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The ongoing crypto winter has ensured that the once flourishing crypto companies have now been facing several issues, financially and in terms of community trust. Since Bitcoin faced a massive correction and lost almost 70% of its value since 2021, there has been a steady decline in the price as well as interest in many of the crypto-based platforms.
A number of cryptocurrency companies have publicly announced to be going under or facing severe financial distress. This has created an environment for investors, where they are compelled to not only be worried about the price potential of their tokens but also about the safety of where it is being stored.
The primary purpose of online exchange wallets or platforms that allow staking and other related things is to safeguard assets. However, this hasn’t been the case for the last couple of months. There have been not one or two, but a variety of incidents where organizations were taking away control of their assets from the users.
This came most usually in the form of “postponed withdrawals” that were allegedly caused due to liquidity crunches. Prominent names in the industry like Celsius and many others faced heat for this move but ultimately had the chance to get away with it. As exchanges that promise autonomy over one’s asset start interfering with it, investors are being led to rethinking about where they park their cryptocurrency.
For the same reason, there has been one domain in the blockchain industry that has been enjoying massive profits while others have been barely surviving- Hardware Wallets. The latest reports show that while top crypto exchanges and Defi platforms are losing users and their assets, hardware wallets have been enjoying a great season since the start of 2022.
What is a hardware wallet?
Considered to be the safest mode of storing cryptocurrencies, hardware wallets are simply devices that hold one’s assets. As the name suggests, it is a physical object and has the capacity to store tokens safely without any risk of being hacked online since these are of offline nature.
Also known as cold wallets, these things are generally USB or Bluetooth devices that store something called a private key within them. These act as a password to be able to access the cryptocurrency held within the wallet.
There are some other details too, that need to be held by one in order to gain complete control over them. A recovery seed, which may be a string of random words, and a pin serve as an extra layer of protection for these wallets.
Hardware wallets are physical objects that can be carried around or put somewhere safe, making them an easy but highly secure way of storing tokens. As long as the owner has access to the passphrase, recovery seed and the pin, there will be no interference from any third party. While they may be on the costlier side, they feature ease of use and security of cryptocurrencies like no other wallet.
The first-ever hardware wallet called Trezor was launched in 2013 and has remained to be the number one cold wallet in the world due to its top security features.
Why the sudden blowup in hardware wallet sales
The trust placed by thousands of investors on online cryptocurrency platforms was compromised as these organizations gained the access to their funds. This wasn’t an isolated incident and was occurring more often than ever, thanks to the liquidity issues. However, the reason wasn’t good enough for the users.
Since the whole concept of autonomy was being tampered with, a huge chunk of the masses had taken to social media in hopes of getting their concerns addressed. However, these organizations couldn’t help but state the obvious reasons and simply promise to resume operations as the issue gets tackled.
This incompetency in terms of what was promised to users directly contributed to this massive growth in the hardware wallet domain. Infact, an employee of Ledger, a top hardware wallet brand stated that their sales had gone up 4.5X since the Celsius issue in June.
While the minimal risk of assets being stolen from a cold wallet through phishing attacks is possible, it is unlikely if one is careful. Apart from this, it is the most secure means of safeguarding your tokens. Thus, a growing trend of moving to these wallets is being seen recently, putting a strain on the online platforms, which were previously enjoying the spot.
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