Crypto wallet market trends in 2023 Blog
Crypto wallet market - Research photo
By: Peter

Crypto wallet market - Research

Table of Contents

A combination of several unforeseen factors in the global economy has been transforming the financial sector since 2020. The recent COVID pandemic and the current war in Ukraine seem to be the most significant events in this regard. They reflect how turbulent our life can become in terms of political uncertainty and social insecurity. However, they constitute just a part of the noted set of drivers enabling viable alternatives to fiat currencies to carve out an expanding niche in global finance.

The increasing popularity of cryptocurrencies as well as their growing acceptance, are explainable since crypto is a legitimate and viable medium of exchange. The growing demand for such a medium relies on the population’s mobility. Huge masses of people start crossing borders more actively. Numerous reasons for the intensifying migration, from searching for a better job to escaping war, make people adopt crypto as a more flexible and bank-agnostic value aggregator. Crypto wallets, in turn, provide the most convenient and reliable tool to manipulate cryptos in a wide array of tokens.

Crypto wallets form a standalone segment of crypto-related software that allows any user, from pure newcomers to industry gurus, to keep control over their crypto funds. The crypto wallet market is growing in parallel with the increasing interest of individuals and organizations in a faster, cheaper, and simpler-to-use way of transferring cash. The present review aims at describing what the global crypto wallet market looks like today and how it promises to change in the foreseeable future.

General features of the crypto wallet market

Many of today’s researchers agree that the current state of the crypto wallet market should be considered as sustainably increasing amid the rising adoption of crypto transactions by businesses of all kinds and sizes. Even though figures vary from agency to agency, at least 290 million crypto users are available worldwide today. They use more than 84 million crypto wallets, as various surveys suggest. Why do those figures differ? Many crypto enthusiasts use crypto exchanges and various online crypto-transaction services beyond crypto wallets. The image of a typical crypto wallet user should be described to understand why it so happens.

Typically, crypto wallet users are younger and more tech-savvy, as crypto wallets are still relatively new and may be difficult for older or less tech-savvy users to understand and use. However, as cryptocurrency gains popularity and mainstream adoption, the image of a typical crypto wallet user is likely to change and expand to include a wider and more diverse group of individuals from all walks of life and at all levels of expertise or understanding of the crypto space.

Crypto wallets form a specific type of software whose user audience is deeply involved in a crypto ecosystem. Crypto professionals prefer the so-called cold wallets to deal with their tokens. A cold wallet is a specific hardware/software solution allowing users to securely store cryptocurrencies with no connection to the internet. However, most crypto enthusiasts use a more common type of crypto wallet. They are the so-called hot wallets in the form of mobile or desktop applications working via the internet. Both types allow users to hold their private keys for making crypto transactions.

The crypto wallet market demonstrates sustainable growth from about $6 billion in 2021 to the anticipated $48 billion in 2030. Many industries can only envy such a dynamic. The trend reveals that crypto wallets form an incredibly fast-growing and lucrative market that presents tons of opportunity and upside for those who are able to tap into its potential. It's also a constantly evolving field, with new developments and advancements being continuously made.

Crypto wallet market in 2023

Despite disastrous political and social events in many parts of the world in 2023, the behavior and trends of the global crypto wallet market remain within the general course of the crypto industry's development. The market is sustainably evolving with insignificant differences in the growth rate across sectors and countries.

The Asia-Pacific region keeps leading the development with the expected average CAGR of about 12% during the current decade. Japan and South Korea stay at the forefront of the movement. At the same time, the North American segment still remains the largest, with about 27% of the global crypto wallet market share. Germany is the European leader in the crypto wallet market's development, with about 20% of the worldwide crypto wallet market expected to occupy by 2032. At the same time, such European crypto havens as, for instance, Switzerland and Estonia deserve close attention regarding the ease of doing crypto business they provide. Many crypto experts consider the U.S., Canada, Germany, the U.K., India, and Japan as the major driving countries in the global crypto wallet sector today.

Numerous advantages of distributed ledger technology continue to cover new industries and segments when companies and organizations start using crypto transactions in their routines. However, the BFSI (Banking, Financial Services, and Insurance) segment demonstrates the strongest adoption of crypto wallets. Instant P2P payments, trading, and remittance benefit the most from using blockchain in financial interactions.

The second most crypto-friendly industry is retail with its subdivision e-commerce. The latter aligns with crypto payments as few other segments do due to the joint digital environment where all deals happen. Telecommunications, media, and entertainment go next. The segments are completely digitized and, therefore, inclined to the popular subscription business model for which microtransactions in crypto are suited almost ideally. Automotive and other industries are on the way to crypto as well.

