After a successful hacker attacks on Binance sell hardware crypto wallets the company’s Ledger doubled. Users are once again convinced that even the largest exchange can’t ensure full security of crypto-assets of its users. The head of the Ledger Pascal Gauthier noted that the offered level of security of such platforms is too low to protect the cryptocurrency savings. That is why the market of hardware wallets is growing rapidly. DeCenter figured out what the situation on the market of hardware wallets, what will happen to the industry in the coming years, what are the current technological trends, and also learned which solutions choose the experts.
Market overview hardware crypto-wallets
Hardware crypto wallets or cold wallets are the most reliable compared to hot and local alternatives. These devices are presented in the form of a special flash drive that stores cryptocurrencies and keys to them. This purse has no permanent network access, it connects to it via computer using USB, Bluetooth, NFC or optional Wi-Fi. Hardware crypto wallets there are several degrees of protection: the password to login, to access the balance, passphrase to restore access to the vault. Thanks to all this, they are considered the most reliable.
On the market manufacturers. Key players: Ledger, best wallet, KeepKey, Digital BitBox, Coinkite, BitLox, CoolWallet and CryoBit. Among them the leading position of the Ledger and best wallet. In 2016 Ledger sold purses for $734,000, and by the end of 2017, the company has sold over a million devices in 165 countries around the world, generated $52.9 million ($29.4 million net profit). In 2018, the firm earned $116 million by selling a total of more than 1.3 million units. Sales volumes of other companies are unknown, but most likely they are smaller. For example, according to unofficial data, best wallet has sold more than 800,000 devices.
Prospects of development of the market of hardware wallets
According to forecasts Mordor Intelligence, the international market of crypto-currency hardware wallets can grow almost 300% over the next five years. According to analysts, in 2018, this segment was estimated at $129 million by the end of 2024 is expected to grow to $496 million. CAGR (compound annual growth rate) of the market in the next 5 years will be $ 24.63 per cent per year.
The most significant and rapid growth expected in the Asia-Pacific region. Although the ban on digital currency exchange in China could hamper regional development of the sector, growing recognition of the digital economy in the rest of the region, especially in Japan, Australia, South Korea and Southeast Asia, promotes the formation of a mass market for crypto-currencies in the Asia-Pacific region. At the same time North America, particularly the United States, will continue to play an important role that cannot be ignored. Any changes in the United States may affect the development trend of crypto-currency hardware wallets.
The rate of growth of the market of hardware wallets, according to forecasts Mordor Intelligence. Source.
Biometrics, biometrics and smart cards: current technology trends
Despite all the security measures hardware wallets are still vulnerable. The scammer can access the funds: hacking the computer attached hardware wallet, the theft of the wallet, attack medium, a bypass pin (using a voltage criterion of failure or the failure hours), the wallet can hack on the road to the buyer, the loss or theft of the sheet with the phrase of recovery, banal surveillance (pry PIN input). To protect assets from these and other threats to obtain benefits in the competitive race and expand the market, manufacturers of purses have continued to develop their technology. Recently entered the market several new solutions, which was not there before.
Among the technological trends for the coming years: biometric user authentication, binding the wallet to a specific location even more secure encryption, NFC chips for contactless payment, connect wallets via Bluetooth and Wi-Fi, transfer hardware wallets to smartphones, the key storage cryptocurrency (including the signature of the crypto operations) and critical personal information or other data (credit cards, passwords), digital signature key users.
So, Ledger is working to update wallets, so that they could confront professional criminals. A big bet on the company makes a product for enterprise customers Ledger Vault. The device is based on a unique technology — an operating system that is specifically designed to work on any safe equipment and to support any cryptocurrency. It allows banks, hedge funds and family offices to manage their crypto-assets.
In the spring of 2018 Ledger also announced a partnership with Japanese financial giant Nomura to launch a joint project Komainu, which will allow large holders to store your cryptocurrency assets in special repositories.
Ledger expands market reach and now sells their wallets offline. In the photo — shop Duty Free at Amsterdam airport Schiphol. Source.
There are new form factors wallets. For example, the project released a Cool Wallet hardware wallet in the form of a flexible credit card.
Also in recent years entered the market several solutions suggesting to use smart phones as hardware wallets. For example, Samsung added to its Galaxy S10 functionality of the crypto hardware of the purse. This is a significant event for the crypto community, as the popularity of the brand can attract new, far from cryptomeria, users. However, the company is not interested in, just to compete for a piece of the pie of the market of hardware wallets. Apparently, their goal is to make a hardware wallet smartphone a full-fledged payment instrument, not just a safe way of storage.
