Hardware wallets: luxury or necessity?

Ever since the FTX scandal broke, crypto investors swear by hardware wallets.

Custodian wallets (or custodial wallets) are simply wallets managed by a third party such as a platform or a crypto exchange. In other words, if the exchange that controls your wallet suffers an attack or declares bankruptcy, you risk losing your funds.

On the other hand, non-custodial wallets (or non-custodial wallets) add an extra layer of protection to your crypto assetsas they give you complete control over your funds.

Contrary to what one might think, mismanagement and misappropriation of funds are not the biggest risks of custodial wallets. Indeed, the biggest drawback of these wallets is their vulnerability to hacks. And as we all know, hacks are common within the crypto realm.

In October, crypto exchange Binance suffered an attack that cost it $570 million. To achieve their goals, hackers used the BSC Token Hub service, the blocking bridge of The BNB chainto create and withdraw 2 million BNB tokens.

Similarly, a few hours after the bankruptcy filing, FTX suffered an attack that cost it hundreds of millions of dollars. While the causes of the incident remain unknown, many members of the crypto community are convinced that it was not a real hack.

The incredible growth of hardware wallets

While the crisis of confidence has slowed activity on crypto exchanges, hardware wallets gained ground in 2022. Yes, the misfortune of some is the happiness of others.

Treasury, one of two industry leaders, saw its traffic increase by 350% in the days following FTX’s bankruptcy. Likewise, sales of the company’s hardware portfolio have more than tripled.

Hito, a wireless rechargeable hardware porter, also enjoyed tremendous success during the same period. “The industry has grown. Ledger doubled its revenue in the month after the FTX crash. A little while ago, the parent company of wallet crypto had announced a partnership with Binance,” said Mikhail Kirillov, CEO of Hito.

“Although Hito announced its pre-sale less than six months ago, we have seen an upward trend in sales since FTX went bankrupt.”

Hardware wallets

This renewed interest in hardware wallets is quite normal, as these wallets are more in line with the principles of Bitcoin. In effect, Satoshi NakamotoFOUNDER anonymous of the world’s first cryptocurrency, wanted to eliminate middlemen. “With a digital currency based on cryptographic evidence, money will be secure and transactions will be easier”can we read in a post published in 2009 by Satoshi Nakamoto.

There are several types and sizes of hardware wallets. Smaller ones, like the Ledger Nano line of wallets, look like a thumb drive and can be attached to a key chain. The biggest ones, like NGRAVE ZERO or ELLIPAL Titan, are the size of a small phone. All come with additional features like dust protection, etc.

Hardware wallets are part of what are called cold wallets, or cold storage wallets. It is a hardware or software tool that allows you to store your crypto without connecting to the Internet. Some wallet developers, like MetaMaskprovide cold wallet software to their users.

Hardware wallets are not the only solution

Despite all their advantages, hardware wallets are not unanimous. Changpeng Zhao, CEO of Binance, said last month that “99% of people are at risk of losing their crypto if they go into self-care.” CZ’s valuation is exaggerated, but let’s not forget that hardware wallets only gained ground after the Terra Luna, Celsius and FTX scandals.

“Only time will tell,” says Mikhail Kirillov, CEO of Hito. “But with $70 billion in losses from the Celsius, Terra, and FTX crashes alone, it seems like leaving your crypto on an exchange is much more risky than losing a device. (which doesn’t matter anyway). That said, the saying “not your keys, not your crypto” is an inevitable lesson that users have learned the hard way.

“If you lose your device, don’t worry; As long as you keep your passphrase safe, you can safely access your funds. Yes, we think it’s time for users to have the tools to trust themselves, instead of trusting crypto exchanges. Hito is one of the easiest tools they can use.”

There are also software wallets that put you in control of your crypto. For example, atomic portfolio gives you the ability to securely store your digital assets on your computer. Recently, Zerion and Frontier launched easy-to-use browser extensions compatible with multiple types of crypto assets, including non-volatile tokens (NFT).

Which place for decentralized exchanges (DEX)?

If you are more of a trader than a HODLer, you can choose a DEX. “Decentralized exchanges should not be confused with centralized exchanges like Coinbase and Binance”says Ravindra Kuma, founder and CEO of Frontier.

“Centralized crypto exchanges hold your assets for you and must always verify your identity. Decentralized exchanges do not require KYC (customer knowledge)they don’t require creating an account and allow you to trade directly with other people”.

Moral of the story: you already know, if you don’t own your private keys, you don’t own your crypto.

Disclaimer

All information on our website is published in good faith and for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at his own risk.

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