Self custody is not reliable

[MainIbem]

When Bybit was hacked, people were moving their coins from exchanges to noncustodial wallet. When a noncustodial wallet was hacked, people were moving their money from noncustodial wallet to exchanges.

So that is what people are. Most people do not have the right knowledge to know what exactly to do.

There is nothing better than open source noncustodial wallets, but do things right. Use passphrase to extend your seed phrase with an impossible to guess and impossible to brute force passphrase of go for multisig wallet.

Exactly mate, instead of running in circles they should just go for the best option, this recent hack would make many people do silly things but the wise ones would understand that not all noncustodial wallets are trustworthy for security and seek a better alternative instead of a riskier one (exchanges). Open source noncustodial wallets gives extra security as much as they offer self custody, just like a door with an extra protector like a bullet proof making it safer.

[coinlary]

This is the message that's been indirectly passed by what happened with ColdCard hardware wallet, and it's why my friends believe that this attack was planned to make people have doubts about self custody.

Not really actually (at least from my perspective). I think it was only hijacked by the bodies trying to instigate such in people because the attacked already has the shape of what they want.  All they need now is to utilise the moment while it last  and they are  already doing it.

I never really like suggesting hardware wallet to people , would  prefer a holder to learn how to create and use cold storage and tbh, compromised entropy is probably one of the worst things that can happen to a wallet.

What I think more people should do is learn to make a better custody.

[Cryptomultiplier]

When Bybit was hacked, people were moving their coins from exchanges to noncustodial wallet. When a noncustodial wallet was hacked, people were moving their money from noncustodial wallet to exchanges.

So that is what people are. Most people do not have the right knowledge to know what exactly to do.

There is nothing better than open source noncustodial wallets, but do things right. Use passphrase to extend your seed phrase with an impossible to guess and impossible to brute force passphrase of go for multisig wallet.

Exactly mate, instead of running in circles they should just go for the best option, this recent hack would make many people do silly things but the wise ones would understand that not all noncustodial wallets are trustworthy for security and seek a better alternative instead of a riskier one (exchanges). Open source noncustodial wallets gives extra security as much as they offer self custody, just like a door with an extra protector like a bullet proof making it safer.

Self custody always comes with its own risk just like saving money in the bank has too. It is up to anyone practicing self custody to do proper research into what should work the best for their security sake and privacy.
The fact that these attacks can happen anytime is just a warning to be vigilant and always try to have a backup so as not to lose all holdings at once.

[Charles-Tim]

Self custody always comes with its own risk just like saving money in the bank has too. It is up to anyone practicing self custody to do proper research into what should work the best for their security sake and privacy.
The fact that these attacks can happen anytime is just a warning to be vigilant and always try to have a backup so as not to lose all holdings at once.

Just a backup is not enough. At least, have 2 backups of your seed phrase and passphrase.

But this is not only about just backups, this is also related to the Coldcard vulnerability that led to loss of over a hundred million dollars so far which is not about seed phrase backup, but also another a vulnerability in the Coldcard means of generating seed phrase. The seed phrase generated are weak and used to compromise Comdcard users.

[Dreadboost]

ETFs are far more reliable than you holding Bitcoin yourself.
Self custody is not reliable, let crypto exchanges do the holding for you.

Instead of trusting some Bitcoin wallet that promised self custody it's better to trust JP Morgan.
It's better to have trust in BlackRock so that you can sleep well in the night.

You can't wake up and see your Bitcoin moved into another person's wallet address.
Never ever trust Self Custody.

ETFs holding the coins mean you lack self-custody. 

A Bitcoiner shouldn't be afraid to hold his coins. ETFs wont always be there to store it for me. One day he will take them. Why not learn security rather than looking for an alternate risky option?

Humans are hard to satisfy. The solution to the problem is visible for the eyes to see, but some people like making things complicated.

[Royal Cap]

Instead of trusting some Bitcoin wallet that promised self custody it's better to trust JP Morgan.
It's better to have trust in BlackRock so that you can sleep well in the night.

The ColdCard incident has hurt the confidence of many, that's true. But it's not right to call the whole concept of self custody wrong because of one company's mistake. Similarly if an exchange is hacked, we don't say that all custodial services are not secure. The problem here was in the firmware, not in Bitcoin or self custody.

Self Custody is still Superior to centralised options, with multi signature setups and 100 Dice rolls your wallet will be more stronger than ever

The biggest advantage of self custody is still the same, the private key is in your control. However I would suggest using a wallet with a passphrase. Because now is the time for quantum computing. And anything can happen at any time, which we cannot even imagine yet.

[BABY SHOES]

I'm sure a lot of Coldcard victims no longer believe in the self-custody mantra or maybe even in the BTC network, but who can blame them? Losing everything you've worked for surely has its effect on the victims. Take note that we would have also blamed them if they had lost these funds through a centralized or custodial service.