Sony is also developing their own cryptocurrency hardware wallet. And unlike traditional wallets, best wallet like Ledger Nano and One’s that allow users to simply connect to your computer and to access to your private keys and funds, the wallet Sony will store private keys on the user smart card. With its help, users are able to pay wallet via the NFC chip.
Similar technology has developed and the American startup VaultTel is a small hardware wallet, is inserted into the SIM card slot. The device can be used in Android phones with two SIM cards or iPhone with the optional device. For greater security, the wallet uses biometric authentication of the owner. Another similar example — Parity Signer, which turns any smartphone into a hardware wallet.
Despite all the innovations in the coming years, a leading position in the market is likely to persist for Ledger and best wallet. «Users are quite conservative and in no hurry to move on to new solutions if the current functionality suits them,» said Valery Petrov, Vice-President RAKIB.
Expert opinion: technology Overview hardware wallets
About the device and the advantages of hardware wallets told us in detail Valeriy Petrov, Vice-President of the Russian Association of crypto-industry and the blockchain (RAKIB).
Hardware wallet keeps information about the number of coins, a program to link the wallet with the Internet service and cryptographic keys (open and closed).
Usually used to generate the cryptographic keys on the basis of grain. The system, in fact, generates two pairs of keys (to store several key pairs generated separately uncomfortable), and one a large number of so — called seed, or cryptographic grain. And already based on it may in some predictable way to obtain desired number of pairs of public and private keys for multiple wallets.
This technology, on the one hand, simplifies the process of generating purses, on the other hand, reduces the reliability of the system, that is leveled just due to hardware wallets. This is due to the fact that the owner of the hardware of the purse store is the number — cryptographic seed.
Thus, hardware wallet, in fact, contains not just private keys, and crypto-wallets — as in most cases, any means to store public and private key are also wallets.
Security hardware wallet due to the fact that access virus programs or hackers is practically impossible, unlike PCs or smartphones. Therefore, to protect the interests of users implements the main technological principle is a cryptographic grain should never leave the device or media on which it is stored (usually this is a mini-computer in the form of a stick). All cryptographic operations are performed inside the device connected to the computer and go outside already signed the transaction. Thus, even if hackers crack the computer, access to cryptographic grains they most likely will not.
Ledger’s Nano is the most popular hardware wallet in 2018. Supports 25 cryptocurrency connects to the computer via USB, it has a OLED display 2 functional buttons and a multi-level system of confirmation of transactions. Wallet you can carry in your pocket, on your keychain or keep in the safe. Source.
The internal structure of the hardware of the purse is different. For example, widespread purse from the Ledger uses two chips. One so — called secure element is a dedicated microcontroller which stores sensitive cryptographic data (analogue to those of microchips used in SIM cards or Bank cards). The second chip is a microcontroller, a crucial peripheral management tasks usb connection, display, buttons, and so on.
The most serious risk of compromising the hardware crypto wallet is a theoretical possibility distribution patched wallets, in which the microcontroller is programmed in such a way that allows to change memory addressing, in particular of the memory cell in which stored seed. But when you use certified branded products, this risk is reduced to almost zero.
Theoretically, a hardware crypto-wallet is also possible to compromise using the so-called hardware implants that push the confirm button when receiving a malware on the radio. But it requires unconventional approach and complex execution, and go for it hackers can only be confident that if successful there will be a very big «scoop.» It is also theoretically possible to hack the wallet, if you learn how to receive radio signals, which are generated at the time of entering the pin code, but you need to be in close proximity to the owner of the purse.
Best wallet T — supports about 1000 coins, is controlled OLED display, two functional buttons, it has the function to restore access. The company was first to market and prior to joining the Ledger remained the leader. Source.
Other manufacturers of hardware crypto-wallets to use only one chip, the most famous of them is the best wallet. It uses a General purpose microcontroller based on ARM architecture. This chip is responsible for storing and processing data as well as control by crypto-wallet, display, buttons and the overall functioning of this device.
Possible scenarios of hacking here are the same as those described above, with the proviso that in this case, attackers need to access only to the flash memory of the microcontrollers to learn a cryptographic seed. But the high-quality IOS hack it is almost impossible, so there is only one option of getting access to funds through the hardware of the purse that is really only in direct contact with the device.
By criterion the price/quality the most interesting offer at the moment is the decision from the company best wallet and its clones are widely available on the market. And among them there are a number of solutions that surpassed the parent company in their functionality and not inferior in safety. In the Russian market it is possible to allocate a product which is called best wallet-Mini. It allows for secure storage of not only keys for a wide range of cryptocurrencies, but also other sensitive information.