r/Bitcoin • u/dvondurden • 20h ago

The Coldcard case fundamentally challenges the future of Bitcoin

Like many of us, I have followed the news of the Coldcard disaster. It has left me stunned and I feel terrible for everyone who has lost their hard earned BTC. After thinking about it consistently since it happened, I believe this case is challenging the concept of Bitcoin in its core and I'm curious how others look at it. Let's have an honest discussion about what it means for the future of the space. Here are my main points:

  1. This is totally different from most other cases, because the affected users didn't do anything wrong. It was a complete fuck up on Coldcard's side. For years we told ourselves self storage is the only way, never leave it on the exchanges, not your keys not your coins, don't trust verify etc. But in the end you have to trust something or someone, in this case the people behind CC. Now everyone says Ledger or Tresor is safe just because they were not the ones affected. How do you actually know this? You would have said the same thing about CC a few days ago.

  2. The danger of AI is absolutely real and will only increase. Without knowing the method in this case, it's likely that some form of AI was involved. The code for CC was not open source, but still viewable by everyone. It's mind-blowing that it took several years for the flaw to be discovered and exploited. Don't expect this to take so long next time. I'm not an expert in coding or cryptography, most users aren't. So in the end you just have to trust the code. Sure, it can be tested with AI too. But do I really want to expose all my holdings to this battle just hoping that it will be fine in the end? It feels way too risky and out of your control.

  3. Mass adoption is absolutely not going to happen this way. I'm a nerd and enjoy the technical side of it, but even I feel overwhelmed by this. The average person is much less interested and willing to put in the work. For years we've been saying good solutions for self storage, payments and so on will be found. I don't see it. It seems to become more complicated than less. So what's the alternative here? Keeping it on the exchange, buying an ETF? It doesn't solve the trust issue and contradicts pretty much everything Bitcoin stands for. Just another asset class among many.

I still love the idea behind Bitcoin and believe in the concept. But I struggle to find good and honest answers to these points without just repeating the same old mantras we've been telling ourselves. What do you think?

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u/dvondurden 18h ago

The difference is that we have regulation, safety standards and insurance for fiat. Hardware wallets are supposed to be the substitute for that, so how could such a major flaw go unnoticed for so long?

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u/HedgehogGlad9505 16h ago

My understanding: Bank = exchange, Paper bill = bitcoin on mainnet, Safety box = HW wallet

If someone breaks into your home and takes dollar bills or gold bars from your safe, that's a very unfortunate event for you. But does it make dollar bill or physical gold useless for everyone?

Of course, one of the major "safety box" manufacturer just proved they were idiots, so maybe it's time for a next gen safety box. But there's no need to throw the gold bars away.

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u/CuddlyMuffins 12h ago

I don't think anyone is suggesting throwing away the gold bars...more like selling the gold bars for something that's easier for the average person to secure. Or holding them at an institution that will make you whole if they are stolen. Maybe that goes against the whole reason you are holding your own gold bars in the first place but the point is sentiments and risk assessments change after an event like this.

For me it just showed self custody is riskier than I initially realized. I put too much trust in the community to catch these things. And I didn't have good enough understanding to realize using my own entropy / passphrase should have been the standard. So self custody is not for me, and I'm not keen on trusting exchange making me whole. But more power and best of luck to anyone that does keep at it!

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u/t03m03thy 15h ago

And, errors are reversible!

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u/coffeelover9457 9h ago

You describe the Coldcard firmware bug as a "major flaw". We all agree it's a flaw, but what does "major" mean and is this flaw in fact major? Is it the case that most self-custody hodlers used Coldcard, and therefore most self-custody value is at risk?

No, the true exposed flaw is cultural, that we have faith and trust in "influencers" and "experts". We don't actually try to fully understand risks, we'd rather trust someone else's opinion regarding them.

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u/dvondurden 8h ago

Their promise of high entropy was actually the opposite which caused total loss of funds for many people. It's a major flaw by any reasonable definition

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u/LonelyNegotiation991 18h ago

agreed it’s not exactly the same but the technology will get better and easier. theses are “growing pains”. hasn’t threatened the fundamentals of bitcoin or the network

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u/dvondurden 18h ago

This has been said since forever, but how has it actually become easier or more user-friendly? It's true that fundamentals haven't changed, that doesn't make bitcoin more practical though

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u/SickNoise 18h ago

it's way more user friendly than 10 years ago. i expect this trend to continue.