Do i still believe in self-cusody and in BTC? 100%, but i cannot predict in what state of mind i would be in if i lost all the coins i have worked so hard to save. Self custody is reliable and i would always recommend it, but i am also human to understand how people would naturally react when they lose all their money--not of their own error-- in a hardware wallet of all places.

Naturally this principle in doubt about the "self-custody" in doubt because they are victims of Coldcard... maybe I'll think don't trust this hardware anymore or go back to trusting the stock exchange for a while until I really get back to understanding Security much better.

The person begins to stress... for years of storing coins in hardware that is said to be safe, kok instead become a victim of failure of the firmware itself, what they think becomes wild, can even say all hardware is the same.

I understand the situation, I still believe in the principle of self-custody, so the point is that I would rather lose through my own fault than lose in a centralized entity.

But it's not entirely to blame for people using Coldcard.

[Odusko]

Let's not poison people's mind against the use of self-custody, because this is the best option, but people must understand why they must prevent themselves from any vulnerability and also be well informed about how to go into the required process, that you are using a non-custodial wallet does not give you 100% maximum Protection except you are being careful on what you do and maintain both security and privacy normal standards.

Those minds that can be poison are those that lack the right knowledge, of you don't have knowledge about wallet, it security and how to go about protecting your assets through multisig wallet and wallet paraphrasing and how to back up you seed phrase in multiple safe locations, anyone with no such knee can easily get moved by this kind of assumptions, no matter what, self custody is still the most secured means of protecting your assets, storing them with third party increases your risk because anything can happen to those exchange and your coins is gone.

[Hazink]

Let everyone think whatever they want to think. What happened to one should not be enough reason to say it's not reliable. Exchanges have also been hacked and some lose their money, so no place is safe if we are to look at it that way.

Self custody will always be the best option, as long as you know how to do it right always increase the security of your wallet if you must make it harder for people to breaking as Charles-Tim have suggested.

[adultcrypto]

I knew that the incidence with Coldcard will bring this type of argument that may look plausible superficially. I read in some groups where people are even saying that when some CEX got hacked and people lost money, that they were reimbursed by the exchanges hence the exchanges serve as a form of guarantee for the users. Despite how sweet the argument in favor of CEX may sound,  nothing beats self custody. People just have to add extra security layers like multisignature, passphrase and others.

[macson]

This case is like free marketing for ETF institutions, as many people are planning to move their assets to ETFs since this case. But they should have been able to distinguish that the Coldcard case is separate from self-custody. That it's entirely their fault --- self-custody is still the best way to take full control of your own assets.

They can argue that ETFs can at least provide compensation or privacy, or various other benefits. But still, putting your assets in an ETF is like giving them your assets. Self-custody gives you freedom. All it requires is implementing best practices, such as multi-sig, maintaining secure backups, etc. It may seem more complicated, but it's not as difficult as it sounds.

[Hamza2424]

In ETFs, you buy a piece of their stock so if that gives you more confidence in how you invest, there's no debate on that. But owning a piece of a very limited supply of bitcoin in my hands is way better than these stocks that could be printed more by whichever financial company or etf you invest with. There's really the pros and cons for each of these investments that we like and I think that we're all agreeing to disagree that each of them has its own beauty, advantages and disadvantages but all of them carries the same risk.

Bro, when you buy a BTC ETF like IBIT from BlackRock, you don't hold or buy the company's stock because stock is completely different than the share in this scenario although it is not, you will understand when I will explain it using macro and micro example.

For example, the stock of the BlackRock company is BLK, while IBIT is a share. You can understand it by using a macro and micro factor example. BlackRock is a huge company with different kinds of investment opportunities. If you want to get exposure to their business performance, buy their stock. If you want to get exposure to Bitcoin through centralized and trusted management, then you buy a share of IBIT.

They have to buy a corresponding amount of Bitcoin. Like, if they want to print some shares, they have to acquire cash or Bitcoin. Only then can they print them. But it is true that they don't have the limited supply feature like BTC.

[Cookdata]

ETFs holding the coins mean you lack self-custody. 

A Bitcoiner shouldn't be afraid to hold his coins. ETFs wont always be there to store it for me. One day he will take them. Why not learn security rather than looking for an alternate risky option?

Humans are hard to satisfy. The solution to the problem is visible for the eyes to see, but some people like making things complicated.

I don't think it's about human satisfaction, it's about not taking responsibility of risk of self custody. There is no custody of Bitcoin that has no risk, they all have risk but the degree of risk is higher than each other. You can buy an ETF and let them be the custody of the real Bitcoin but it doesn't change the fact that the platform can kick you out and if they do, you will have to fight for your asset. If this is self custody there is no one that will kick you away because you control your Bitcoin, it's your rules your way.

Just because ETF claimed they hold coins doesn't show any evidence that they do, they don't disclose most of their wallet address. The last time FTX went bankrupted, they said the same thing that coins are intact but what happened on that day is unforgettable, the exchange has spent most of their reserves. It was that incident that prompted exchange to start monthly proof of reserves but it still doesn't change the fact that self custody is the best.

