With traditional banking and commerce trading, a bank or another financial institution is responsible for ensuring security. But when it comes to storing Bitcoin and other cryptocurrencies, users are on their own. Once a user loses access to their coin portfolio, it’s likely gone forever. To safeguard against cryptocurrency attacks, crypto users will increasingly turn to cold storage wallets, an ultra-secure crypto storage solution that operates offline and involves a hardware device.
Growing Demand for Crypto Security
The sharply rising demand for cryptocurrencies such as Bitcoin and Ethereum across larger economies such as India, China, and Brazil, as well as an entrenched market in the West, will drive a significant opportunity to grow the hardware wallet market, due to the increase in global inflation and potential for safe-haven assets. Stronger economies in the Asia-Pacific region like India, China, Japan, and Brazil sport some of the largest IT markets and consequently are seeing a wave of digital currency transactions. Unsurprisingly, this has resulted in an increase in crypto awareness and security risk, which is exactly the kind of breeding ground that is driving remunerative opportunities and expanding the cold storage wallet market. As users become more embroiled in the crypto space, the need for security and ease of access is becoming ever more important and is reflected in the trendlines of the market with vendors and solutions providers seeking to provide sleek and accessible offerings, while maximizing the security of the device. But what characteristics do the best cold storage wallets possess? And what kind of moves are market leaders making? Answering these questions will help providers better understand which features to focus on and how branding positions should be formulated.
To help find these answers, ABI Research Cyber & Digital Security Industry Research Analyst Sam Gazeley, alongside Phil Sealy, Research Director, Digital Security at ABI Research, compiled a competitive ranking of various players in the cold storage wallet space—which forms the basis for this post. The following are some common themes among the top cold storage wallet companies.
Supported Currencies
The best cold storage wallets support a broad array of currencies, with the most common coins supported being Bitcoin, Ethereum, Tether, Binance, Dogecoin, and Litecoin. Companies that provide hardware wallets for cryptocurrency security must expand even beyond these currencies. For example, Ledger’s Nano S and Nano X collectively support any ERC20 token, in addition to more than 1,000 different coins.
Ease of Use and Functionality
Cold storage wallet users expect their offline security solution to be simple to use. If the solution is convoluted and presents complexity to the tracking of crypto holdings, then the product will lose its allure. A solid User Experience (UX) will include a streamlined onboarding process, a clear display, smooth navigation, and painless authentication (biometrics, finger sensors, etc.).
The Trezor cold storage wallet from Czech company SatoshiLabs is the perfect example of a solid user experience. Compared to the competitors, the Trezor model sports a larger-than-average display, which improves readability. More specifically, the Trezor Model One has a 128x64-pixel, Organic Light-Emitting Diode (OLED) screen — the latter of which is unique in the cold storage wallet market. On top of the superior screen, the Trezor Model One only takes around 10 minutes to get fully set up.
Security Approach
With cryptocurrency theft being up 516% since 2020, security is top of mind for most users. Although offline hardware storage is inherently more secure than online crypto storage, there are still some pain points that must be addressed. For example, potential customers will likely research whether a wallet has a history of security breaches or how offline private keys function for a smart card. Moreover, the top cold storage wallets follow high security standards, such as the use of Secure Elements (SEs), Multi-Factor Authentication (MFA), BIP39 backup, and higher Common Criteria (CC) Evaluation Assurance Levels (EALs).
Partnerships and Acquisitions
As a way to compensate for lacking competencies and features, there are numerous splashes being made in the cold storage wallet market. For example, CompoSecure partnered with smart card manufacturer Thales to produce the Crypto.com Visa Card. As another example, Ledger recently allied itself with The Sandbox to create an educational blockchain game called Ledgerverse.
Other companies, such as CoolWallet, are striking alliances so that they can support a wider variety of coins. In the case of CoolWallet, the company teamed up with Crypto.com Pay; now, users can store CRO, BTC, LTC, ETG, DOGE, and 20+ coins through the platform.
Always Keep a Watchful Eye on the Market
For newcomers in the cold storage wallet market, it’s helpful to know what the best cryptocurrency offline solutions come equipped with and what kind of actions industry players take. And if you’re already an industry player, keeping an eye on competitors is key to identifying popular features of hardware wallets and discovering areas where your brand can differentiate itself.
To briefly summarize, the top cold wallet companies support numerous types of currencies, provide easy-to-use functionality, deploy the latest security standards, and recognize the importance of filling in the gaps by partnering with other companies or acquiring them outright. While these four “ingredients” don’t comprise the final formula for success in the cold storage wallet market, they are certainly crucial steps in the right direction. Indeed, new customers to the market will be seeking an easy-to-use and easily portable device which sports the highest levels of security available. Offerings that keep these as the pillars of their creation will see stronger uptake, coupled with multiple backup options and a competitive price point as the majority of crypto portfolios will be smaller in size for the newer user. ABI Research expects to see more solutions being brought to market demonstrating these features as they have proven to be successful at this juncture.
To learn more, download the competitive ranking assessment.