Crypto traders flock to hardware wallets that hack the Roil industry

by Arthur · August 24, 2022

Hacks and bankruptcies continue to plague the digital asset industry. But these setbacks have been a boon for hardware wallet makers who have seen their sales soar as customers rush to protect crypto assets.

French startup Ledger saw its day-to-day sales balloon 400% in 24 hours after a $5.2 million hack involving digital wallets based on the Solana blockchain earlier this month, according to the company’s chief experience officer Ian Rogers. Unlike many digital wallets, hardware keeps a crypto user’s private keys, which are the passwords they need to access blockchain assets, offline.

Ellipal, a Hong Kong-based company, saw wallet sales increase by 30% and website traffic jump by 50% in the days following the hack of the Solana wallet, according to a company spokesperson. Sales of KeepKey’s hardware wallet also increased by about 30% in the week after the attack, said the company’s chief technology officer, who goes by the pseudonym “pastaghost.” The hack stemmed from a digital wallet created by Slope Finance, which revealed in a post published earlier this month that there was a security flaw in a third-party service provider it used.

“These things remind people that safety and self-preservation is important,” Ledger’s Rogers said in an interview.

While Ledger typically sells most of its wallets on its website, it was a big hit in in-person sales at electronics retailer Best Buy Co Inc., Rogers said. The device, which resembles a USB stick in size and shape, was sold out at locations in several regions, he said. Best Buy did not respond to a request for comment.

The speed at Best Buy shows how quickly people wanted to get their hands on a hardware wallet, according to Rogers.

“It’s the only place to get Ledger in less than an hour,” he said.

The collapse of lending platforms such as Voyager Digital Ltd. and Celsius Network Ltd., which included freezing withdrawals for customers, have alarmed users, KeepKey’s pastaghost said. This has helped spur interest in hardware wallets like the company’s product, which resembles a small external hard drive, he said.

Recent market turbulence has created “increased consumer awareness about protecting their digital assets,” Adam Lowe, chief product and innovation officer at CompoSecure Inc., said in a statement. The firm, which developed Arculus, a hardware wallet similar in size and thickness to a credit card, saw an increase in demand between the first and second quarters despite the onset of crypto winter, he said.

Some centralized crypto exchanges, such as Coinbase Global Inc. and Binance, offer customers digital wallet options, where the keys are controlled by the companies.

“If you don’t manage the keys, you don’t own the funds,” said pastaghost.

Using a physical wallet adds another layer of defense against attacks that digital wallets can be susceptible to, said Steve Walbroehl, co-founder and chief information security officer at Halborn, a blockchain security firm.

Hackers sometimes use malicious links and fake websites that mimic those of actual crypto platforms, as was the case with a $3 million hack involving Bored Ape Yacht Club non-fungible tokens earlier this year. Users unwittingly linked their software wallets, only to have their assets deleted.

“The hardware really keeps it protected and out of reach from all these attacks,” Walbroehl said.

The Solana Foundation echoed this in a post from an official Twitter account following the attack, urging users to use a physical wallet to hold their crypto security.

“A hardware wallet is the most secure way to store crypto, and it’s a very good idea for anyone who has large amounts of wealth, no matter how you define it in crypto,” said Austin Federa, chief communications officer for the Solana Foundation. an interview.

But despite the recent surge in sales, hardware wallets still face obstacles to wider adoption, Walbroehl said.

Hardware wallets are typically more expensive than digital wallets, which may be why some users stick with the latter, he said. While popular digital alternatives like MetaMask and Phantom are free to download, the price of hardware wallets can range from less than $50 to more than $300.

“It’s the law of least resistance,” Walbroehl said. “It’s easy to just install an app you get for free.”

Hannah Miller reports for Bloomberg News.