Reports suggest that the hardware wallet industry will outgrow exchanges

[Ambire]

It seems that the crypto hardware wallet industry is growing at a much faster pace than cryptocurrency exchanges, according to several studies.

This is likely due to the current bear market, which has accelerated the development of cold wallets, while many centralized crypto exchanges had a tough time maintaining operations.

For example, a report by business intelligence firm Vantage Market Research showed that the revenue of global crypto trading platforms amounted to only $330 million in 2021.  This is quite a modest number compared to the $1.1 billion value that the hardware wallet industry is expected to reach by 2027.

These findings suggest that  the main reason for the lagging growth of exchanges is the lack of trust in centralized platforms, as users are increasingly looking for ways to store their digital assets in a more secure way. With the rise of DeFi and the growing popularity of non-custodial crypto services, it is likely that the industry will continue to grow at a rapid pace in the coming years.

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[Charles-Tim]

These was discussed on this forum and also on this board (bitcoin discussion board) like a week or less than 2 weeks ago:

Hardware wallet demand increases in 2022 bear market as exchange scramble

Better to have your coins on hardware wallet or any other cold storage wallet than exchanges that can be hacked. On exchanges, you do not also have full control over your own coins. Some people can also be afraid of exchange bankruptcy and inability to pay customers funds on their exchange.

Best to lock this thread and post on the already existing thread to avoid duplication and repetition.

[bitmover]

For example, a report by business intelligence firm Vantage Market Research showed that the revenue of global crypto trading platforms amounted to only $330 million in 2021.  This is quite a modest number compared to the $1.1 billion value that the hardware wallet industry is expected to reach by 2027.

This data makes absolute no sense and it is false.

If you take a look at Coinbase Investors Letter, you can ssee 2021 results


https://s27.q4cdn.com/397450999/files/doc_financials/2021/q4/Coinbase-Q421-Shareholder-Letter.pdf

Just Coinbase, alone, generated a revenue of 7.4 Billion USD.


While cold wallets are certainly useful and may grow a lote, that is not where most of the money goes. People pay much more money in trading/widthdrawal fees than in a hardware wallet, which is a one time payment of 40-50 usd.

[jackg]

For example, a report by business intelligence firm Vantage Market Research showed that the revenue of global crypto trading platforms amounted to only $330 million in 2021.  This is quite a modest number compared to the $1.1 billion value that the hardware wallet industry is expected to reach by 2027.

You'd be better off using data for both at the same time. Expecting crypto exchange revenues not to grow by more than 4x by 2027 is probably an underestimate (even if their incomes are a bit sporadic afaik).

[DdmrDdmr]

MarketWatch estimated a few months ago that the total global trading revenue of crypto exchanges was over 24,3 $ billion in 2021, but was only 3,4 billion $ in 2020, which is seemingly a massive and somewhat surprising leap.

Vantage Market Research, besides being expensive as hell seems way off with its 329,4 M $ estimate. Of course, the report not being open to scrutiny without paying a pretty penny does not allow us to see the methodology, but both the above post by @bitmover and this data seem radically different from Vantage Market Research’s, which is something they should address and/or clarify.


See: https://www.marketwatch.com/story/crypto-exchange-revenue-grew-700-in-2021-surpassing-traditional-exchanges-like-nyse-report-11647286545

[hatshepsut93]

Exchanges are exchanges and hardware wallets are hardware wallets - they serve different purposes, so you can't compare them directly, they don't compete with each other. People are keeping coins on exchanges not because they view it as a wallet, but because they don't bother to move them out, or maybe they prefer a convenience for trading without making deposits/withdrawals. Also, you should keep in mind that software wallets are more widely used than hardware wallets, so if you want to analyze outflows from exchanges, hardware and software wallets should be viewed together.

[TimeTeller]

Exchanges are exchanges and hardware wallets are hardware wallets - they serve different purposes, so you can't compare them directly, they don't compete with each other. People are keeping coins on exchanges not because they view it as a wallet, but because they don't bother to move them out, or maybe they prefer a convenience for trading without making deposits/withdrawals. Also, you should keep in mind that software wallets are more widely used than hardware wallets, so if you want to analyze outflows from exchanges, hardware and software wallets should be viewed together.

It is indeed not reasonable to compare these 2 different entities, as they are serving different purposes.
Hardware wallet is merely for storage of your coins, whereas, exchanges are for trading purposes.
They have totally different purposes so why compare these 2? And a user can buy more than one hardware wallet, just think about it.
I don't see a point of comparing these 2 though. You can't create exchange easily and survive this market.
So definitely, only few have the capability to sustain this kind of business and maintain it thru ups and downs of this volatile market.

[aysg76]

There are many different articles on the net on which we can't trust blindly and this one seems odd due to their incorrect stats as global trading platform revenue is way much then that as @bitmover has already pointed out that only coinbase revenue is around $7.7 billion and we have not included Binance at the moment who has surpassed it despite having less userbase then Coinbase.

Binance revenue as per this report is estimated to be around $20 billion :



Source

MarketWatch estimated a few months ago that the total global trading revenue of crypto exchanges was over 24,3 $ billion in 2021, but was only 3,4 billion $ in 2020, which is seemingly a massive and somewhat surprising leap.

There is massive growth in the revenue of these exchange with lot of people entering the crypto market in these two years and mostly coinbase and Binance have the domination over the market and this is fact that CZ has become the richest crypto billionaire and Armstrong is also in the list of billionaires.

See the share of exchange trading volume around the globe as presented by marketwatch :



The growth in one year is massive but people don't understand how risky is it to keep your funds over these CEX as your funds are in their possession and keys.

[cheezcarls]

This is going to be more likely in the upcoming years because of the uncertainties of these centralized exchanges as they are vulnerable towards hacking their crypto assets. Hardware wallets are much more safer because of fully controlling the seed phrases as no one (even the developers) may be able to control them for good.

[hZti]

Im pretty schurr it will be at some point normal to use a hardware wallet and there will be no software wallets on your normal computer anymore in use. The risk is simply to high since bitcoin is so well known so far that people actively developed attacks against software wallets. This will only get worse and worse.

[Bitcoin_Arena]

This is going to be more likely in the upcoming years because of the uncertainties of these centralized exchanges as they are vulnerable towards hacking their crypto assets. Hardware wallets are much more safer because of fully controlling the seed phrases as no one (even the developers) may be able to control them for good.

And when buying and selling crypto assets, what do you think a majority of people will use? Obviously centralized exchanges
Even with the current risks that centralized exchanges have, most common users still foolishly use them as their wallets, and I don't think such a habit is about to change.

People even ignore decentralized exchanges in favour of exchanges and wallets that are custodial. For some reason, most people just don't want to take control of their funds.