How can crypto hardware wallet companies make money? How long will the hardware wallet last? All companies involved in the production of hardware encryption wallets have multiple direct or indirect revenue sources. The hardware wallet industry has become one of the most resilient industries to the continuous cold winter of cryptocurrency. Problems such as the collapse of FTX have brought more cold wallet sales. The bear market in 2022 again reminds crypto investors of the importance of self custody and independence from the central exchange (CEX). Therefore, some major CEX like Binance increased their investment in hard wallet companies, and CEO Zhao Changpeng even said that CEX may not be needed in the future. If so, the future encryption industry will be very different from the existing industry, because the business model of the hardware wallet is different from that of CEX. A big difference is how the hardware wallet makes money, because unlike CEX, the cold wallet is not designed to charge any fees for most transactions. However, for many reasons, selling equipment is not the only source of revenue for cold wallet manufacturers, including hardware wallets, which are durable devices that do not need to be upgraded frequently. So, how do hardware wallet manufacturers make money? Now let's get to know.
How long will the hardware wallet last?
How long the hardware cryptocurrency wallet can last is not clear, partly because the first cold wallet still works normally.
Trezor, a hardware wallet company headquartered in the Czech Republic, became the first company to officially launch a cold wallet in 2014. Eight years later, the Trezor One model is still one of the most popular hard wallet devices, and many customers are still using their first generation Trezor devices, Trezor Brand Ambassador Joseph Tetek told Cointelgraph.
"Trezor equipment is guaranteed for two years. However, this does not mean that the equipment will fail after two years," Tetek added:
"At meetings, we often encounter users who are still using the first version of 2013. In general, Trezor devices are very durable and have a very low failure rate."
The executive stressed that users may damage, lose or damage their devices, but they will keep their Bitcoin stock down $16960 if they keep the restore seed backup intact.
According to Ledger, another major cold wallet provider, the service life of the cold wallet is "very long", but the company cannot estimate it. "The equipment is durable. Sometimes every product has problems, but people should be able to solve these problems," a spokesman for the company told Cointelgraph.
According to some hardware wallet providers, card based cold wallets can be used for decades or never expire.
Andrey Kurennykh, CEO of Tangem, a cold wallet company supported by SBI, said that their card hardware wallet has the same service life as the underlying Samsung S3D350A security components. "Samsung claims that their service life is more than 25 years. Since there are no other hardware components in the Tangem wallet, we think this is the service life of the entire device," Kurennykh said in an interview with Cointelgraph.
Adam Lowe, the founder of Arculus, another cold wallet company, also told Cointelegraph that the company's card type cold storage device "never expires".
As the hardware wallet may never require users to upgrade their devices, how can Cold Wallet companies keep running because these companies must spend a lot of resources to provide long-term support for their customers?
Increased demand for hardware wallets
In order to meet the growing demand for cold wallet devices, many hardware wallet providers are forced to expand their support staff.
Ledger spokesman said: "We have greatly expanded our support team. Considering the recent events in the encryption industry and more and more people turning to self-regulation, this is very important for us."
Kurennykh of Tangem pointed out: "We see a large number of new people from different channels and regions entering the cryptocurrency field, and we are strengthening our support in proportion."
Many wallets also introduced new support solutions, including self-help tools and chat robots, to make it easier for them to handle frequent requests, such as implementing e-commerce APIs. Tetek of Trezor said: "This helps to deal with unexpected surges of queries, such as those that occurred during the recent FTX crash." He added that the company has also been actively adding videos about solving the most common problems and difficulties.
Multiple income sources of cold wallet
According to the comments of industry executives, all companies involved in manufacturing hardware encrypted wallets have multiple direct or indirect income sources.
"Ledger is not only a hardware company, but also a software company, as well as Ledger Live," said a representative, adding that its revenue comes not only from selling Ledger devices, but also from services on Ledger Live.
The spokesman pointed out that the company also provided its own heterogeneous token platform, Ledger Market, and enterprise to enterprise (B2B) product tool, Ledger Enterprise.
Ledger has also been actively expanding its equipment and has launched seven different cold wallets since 2014. The latest wallet jointly developed by Ledger and iPod Classic creator Tony Fadell costs 279 dollars, which is 200 dollars more than the previous one.
Tetek said that competitor Trezor does not provide any financial services, nor does it charge any fees for using its Trezor Suite applications. At the same time, its sister company Invity enables Trezor users to buy and sell Bitcoin.
He said, as well as other cryptocurrencies directly from Trezor Suite, and emphasized that the company is independent of Trezor's business.
According to Kurennykh of Tangem, the company has multiple revenue sources, of which up to 70% of the company's revenue comes from the sales of hardware wallets. Kurennykh said that about 20% of the revenue comes from third-party service fees, such as import and export exchanges, while 10% is generated through the sale of white label wallets. The company is also developing its own unmanaged payment solution, which is expected to generate another additional source of revenue.
Ruben Merre, co-founder and CEO of Ngrave, the cryptowallet supported by Coinsecurity, also told Cointelegraph that the company's revenue mainly comes from product sales. However, there are other revenue sources, including transaction fees for the legal cryptocurrency entry. "Users can then purchase cryptocurrency directly from the hardware wallet application [...] The hardware wallet manufacturer may charge a transaction fee for this process," Merre said.
In addition, many cold wallets also cooperate with encryption services and exchanges to participate in affiliated or promotional programs.
At present, there is no public hard wallet company
As the existing hardware wallet companies are not public, there is no ready data on their business income. All the hardware wallet companies interviewed by Cointelgraph refused to provide any data related to their financial information on the grounds that they were private companies.
At the same time, the executives reiterated that the collapse of FTX Exchange in November had driven a large number of sales and traffic of the hardware wallet platform.
The spokesman said that in November, Ledger's transaction income through Ledger Live doubled month on month, and the transaction volume through Ledger Live also reached a record high. "We had the best sales month ever in November. After FTX, November 13 and 14 were our best sales days ever," the representative added.
"We can say that we have sold more than 1 million devices, and our sales have reached a record high after the recent FTX crash," Trezor's Tetek also pointed out.
As previously reported by Cointelgraph, even before the collapse of FTX, the hardware wallet industry grew faster than exchanges. However, although self preservation is one of the real purposes of cryptocurrency, investors should still be aware of the risks associated with their coin storage.
In general, the above details how the encryption hardware wallet company can make money and how long the hardware wallet can be used. I believe you will understand it after reading it. In short, there is no clear answer to how long the hardware cryptocurrency wallet can last, partly because the first cold wallet still works normally.