The general message regarding crypto adoption by businesses suggests that the inevitable digitization of industries and expanding application of blockchain will make crypto payments an integral element of financial interactions between companies and segments.

Primary traits of crypto wallets

The prerequisites of the crypto wallet market’s growth lie in the inherent characteristics of that specific solution. Any crypto wallet is about security, especially a cold wallet created as a physical gadget. Considering two available types of crypto wallets makes sense to realize how they suit the users’ needs.

Cold wallets

Similarly to any conventional wallet in which we hold our cash, cold crypto wallets are physical devices. They are created to be independent of the internet. Physical independence is the primary purpose of their existence. Nobody can reach your crypto if the chip with your keys is disconnected.

Cold wallets can generate private keys for storing and managing digital assets in the form of cryptocurrencies, NFTs, and other tokens. Since they are not online, cold wallets are an extremely secure way to store digital assets, as they are essentially impossible to hack. However, they do have the downside of not being immediately accessible or easy to use, which can be a drawback for some users.

Many (if not all) crypto investors prefer cold wallets to other solutions since those devices are explicitly purpose-built for managing and storing cryptocurrencies. Cold wallets provide a higher degree of security and safety than hot wallets. It makes them more appropriate for crypto professionals who may be more concerned with the security and safety of their digital assets. A cold wallet can be lost or even destroyed as any physical thing. However, such a threat is less probable and dangerous nowadays than hacker attacks.

The most popular cold wallet brands are Ledger, Trezor, Ellipal, and KeepKey. They offer a variety of different cold wallet devices with varying features and capabilities depending on the user's and crypto professional's needs. Many crypto traders and investors consider Ledger Nano X the best cold wallet device on the market. It looks like a USB stick with a stainless steel body. Nano X is compatible with both iOS and Android. It supports 5500+ crypto coins under the ERC20 blockchain standard. The solution’s software provides access to about 20 dedicated apps, including customer support and a live chat.

Hot wallets

Hot wallets constitute a more widespread segment of crypto wallets. They are pure digital solutions in the form of web-based and mobile apps. Dozens, if not hundreds, of decent hot wallet apps are available today. The segment keeps evolving actively with new vendors. Hot wallets provide the same functionality as cold wallets. The main difference is that they do not have a hardware component. It means mobile gadgets and computers can be the hardware carriers for hot wallets. Since they are continuously connected to the Internet in most cases, hot wallets appear to be more vulnerable to hacking. Many hot wallet users accept quite a palliative approach when they use another smartphone disconnected from the internet as a cold wallet.

The most popular hot wallets originate from leading crypto platforms and exchanges since such vendors know the demands and expectations of users as few others do. Besides, direct integration with a particular crypto exchange can expand the functionality and usability of a hot wallet. Due to the significant number of hot crypto wallets available, defining any unconditional leader among them seems problematic. The top-ranked vendors include Coinbase, SafePal, Exodus, Crypto.com, and other famous crypto platforms and organizations. Their hot wallet apps offer everything users may need, no matter whether they are professional traders or just amateur crypto holders.

The market of hot wallets significantly exceeds the cold wallet market due to some specific reasons, which include but are not limited to:

  • A much bigger customers demand for hardware-free crypto wallets;
  • A significantly lower cost of hot wallet apps compared to cold wallets;
  • A much broader choice of software development teams capable of building hot wallets;
  • A simpler development pipeline compared to cold wallets;
  • A much wider user audience in terms of the level of crypto expertise;

Hence, the entire crypto wallet market can be divided into cold and hot subcategories. They differ in the core design, applied development technologies, and the goals and needs of their users.

Cold wallets suit professional crypto traders and investors who operate significant crypto funds and require maximum security for the stored assets. Also, cold wallets can meet the expectations of ordinary crypto enthusiasts whose transactional activities imply sending and receiving crypto payments unhurriedly when there is enough time to plug and unplug cold wallets. Besides, anybody whose trading strategy implies accumulating and holding crypto assets may find cold wallets suitable.

Hot wallets cover the remaining categories of crypto users, including the ones mentioned above. Active traders of all sizes who make multiple transactions regularly can find hot wallets more convenient and usable since they can be activated with a few taps on their smartphones. Hot wallets are less functional than online trading platforms and crypto exchanges with their options. At the same time, hot wallets remain significantly more secure and protected from the so-called exit scams and against any arbitrariness of crypto exchange owners. Most retailers and e-commerce entrepreneurs can also find hot wallets more appropriate for their businesses in terms of security and ease of use.

