As Crypto exchanges struggle in a bear market, are hardware wallets about to make a comeback?

The crypto hardware wallet industry, somewhat eclipsed as crypto exchanges gained in popularity, may be due for a gradual comeback. As some centralized crypto exchanges experienced difficulties in operations while crypto currencies plummeted in value and users clamoured to withdraw funds, this rise in instability may have boosted interest in the "cold wallet" industry. According to a report, the global hardware wallet market reportedly reached a value of $252 million in 2021 and is expected to reach a value of $1.1 billion by 2027, or a CAGR of 27.2%. This would suggest it may outpace the reported 12.7% growth rate of crypto exchanges, with a predicted market revenue value of $675 million by 2028. Read into that what you will.

Suffice it to say that into this bear market is launching SF-based Hito, which is marketing itself as an "iPod for crypto." Hito is the size of a credit card, has a large multitouch screen and connects to devices wirelessly.

Hito may be pushing at an increasingly open door. Given two of the primary hardware wallets, Ledger and Trezor, have roughly 5 million users, there would appear to be plenty of room for growth, since there are at least 295 million crypto holders who may decide to add hardware wallets to their portfolio.

Hito is priced at $149. This contrasts with — for example — the cheaper Ledger NANO S, which comes in at around $65. Hito’s pitch for that extra cost is that transfers can be maid wirelessly using either Bluetooth or NFC, while updates and charging are also wireless. So I guess you are paying to remove the USB connector?

There are other features, however. These include a 2-inch multitouch color screen that displays your crypto assets; support for over 600 digital assets, including Bitcoin, ETH and ERC20 tokens; connections to other wallets such as WalletConnect, MetaMask, Trust Wallet, Argent, Gnosis Safe Multisig; a single system-on-a-chip; support for multiple wallets and pin codes; and shielding from electromagnetic signal readers.

If Hito is as simple to use as it claims to be, it may have a chance in the market, given current conditions. And it’s fair to say many hardware wallets require a lot more technical technical skills than the average person can muster, so any simplification is to be welcomed.

I asked founder Mike Kirillov, CEO and founder of Hito why he thinks Hito has a shot in this current environment: “Previous hardware crypto wallets have been built for geeks and by geeks. They’re cumbersome, require technical skills, hard to interact with and always cause a feeling you’re about to do something wrong. Ultimately, they weren’t able to become a mainstream solution, meaning the funds of most crypto holders out there aren’t safe,” he said.

Kirillov claims his team spent three years building Hito in stealth mode as "a ubiquitous, easy-to-use device with great UX. It is stylish, intuitive and ultimately protected hardware wallet that can that the mass audience can rely upon,” he claims.

Certainly the more mainstream Crypto becomes, the more crypto fraud and scams are booming, favouring the argument for hardware wallets. Crypto scammers took a record $14 billion in 2021 (79% growth YoY).

And $1.23 billion was lost in the first quarter of 2022, up almost 8x from a year ago, according to a report by Immunefi, largely because scammers can gain access to crypto accounts online.

Hardware wallets can’t be hacked via the cloud in the same way, since your credentials never leave the device.

However, it remains to be seen if Hito will be able to win over more users from exchanges; hardware wallets can also be simply, physically, lost.