Written by: muneeb

Translated by: Plain Language Blockchain

The Coldcard incident brought three lessons. The first is about how to store your Bitcoin; the second is about the impending quantum computing threat; the third is about how to make the BTC ecosystem healthier in the future. Below are the details.

(1) How to Store Bitcoin

The Coldcard incident is particularly regrettable because the affected individuals are those who invested their life savings and who did everything very cautiously. They stay away from high-risk investments, learn about self-custody seriously, and genuinely believe that Bitcoin is the best store of value.

I won't repeat the details of the attack (others have already discussed it). Looking to the future, the best strategy is to diversify your holdings.

Consider putting 20%-30% into an ETF (like IBIT). Compared to directly holding it on exchanges, I prefer ETFs because they offer two benefits: first, the underlying custodians are more diversified; second, a regulated ETF also provides additional legal protection.

Next, put 40%-50% into a multi-key solution like @CasaHODL: one key held by a security company, one on a mobile device, and one in a hardware wallet (like Trezor).

The remaining 20%-30% can be placed in solutions that emphasize self-sovereignty, using different brands of hardware wallets and different sources of entropy to generate keys (suitable for advanced users).

Do not put all your eggs in one basket.

(2) On the Quantum Computing Threat

If future quantum computers can really break encryption systems, what it would look like could very well be akin to your BTC suddenly being transferred from your cold wallet. The community already has a visceral memory of this pain and understands how terrible that feeling can be.

The quantum threat is real, and the time we have to take action is probably only a few years. Rather than downplaying the progress of quantum computing, it is wiser to be more cautious, especially in light of the rapid advancements happening in LLM.

(3) Improving the Health of the Bitcoin Ecosystem

In recent years, certain parts of the Bitcoin community have become overly insular. Many talented security researchers and companies are actually outside the "only do Bitcoin" circle. Most people in the industry have not even heard of Coldcard, and I suspect that top security research firms have likely not audited their code.

Some of the best security talents often choose to keep their distance simply because they do not want to get involved in the disputes and dramatic conflicts that may arise from criticizing some "Bitcoin maximalist" developers. It is time to step out of these self-imposed limits and internal strife.

The Bitcoin community should be more inclusive and welcome engineers who do not only work on Bitcoin. (I know I will likely be criticized for saying this, but I have become accustomed to it.)

Engineers working on other crypto protocols are not inherently "evil." In fact, some of the top engineering talents—especially in security—are precisely outside the Bitcoin circle (for example, Trail of Bits, Asymmetric Research, etc.).

Companies focused on Bitcoin should collaborate more with these security firms and researchers to build friendly relationships and auditing processes.

When Bitcoin is harmed, our entire industry is harmed. Do not self-limit due to ideological reasons; let us work together towards a safer future.