[lionheart78]

This is the message that's been indirectly passed by what happened with ColdCard hardware wallet, and it's why my friends believe that this attack was planned to make people have doubts about self custody.

People with propaganda begin shooting when the situation favors their ordeal.  So I am not surprised to read those kinds of messages because after the coldwallet were hacked, it is the best opportunity to push for custodial services.

Come to think about it, who benefited the most out of this attack?, exactly...
This message might look too early but I'm sure that what's going to be pushed from now on is people needs to trust centralised platforms more.

I do not think the attack is made by a centralized entity but I am sure these centralized entities see this event the perfect timing to push their narratives and purpose.

People needs to trust Blackrock, fidelity, and others than self custody, but nothing beats self custody even after what happened, this attack will be an eye opener to why you and I should be picky when it comes to self custody.

Self Custody is still Superior to centralised options, with multi signature setups and 100 Dice rolls your wallet will be more stronger than ever

I highly agree as long as the person who is doing the self-custody is well versed on how to implement proper security on his non-custodial wallets.  If a person does not know how to properly protect secure his holdings, it is worse than having centralized custody to take care of his Bitcoin holdings.  So the bottomline here is to have knowledge and learn how to protect our Bitcoin holdings.

[Agathamay]

When Bybit was hacked, people were moving their coins from exchanges to noncustodial wallet. When a noncustodial wallet was hacked, people were moving their money from noncustodial wallet to exchanges.

So that is what people are. Most people do not have the right knowledge to know what exactly to do.

There is nothing better than open source noncustodial wallets, but do things right. Use passphrase to extend your seed phrase with an impossible to guess and impossible to brute force passphrase of go for multisig wallet.

The truth is that, most people can't different which wallet is an exchange wallet and which is not.
Nothing is that, most people prefer to use exchanges to hold their coin because of the ease to sell at will without having to sending from another wallet to the exchange or paying for a transaction fee but the bitter truth is that, they forget that, they're trading their safety over a few sent or dollar fee.

Most people still know these things but still prefer to use exchanges simply because they want someone to be responsible for their coins if there ever be a hack, strange but true.

[wapwapwendy]

Self-custody has always come with responsibility. That's the trade-off. You control your coins, but you also need to understand the tools you're using. I'd still choose that over relying entirely on a custodian.

[Audrey Simmons]

People needs to trust Blackrock, fidelity, and others than self custody, but nothing beats self custody even after what happened, this attack will be an eye opener to why you and I should be picky when it comes to self custody.[/u

The Coldcard incident is a huge eye opener to wallet devs and hardware companies to properly watch out for certain vulnerabilities in their source code, 1300 Bitcoin stolen and if more will be swiped again, it is a big loss to investors and a massive blow to the idea of self custody.

I don't blame those who are looking for outside measures to protect their investment, this is all human nature, and they are acting based on the current heat concerning the hack, by the time everyone settles, many will eventually return to maintaining self custody.

What's left is to improve how we apply self custody, good tips have already been shortlisted by Charles-tim, which I'm also learning.

[sunsilk]

It's a natural reaction when there's the cold card bug that we've seen lately. But self custody is still a better choice.

Whichever makes you confident where your funds are safe, then move it to where you think is the right place. But as for me, it's still my choice.

I'll still like to hold my own coins but this time, it will be split in different wallets with different private keys. I think the involvement of each of us with our personal holdings have made us more proactive due to that issue which is good.

[shinratensei_]

Trust 3rd party custody and you will face the same fate as those who deposited their money to Bitmart and right now facing hardship of withdrawing their own hard earned money. The worst thing you can get from self custody is entropy bug however some independent verifiers has said that if you put a little bit of effort rolling dices your seed phrase is still safe but you will need to migrate your coin if you have used coldcard regardless.

3rd party custody will cause you to face diverse set of risk from the tainted address if you happen to accidentally receive shady money which might lock you up out of your account forever, email and kyc breach, to getting banned for no reason. I'd take self custody anyday than custodial service because I know how bad it is. Coldcard was bad, but we shouldn't ignore that even right now, bitmart customers are facing problem withdrawing their money and don't pretend like this kind of problem doesn't happen too often on exchanges.

[SquirrelJulietGarden]

Trust 3rd party custody and you will face the same fate as those who deposited their money to Bitmart and right now facing hardship of withdrawing their own hard earned money. The worst thing you can get from self custody is entropy bug however some independent verifiers has said that if you put a little bit of effort rolling dices your seed phrase is still safe but you will need to migrate your coin if you have used coldcard regardless.

Bitmart is not a first centralized exchange has issues with user withdrawals, and closure of their service. At least Bitmart does not suddenly shutdown their service and disappear but actually there are drama about their service closure and user withdrawals.

There are many warnings about risk of centralized exchanges if you store your fund there. People still don't change and three years ago, FTX collapse after Terra death spiral were reasons for this following reminding thread.
Reminder: do not keep your money in online accounts.

Three years later, in 2026, we are still reminding about this risk and there are still many people who will not change their practice.