaving them with exchanges or other custodial services. Major exchange hacks and thefts in the past have demonstrated the risks of these custodial solutions, with investors standing to lose all their funds if the exchange is compromised. Hardware wallets solve this issue of counterparty risk by allowing users to retain full ownership of their private keys without reliance on third parties that could be hacked or go bankrupt.
The self-sovereignty offered by hardware wallets closely matches the political economy values around decentralization and censorship-resistance that initially drove the creation of Bitcoin. As the community has matured, these principles of personal control over assets have grown in importance.
In December 2023, Block Inc. which is a fintech company, launched Bitkey, a self-custody Bitcoin wallet available in India and 94 other countries. Bitkey provides investors with a comprehensive solution for owning, managing, and storing Bitcoin off exchanges, incorporating a mobile app, hardware device, and recovery tools utilizing three keys for enhanced security.
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