Cryptoverse: Hacking Nerves Pushes Bitcoin Investors Back To The Future

Oct 11 (Reuters) – It’s not easy being a crypto investor.

They have seen the value of their holdings drop like a brick this year, and now many are concerned about the safety of their crypto money after a series of heists saw hackers steal around $2 billion.

Step into the ghost of technology’s past.

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Hardware wallets, old-school USB drive-like physical devices that store cryptocurrencies offline, may seem like a throwback to a more innocent digital age, but they’re proving to be a popular answer to a cutting-edge conundrum.

The global hardware wallet market, valued at $245 million in 2021, is expected to grow to more than $1.7 billion by 2030, according to market research firm Straits Research.

It is being fueled by a steady stream of cyber thefts which, according to researcher Chainalysis, has seen thieves steal $1.9 billion in cryptocurrency in the first seven months of the year, a 60% increase from the previous year. Much of this was stolen directly from blockchains or “hot” online wallets.

It’s not just the gimmicks that make investors nervous. Others lost access to their crypto when major lenders like Celsius Network and Voyager Digital collapsed in July.

“We’ve definitely seen more interest in hardware wallets and self-custody in general after various issues,” said Adam Lowe, director of products and innovation at US-based CompoSecure (CMPO.O). , one of several manufacturers of hardware wallets. trying to cash in on a race for safety.

“The day of those events or the day after, we would see very significant (sales) increases.”

However, there is no such thing as a free crypto lunch: while hot wallets are convenient and allow for quick trading, hardware wallets generally do not appeal to first-time investors, who often buy crypto on large exchanges and may opt for keep your assets. on those platforms, where they can simply log in with a username and password.

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BLOWING HOT AND COLD

Although hot wallets are often free and offer quick access to cryptocurrencies, they can be vulnerable to attack. In August, nearly 8,000 crypto wallets on the Solana blockchain were attacked by hackers who made off with more than $5 million worth of cryptocurrency.

“Users are strongly encouraged to use hardware wallets,” Solana said at the time.

France’s Ledger, another hardware wallet maker, said it saw a spike in sales after the Solana wallets were stolen.

“We see a significant uptick in user interest in some of these stressful market situations,” said Alex Zinder, global head of Ledger Enterprise.

Most hardware wallets connect to a mobile app, where owners of the digital keys needed to access their crypto keys can control their funds. Some use “Secure Enclave” technology, a security feature used to store sensitive data.

Josef Tětek, a bitcoin analyst at Czech-based hardware wallet company Trezor, says he expects better phone interaction with cold storage wallets in the future, to serve investors in places like South America. and Africa, where it is more common for users to have mobile phones than personal computers.

However, companies in this expanding market could be advised to make hay while the sun is shining.

One long-term question is whether phone makers will want to get in on the action, said Stan Miroshnik, co-founder and partner at 10T Holdings, which led Ledger’s $380 million Series C funding round last year.

“I think a question for the industry and where it’s going and, in part, what’s going to drive consumer adoption, is what if every iPhone has a Secure Enclave hardware wallet built in?”

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Reporting from Hannah Lang in Washington; Edited by Tom Wilson and Pravin Charlie

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, according to the Trust Principles, is committed to integrity, independence and freedom from bias.

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