Should the recent issues with hardware wallets discourage self custody?

[hmbdofficial]

Honestly I’m putting my self in the position of someone who was a victims of the coldcard hardware wallet and lost  his years of savings, after accepting the loss and deciding to move on as there is life beyond what was lost. Now imagine after the loss, he was asking for the best hardware wallet recommendation and a lot of people mentioned trezor wallet as they consider one of the best, but unfortunately just another issue of data breach came up with the recommended hardware wallet.

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again. I mean a lot of people haven’t even recovered from the first incident and loses.
Is this not leading to where self custody is going to be disregarded? We know the advantages but the losses are brutal and not easy to take on. What the best form of cold storage? What could be the possible solution to this?

[PostQuantumBTC]

Must you get a hardware wallet before you can use a cold wallet? Use a wallet on an a device that is air gapped. No one will know you have a wallet because you do not buy it in a way that anyone will suspect that you want to use the device for a crypto wallet.

I am using self-hosted wallet and I am not changing that. If it is not my keys it is not my coins on the chain and no complete control.

If you want to hold you coin yourself, you have a lot to learn.

[DubemIfedigbo001]

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again. I mean a lot of people haven’t even recovered from the first incident and loses.
Is this not leading to where self custody is going to be disregarded? We know the advantages but the losses are brutal and not easy to take on. What the best form of cold storage? What could be the possible solution to this?

Before disregarding self-custody, take a good look at this image consisting of biggest exchanges hacks in history

Source

I hope you can see that custodial services poses more danger. Nothing beats self-custody. I've been using Electrum wallet for years now as cold storage and not had any issues. I am not relenting on my self-custody of my coins anytime soon and I would be the last person to advise anyone to use a custodial service as their main holding.

[Ishicryptic]

What happened with Coldcard was very unfortunate and I feel pity for those that lost their coins for a reason that was not their fault and I can't blame them if they lose trust in hardware wallets, it goes to show that no type of wallet is totally safe even hardware wallets that are highly recommendable. But the question to ask is if hardware wallet is not totally guaranteed for your coins safety what storage is better than hardware wallets? If you are sincere in your answer you will agree that hardware remains the best option to protect your Bitcoin from from hacks because they are offline, what happened to Coldcard was a breach in their system which became vulnerable to be hacked and it doesn't mean that we can totally write off hardware wallets. Despite what had happened we should still priotize hardware over hot wallet that are connected online, they are more likely to be compromised than any hardware wallets. Coming to CEX let us remember the phrase " not your keys not your coins" which means that you're not in total control of your coins, they can be freezed, the exchange can be hacked or go bankrupt.

[Abu-Naim]

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again. I mean a lot of people haven’t even recovered from the first incident and loses.
Is this not leading to where self custody is going to be disregarded? We know the advantages but the losses are brutal and not easy to take on. What the best form of cold storage? What could be the possible solution to this?

To be honest, I understand you, even if I was the one in the first incident of COLDCARD wallet hack, I will avoid  hardware wallets for sometimes because it has gotten to some extreme that hack has really affected so much people and it’s not a small amount of money.

Self custody is important, we can’t decide to give third parties our assets to keep for us just because one wallet got hacked because if we compare to the centralized exchanges that got hacked and how bad they were we will know that this is not a big deal, but since it’s a self custody wallets, we should be concerned because that’s where our trusts are as far as Bitcoin is concerned.
If buying these hardware wallets can lead to serious issues like data leak in the process of buy and importing from the company, we can stick to the once we can download and have access to easily. Electurm, Bluewallets and son can be helpful because it’s still come down to how you can keep your phrase safe.

[Dr.Bitcoin_Strange]

What the best form of cold storage? What could be the possible solution to this?

What I want to suggest might not be suitable for some persons because they might need to sell their Bitcoin during emergencies but truly it can help if someone intended to hold their Bitcoin for a long time in a cold storage. So, the idea is to "time lock your Bitcoin." If you are holding your Bitcoin in a cold storage which you intend to hold it for a long time (4 years or more), you can just lock the coin in that wallet for the period of time you don't want to spend it, meaning that even the hackers can not touch your Bitcoin because it's locked. Second idea is to use open source wallets that allows you to set pass phrase, so that aside the seed phrase, there is a second security to your wallet, the hacker might have your seed phrase but not the pass phrase.

Self custody should always be considered greatly because even the centralized custody is not 100% safe, there have been several hacks on CEX and huge amount were lost.

[Webutxo]

Must you get a hardware wallet before you can use a cold wallet? Use a wallet on an a device that is air gapped. No one will know you have a wallet because you do not buy it in a way that anyone will suspect that you want to use the device for a crypto wallet.

I am using self-hosted wallet and I am not changing that. If it is not my keys it is not my coins on the chain and no complete control.

If you want to hold you coin yourself, you have a lot to learn.

How many people can sacrifice a device as airgaped, the hardware wallet are not as expensive as some device you want to use as air gapped.

I don't think hardware wallets are bad if you work use them accordingly, the cold card made some people regret for using them. That's a challenge we have learn and we need to learn from the mistakes and improve our security. Even the hardware wallets are gong to be improved too. They might start producing versions that will allow users to generate their entropy just to be safe and not think if the hardware wallet is secure for the entropy.

Self custody beats non custody any day any time. The Bitmart exchange is yet to process withdrawals of people that has there money stuck on the exchange. Big disadvantage of non custodial wallet.

[Dreadboost]

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again. I mean a lot of people haven’t even recovered from the first incident and loses.
Is this not leading to where self custody is going to be disregarded? We know the advantages but the losses are brutal and not easy to take on. What the best form of cold storage? What could be the possible solution to this?

