Can highest security, actually Increase the Chance of permanent Loss

[Dictator69]

I was reading a case about Stefan Thoman, who lost the password to his Iron key, which holds 7,002 btc in it and he had 10 chances and used 8 already. Now he is finding ways to recover the password.

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

[Aanuoluwatofunmi]

Let's try to get the logic and idea behind all this, if truly it was a self- custody, then probably be able to have access to his coin as long as he has the necessary private keys or seed phrase to import the wallet from another device.

Is Bitcoin were not stored on his device or wallet, instead on the blockchain, oh that's maybe required is the access to the private keys or seed freeze from another device, but while on his own device he may not be able to access his wallet because of the encoded keys and security is being made just to secure his wallet but not his Bitcoin, because bitcoins are not stored on the wallet or our device, instead on the blockchain.

[BlackBoss_]

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

Permanent loss possibly comes from lowest security to highest security as it's the same if you don't have your backups to use later. Without backups, you will not be able to access your wallets without passwords, PIN code, and if you don't have your wallet backups for recovery, you lost your coins.

Two heart breaking stories about bitcoin security we can learn from
https://blog.lopp.net/how-to-back-up-a-seed-phrase/

Don't have a wallet's backups is bad, but if the backups were made too complex, it's not actually good. Complexity can cause failure in wallet recovery later, and I guess it is "highest security" causes permanent loss in your question.

Seed Backup Threat Model

We already know why we are creating seed backups - to protect against loss of whatever devices (if any) we are storing the keys on for regular use. But what do we need to worry about protecting the backups themselves against?

Loss due to destruction
Loss due to complexity / not being able to restore from backup
Loss to an attacker

[lovesmayfamilis]

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

There is a good saying that "the best will always be the enemy of the good." This can be explained by the fact that having a good level of security, there are great risks of losing everything in the pursuit of perfection. Sometimes you can overdo it and, due to inexperience or inattention, make a mistake, which will be much more difficult to correct if it was with the first result. The more complex the security system, the more difficult it is to set up, maintain, and monitor. Therefore, you should always understand that convenience and simplicity, with reasonable security measures, are always better than a paranoid degree of security that exceeds all reasonable limits.

[rat03gopoh]

Nope, carelessness can lead to fatal errors, regardless of how high your security level is implemented. The rule remains the same: if you lose access to your wallet, your coins are no longer yours. Stefan Thomas's story (according to the sourcw) is no different than, for example, newbies who forgets to back up their keys before reseting their wallet app.

[tech30338]

I was reading a case about Stefan Thoman, who lost the password to his Iron key, which holds 7,002 btc in it and he had 10 chances and used 8 already. Now he is finding ways to recover the password.

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

It is a user error not security issue, he forget the password lost the paper where he wrote the password, that is what cause the bitcoin to be lost forever if they cant find a solution which is hard for now, it is said that after multiple failure it will encrypt what's in it, there is no such thing as password reset for bitcoin, that is your key, you need to protect it at all cost that the protection will not bite you back, password resets are for centralized exchanges, wallets like bitcoin, metamask need the keys, or phrase.
always make sure that the keys is always available for you, but not to others, and never lost where you write it, or it will be the end of it.

[Bryan jessy]

The issues here was not about the type of storage used but the inability to remember or input the right password or seed phrase, sometimes we make very expensive mistake that might affect us in a very negative way due to over confidence, disregarding the fact that we are humans and our brain works in a mysterious way. If he had a back keys or stored it somewhere safe, as it would have been easier for him to fall back on, but he probably thinks he will not forget it. It is really unfortunate and a huge lesson to anyone who comes across this story.

[coinlary]

That's not even the highest.
The highest should eventually lock the coins forever once you misspell a word wrongly or in the wrong order.
I would  say keep it simple,there's no reason to add a trial lock on an encryption.
If you're worried someone might brute-force it, then try a longer password but again, once the password is lost, then it's all gone. Imo, a passphrase is sufficient, It's just like encrypting  without complications but still, it has to be kept safe. So the damage is somehow the same, just that there are infinite trials in this case.

[dkbit98]

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

Adding very complicated backup system that is not standardized is a recipe for disaster and losing coins.
Password is important and it's a good idea to have backup in multiple places.
One of the biggest mistakes I saw people make is trusting their own memory and brain power. 

[HONDACD125]

Adding very complicated backup system that is not standardized is a recipe for disaster and losing coins.
Password is important and it's a good idea to have backup in multiple places.
One of the biggest mistakes I saw people make is trusting their own memory and brain power. 

I totally agree with that. Why should we blame the security of the device for him not being able to access his assets when it's clearly his fault for not remembering the password and also not having any backup for it? If you are required to have backups for your seed phrase, private keys, and all other stuff, then you should also have a backup of a password that you know is very important and can possibly lock you out of your wallet and then you will lose all your assets kept in that wallet. You can't always remember something, you are a human being and we tend to forget things over time.

Someone who knows that they need to use a hardware wallet for better security and safety of the funds should also know that they can't possibly reset the password if they forget it, and this should be enough for them to think that they should have some backup for their password to avoid facing such problems. He didn't do it, and now he is locked out and can't access all his bitcoins which are worth millions of dollars at the current price.

People should learn from this, and should take backups seriously instead of thinking that they have secured their wallets and now nothing can ever go wrong because that isn't correct.

[Die_empty]

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

Having more than one layer of security is better, but it comes with responsibility. Anyone who is careless or cannot take the responsibility of handling a complex security process should keep it simple. It is also good to keep it simple in case you fall sick or leave this world, your dependents or next of kin will find it easier to access your funds when it is simple. A complex process might lead to loss of funds. However, keeping it simple doesn't mean that your security process should be so easy that criminals can gain access cheaply.    