Security features of crypto wallets

Security of the stored crypto assets and safety of transactions are the primary traits of any crypto wallet, be it a hot (software) wallet or a cold (hardware) one. Several in-built modules and functions help achieve sufficient security for crypto wallets.

Two-factor authentication

The 2FA technology provides an extra layer of security. In addition to an ordinary password, such forms of identity as face recognition, fingerprints, and codes for locking mobile devices can be used for two-factor authentication. 2FA works by using a second factor to verify the user's identity before providing access to the account or information. By enabling 2FA, crypto wallet users can be confident that their cryptocurrency is always secure and protected.

Transaction confirmation

The transaction confirmation feature helps users avoid mistakes by giving them another opportunity to check the transaction’s data more attentively. Besides, it protects the in-wallet assets from theft when hackers access the wallet owner's account. To withdraw funds and send them to another address, they must verify the transaction via the owner's email, to which a relevant confirmation inquiry arrives.

Login notifications

To alert wallet owners that someone is trying to access their accounts, login notifications come in emails or other message types. Advanced settings for such a feature can include notifications attributed to various actions that can be performed within the wallet’s functionality: logging in, resetting passwords, attempts to log in via an unknown device, etc.

Multisignature authentication

The multisig feature can be the last frontier to protect a wallet’s owner from illegal transactions when all other security features have failed. Multisignature authentication is a mechanism that requires two or more user signatures to authorize and validate a transaction or other activity. They can include the sender, the receiver, and the independent third party. Multisignature authentication offers a more robust level of security than traditional single-signature authentication, as it acts as a fail-safe mechanism if a single private key is stolen or compromised.

Seed phrases

A seed phrase is a private set of words that can be used to restore or recover a cryptocurrency wallet if lost or stolen. The seed phrase is often written down or printed so that it can be stored safely, and it's essential to keep it secure. The seed phrase serves as a backup or recovery method should anything happen to the original private key, and it's a necessary part of securing a cryptocurrency wallet. In addition, the seed phrase acts as an alternative method of access to the wallet in case the original private key is lost or stolen.

Key encryption

The encrypted private keys can only be accessed or read if the correct decryption or valid password is supplied, safeguarding private keys from unauthorized access. In addition, encrypting private keys can help to protect against potential hacking attempts, as encrypted private keys are more difficult to breach than non-encrypted private keys by an order of magnitude.

Final thoughts

Anyone looking to get involved in the cryptocurrency space should keep a close eye on the cryptocurrency wallet market and trends. The market is continuously expanding and growing as more and more people and markets recognize cryptocurrencies as a legitimate and viable form of payment and exchange.

Nothing hints at any possible decrease in using crypto assets anytime soon. On the contrary, individuals, private companies, and organizations of all kinds will likely continue adopting cryptos at an accelerating pace due to numerous negative factors attributed to the conventional banking system that is getting obsolete day by day.

Crypto wallets form one of the fundamental pillars of the entire crypto industry since they provide the required level of security to crypto asset holders. The current crypto wallet market can offer users various hardware (cold wallets) and software (hot wallets) solutions capable of satisfying professionals and amateurs with different levels of crypto expertise.

The available stats show a clear trend towards sustainable growth of the global crypto-wallet market for the current decade at least. The North American market segment occupies over a quarter of the total market value. At the same time, the Asia-Pacific region is developing faster to become a leader in the following few years.

The industries that drive today’s crypto adoption include BFSI, e-commerce, telecommunications, media, and entertainment. However, it is worth expecting many traditional sectors that go digital and, therefore, start accepting transactions in crypto to follow the zeitgeist. Such a perspective implies a sustainable demand for new crypto-wallet solutions designed for small and middle-sized businesses as well as for cross-border corporate entities.

Regular monitoring of the crypto wallet market provides a holistic picture of the latest developments and trends in the crypto ecosystem. It can help investors and traders make more informed and educated decisions and avoid common pitfalls in the crypto market. Furthermore, regular monitoring can provide a sense of stability and reassurance for users, as they have the knowledge and insight needed to make well-informed and calculated decisions about the crypto market and their investment or trading activities.

Contact our experts to know more about various aspects of the blockchain industry in general and the crypto wallet market in particular. They can provide you with thoroughly collected insider information that publicly accessible sources can hardly represent. An individual approach, along with reasonable pricing, is guaranteed.