The crypto hardware wallet industry could be growing at a faster pace than cryptocurrency exchanges, data from several studies suggest.

The current bear market has accelerated the development of the cold wallet industry, while many centralized crypto exchanges were scrambling to maintain operations. According to a report by business intelligence firm Vantage Market Research, the revenue of global crypto trading platforms amounted to $330 million in 2021.

Released on July 21, the report suggests that the global crypto exchange market revenue would reach a value of $675 million by 2028 with a compound annual growth rate (CAGR) of 12.7%. That’s at least half the CAGR related to the growth of the hardware wallet industry, other reports suggest.

The global hardware wallet market reportedly reached a value of $252 million in 2021 and is expected to reach a value of $1.1 billion by 2027, or exhibit a CAGR of 27.2%.

The concept of hardware or cold wallets has been growing increasingly popular in recent years amid major centralized crypto exchanges limiting access to funds of some users over various types of issues. Hardware wallets became even more popular amid the ongoing crypto winter, which pushed some crypto platforms and exchanges to halt withdrawals.

That is yet another important use case for cold wallets versus crypto exchanges and lending platforms, where the user doesn’t really control the private keys and thus doesn’t control the funds. In contrast to centralized crypto exchanges, hardware crypto wallets are not vulnerable to external manipulation as cold wallet assets cannot be frozen. However, such wallets are still prone to other risks like theft, destruction or loss.

According to some industry experts, relying on either just hardware wallets or solely on exchanges is not the best solution for cryptocurrency holders.

“It does seem like hardware wallet providers are benefiting from this debacle and I hope that more people end up learning the many ways to self-custody. I think it’s a reasonable lesson to learn from all of this,” Quantum Economics CEO Mati told Cointelegraph.

Related: What happens if you lose or break your hardware crypto wallet?

Greenspan noted that storing all money on an exchange is certainly a risk, but recent history has a lot of stories from people who tried to self-custody and lost their funds as well. He added:

“Self custody is important but not nearly as important as diversification. The only way to actually reduce risk is to diversify.”

Itai Avneri, chief operating officer and deputy CEO at the digital asset platform INX, believes that the hardware crypto wallet industry will continue to grow, “especially when more centralized and trusted exchanges fail at safeguarding customer funds because of hacks, or misuse.” He noted that innovative firms are working on self-custody solutions that remove the risk of a customer losing or forgetting their private keys.

“It will make the process of holding your keys more friendly and reduce a major barrier to allow the retail mass market to join the crypto economy. Ideally, it should be as easy as creating an email,” Avneri added.