Trust is lost on Coldcard, not on self-custody. Self custodian wallet remains the best option for me and many people. Because Coldcard was vulnerable to an attack, it doesn't mean every other self-custodian wallet out there is vulnerable to the same attack.

What I want to suggest might not be suitable for some persons because they might need to sell their Bitcoin during emergencies but truly it can help if someone intended to hold their Bitcoin for a long time in a cold storage. So, the idea is to "time lock your Bitcoin." If you are holding your Bitcoin in a cold storage which you intend to hold it for a long time (4 years or more), you can just lock the coin in that wallet for the period of time you don't want to spend it, meaning that even the hackers can not touch your Bitcoin because it's locked. Second idea is to use open source wallets that allows you to set pass phrase, so that aside the seed phrase, there is a second security to your wallet, the hacker might have your seed phrase but not the pass phrase.

Self custody should always be considered greatly because even the centralized custody is not 100% safe, there have been several hacks on CEX and huge amount were lost.

Both options make a lot of sense, but I will go for the first option. According to my goals, longevity or duration I like to hold my BTC for, that is how long I am going to set a time lock. Hackers will be disappointed if they can't access the coin.

[Frankolala]

Coldcard is not an open source wallet and the vulnerability was from the wallet firmware. As for Trezor wallet Data breach, is sad to see that you gave put your data for shipping of your wallet and it was breached which can lead to a wrench attack any time. I think that the best solution is for Trezor to have their branch in most countries using their wallet for secured shipping.

[Hypnotizer]

_snip

“This month has certainly been a terrible month for hardware wallets” and you know there’s no system that is perfect and free from issues or problems, we just have to learn how to minimize those issues. Hardware wallets when used properly are still the best and they’re still better than keeping your coins in custodial wallets. And also, using Hardware wallet isn’t the only form of Cold storage.

Coldcard is not an open source wallet and the vulnerability was from the wallet firmware. As for Trezor wallet Data breach, is sad to see that you gave put your data for shipping of your wallet and it was breached which can lead to a wrench attack any time. I think that the best solution is for Trezor to have their branch in most countries using their wallet for secured shipping.

I don’t think having a branch in most countries is a viable option right now, I think the best thing is to delete customers data immediately the hardware wallet is delivered to them and they confirmed they’ve recieved it, why do they even keep the data in the first place?

 Trezor are now considering anonymous delivery after this data breach and that mean the delivery company wouldn’t have much of your data again and you’ll be free of such thing as data breach.

[Rruchi man]

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again.  

To avoid becoming a victim for the second time, you have to learn what went wrong the first time and make sure we take corrections from it.

Like I already said in
another thread that talked about a similar topic,

What it just opens up is a new door of inquiry on how self-custody can be made safer and better because sometimes it takes some loopholes and exposure of this sort for growth to take place, and what I just see happening is self-custody taking on that level because this opens up a new door of consciousness and awareness for people that just having their Bitcoin kept offline in a wallet is not enough.

With this new development, there will be a lot of intentionality on the model firmware version of your hardware wallet because you now have the understanding that not just any wallet is enough.

[Grace333]

It's quite unfortunate that self-custody had to experience something like this. The issue with Coldcard will definitely make a lot of people distrust hardware wallets, and thopeopleons includes me. I now prefer to use the traditional storage medium, which is a cold wallet and a paper backup stored in a good location. At least with this storage medium, we haven't heard any funny story about an external entity snatching away our coins from our wallet.  Maybe all that glitters isn't truly gold.

[Cryptohygenic]

Make we no dey misquote the news about the incident over the privacy compromised of the two hardware wallets way recently encountered security bugs, some dey spread the truth behind the incident wrongly.
Aftermaths the two notable hardware wallets still remains secured and reliable as usual, the Trezor weakness no entirely affect all user's nor the network security interface, the fault from their delivery company way go mishandle user's information way ordered for the hardware which information includes names, contacts and residential addresses.
That of Coldcard na misconduct of particular model of the hardware making seed phrase generation vulnerable to predict by third parties.
Last last the companies also take headcount of the few victimized user's meaning say no be all user's e affect.

[knowngunman]

It's quite unfortunate that self-custody had to experience something like this. The issue with Coldcard will definitely make a lot of people distrust hardware wallets, and thopeopleons includes me. I now prefer to use the traditional storage medium, which is a cold wallet and a paper backup stored in a good location. At least with this storage medium, we haven't heard any funny story about an external entity snatching away our coins from our wallet.  Maybe all that glitters isn't truly gold.

Despite the ColdCard incident, hardware wallets still remain one of the best option we have to store our coins securely. What happened with ColdCard is just a proof that nothing is 100% perfect. The good thing is that the problem was identified and people were advised to take appropriate measures even though the coins were lost. The traditional way is a good alternative too but it also has risk too. Where do you think you can keep the paper securely for a long time without it being damaged or even stolen? Even banks where we believe we can keep things for safety sometimes get robbed. Of course, the incident is very concerning but it is not a good idea to abandon hardware because of this.

[Odogwu-Blockchain]

No matter how you want to put it this person will definitely loss some confidence and trust in the self custody because he wouldn’t want to be a second victim again. I mean a lot of people haven’t even recovered from the first incident and loses.
Is this not leading to where self custody is going to be disregarded? We know the advantages but the losses are brutal and not easy to take on. What the best form of cold storage? What could be the possible solution to this?

The same way people be recommending other decentralized wallet too, who knows something might happen to it in the future, this just making me loosing interest in keeping crypto in any wallet again, because the risk is getting too much. The other day trust wallet notified every users to create new in accordance with a snapshot given, that whoever fail to create new wallet within certain months might get vulnerable to hackers- what a messed up information from a decentralized wallet.

To be frank, nowhere is really safe again.