[Amphenomenon]

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

There is a good saying that "the best will always be the enemy of the good." This can be explained by the fact that having a good level of security, there are great risks of losing everything in the pursuit of perfection. Sometimes you can overdo it and, due to inexperience or inattention, make a mistake, which will be much more difficult to correct if it was with the first result. The more complex the security system, the more difficult it is to set up, maintain, and monitor. Therefore, you should always understand that convenience and simplicity, with reasonable security measures, are always better than a paranoid degree of security that exceeds all reasonable limits.

Responsibility!!!
The more complex it becomes the more one ought to take full responsibility and know what the risks is all about. Also, they continue to ignore asking themselves this question "what if I misplace my password or seed phrase?"
Nothing beat full custody of your funds and your responsibility is to stick with the simple and secured one that has been working. Testing shouldn't be done with ones life saving or something similar.

[Patikno]

I was reading a case about Stefan Thoman, who lost the password to his Iron key, which holds 7,002 btc in it and he had 10 chances and used 8 already. Now he is finding ways to recover the password.

You mean Stefan Thomas, not Thoman, right? I have seen his name listed in various sources, as Thomas.

Well, I feel like he didn't take one of the proper security measures for his password: namely "backing up his password", and it just as importantly as backing up his seedphrase securely. So, he skipped "backing up" as one of the most important steps to secure his Bitcoin. If someone doesn't back up (preferably securely), the consequences or risks are clear, as Thomas story goes. So, can we call it a good security measure? I don't think so, security should be done well, and try to think of all the possibilities that could happen, including incidents of forgetting passwords, seedphrases, private keys, and so on.

[The Cryptovator]

I was reading a case about Stefan Thoman, who lost the password to his Iron key, which holds 7,002 btc in it and he had 10 chances and used 8 already. Now he is finding ways to recover the password.

It's wrong. He stored the private keys for a wallet that holds his Bitcoins. That means the encrypted IronKey USB drive wasn't his wallet; it was his storage. So if he had a backup for his private keys, then still he would access the funds.

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

No, it doesn't raise any questions about self-custody Bitcoin wallets. Bitcoin non-custodial wallet designed to secure your seed phrase or private keys safely. Unless you secure your seed phrase, then you have to lose your Bitcoin. If you secure your private keys into an encrypted device and forget the password, it's not the fault of the security system of the wallet. The problem is about our brain that can't recall the password.

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

If he used a hardware wallet and secure seed this way, still he would lost Bitcoin. It doesn't make sense secure our private keys only on any device that would be lost or damaged somehow and we may also lost the funds in addition forgetting password.

Better to write the real story; otherwise, it might confuse users. If he had written private keys on multiple pieces of paper and secured them in different places, then he would have his Bitcoins now. That's the real truth; it's not about security concerns.

[EL MOHA]

Better to write the real story; otherwise, it might confuse users. If he had written private keys on multiple pieces of paper and secured them in different places, then he would have his Bitcoins now. That's the real truth; it's not about security concerns.

The story wasn’t actually narrated well maybe was intentional done to actually make self custody appears risky because it has actually been what most people think is there problem investing into bitcoin or cryptocurrency at large. This is the same excuse that was given by ETF investors saying they can not handle self custody.

Self custody to me comes with its own risk (what actually doesn’t have risk) but I will never trade it with having my main asset with another party. Self custody is simply less risky in terms of loss only if you actually make it all less complicated. Many people actually complicate their back ups either by trusting their self memory or actually using certain symbols to represent some words and this is where the redundancy happens which leads to loss or misplace of words characters

[Felicity_Tide]

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

imo, I don't think so. I think ones negligence and lack of caution to take ones security seriously, can actually lead to permanent loss. What amuses me, especially in regards to this security flaws, is that a lot of people treats their passwords that ought to be a long term sensitive information, as a one time password. They just sit down, think of a word, and assume that it can be easily remembered. Why is it so difficult for people to understand that when a password does not have a recovery option, it needs to be treated with caution.

The last time I checked, writing/duplicating such sensitive information, does not in any way causes harm. And I'm not sure if that device is the self destruct type, because I learnt that some of them do perform automatic self destruct after too many wrong attempts. A lot of problems can be avoided, and this one of them.

[Asiska02]

It raises a question about self-custody that, can the highest security actually increase the chance of permanent loss?

For his case, it’s kinda more complicated and hard to actually answer this your question. He never thought this asset could be this valuable and could not keep the password in his head for throughout this time. It’s just unlucky and so unfortunate to be amongst those that can dream, but can’t get to actualize the dream.

I am not saying security is bad, but saying it has tradeoffs and in bitcoin there is no password reset. Because this device is not a normal device, but maybe if Stefan had held those btc in a normal USB or a reliable storage device, maybe he would have those btc now.

He may have those BTC now, that’s still a thing of contention or unknown outcome. Maybe, someone must have also getting access to his USB drive and stole the bitcoin, which makes it even more vulnerable to have being stored in such device without proper backup.

[Upgrade00]

There is no middle ground with security. It has to be at the highest level to protect the assets which are stored in self custody. The protocol also has a back up system to recover funds if other means of accessing the wallet fails. The idea is not to depend on any wallet so in this case it will not matter if you cannot remember the password.

If you're going to add extra security layers like multi signature or using a wallet that has a convoluted security system. You'll have to o take extra precaution to not make a mistake while using that.

[Churchillvv]

I don’t want my bitcoin stolen from me so I have a very high security over it and this high security is not a simple steps or something that can be remembered or stored in the brain capacity how then do expect to recover it when you forget it, sometimes the excessive application of something is very bad, complications can happen and security will now be more like a cause then a good then, instead of relying on what you can remember, write them down to avoid losses.