Encryption winter freezes have turned investors to hardware wallets

There has been no shortage of crypto injuries this summer.

August 8, Singapore’s Hodlnaut joined other lenders Vauld and Celsius and Singaporean exchange Zipmex in suspending withdrawals of users’ crypto due to “recent market conditions.”

The move was apparently taken to “stabilize liquidity”, a phrase also used in Celsius’ withdrawal freeze announcement.

With little warning, investors were hit with the news that the bulk of their digital wealth had been effectively seized while firms devised a recovery plan. Many have been affected in varying degrees of severity, and the human costs are often high horrible to read.

Loud and dry, the recent liquidity crisis has reminded many of the industry’s wise words: Not your keys, not your coins. And new evidence now shows that many are taking these words to heart this time.

While crypto companies file for bankruptcy or receiving bailouts; while Coinbase, Gemini and blockchain.com have all announced mass redundancies; while Solana and Nomad are left behind multi-million dollar attackone subsector is booming: hardware wallets.

Crypto security is at the center

Hardware wallets is often touted as the ideal option for long-term crypto storage.

They keep users’ private keys stored securely offline. Unlike software wallets, they are mostly immune to online attacks, although they have been targeted by phishing attacks, the most recent of which occurred this year when a Mailchimp newsletter database contained the emails of Trezor users was compromised.

So they’re not invulnerable, but if you’re careful and hawk-eyed, hardware wallets can be a much better option than their software counterparts.

The top models from Ledger or Trezor are also resistant to physical tampering, making them a safe bet for anyone looking for long-term storage of digital assets.

An exploitation in Slope mobile wallet applicationsfor example, caused Solana users’ private keys to be “accidentally transferred” to a “third party,” according to Solana’s developers. The attacker walked away with $4.5 million in SOL and USDC.

Binance CEO Changpeng Zhao later tweeted that those concerned could send their funds to a hardware wallet.

Amid the wave of insolvencies, freezes and hacks, hardware wallet sales have surged.

Philip Costigan, a senior account manager at Ledger, says that ultimately people should always think about security. On Ledger Op3n conference in June, the company announced that it had sold over 5 million units. Costigan says, “recent issues with lenders, bridge hacks, the Solana wallet exploits, etc. have only increased demand and sales.”

He told Decrypt that Ledger sales jumped “4.5x” behind Celsius’ bankruptcy.

Ledger is not alone either. Trezor and SafePal have also had a sharp increase in sales recently.

Users “wake up”

Decrypt emailed representatives from Ledger, Trezor and Shenzhen-based hardware wallet maker SafePal to ask if they’ve seen an increase in sales over the past crypto winter, and all three unanimously confirmed it.

SafePal responded that it had seen “significant growth” in both product and asset management scales, attributing it “to the collapse of centralized financial institutions and the liquidity crises affecting the crypto industry.”

SafePal did not offer specific sales information, but CEO Veronica Wong said her firm believes “growth will continue” as crypto continues to gain traction among newcomers.

A representative from Trezor also confirmed that they have seen “increased interest in self-storage solutions in recent months, although the effects of the ongoing bear market are also being felt”.

The company said that crypto users are “waking up to the fact that they can lose access to their assets at any time,” adding: “We believe this is a good development that should ensure that user losses are not as widespread and large as they were in the latest cascade of bankruptcies.”

Costigan echoed this sentiment and recounted Decrypt that “this almost had to happen for people to realize how important security is to storing people’s assets.”

On the day of the Solana wallet exploits, sales of Ledger hardware wallets had “more than tripled” before Ledger announced “MOVESOL2LEDGER” discount code, which ran until August 7, offering new buyers 10% off the Nano X and Nano S Plus models.

Ledger reported “a larger increase” following the announcement and said both models “are seeing similar interest.”

“Although it’s very disappointing and sad for a lot of people that they lost, should something like this happen. I think people now realize why they need to focus more on safety, and I think we’ve seen that reflected in sales, says Costigan.

Unfortunate and inevitable sacrifices have been made, experts say, but it’s clear that the spotlight is turning away from yield farming and meme coins. Now, crypto security is at the center.