I can tell for sure how much time that's needed for people to move past the trauma, but it also calls for more scrutiny and checking of source code over and over again to make sure there are no vulnerabilities that can be exploited. Being open source alone is not enough.

The hardware wallet and how people view them now will change and the best decision to take is not to move someone's holdings down to centralised entities. Instead, diversifying your holdings into different open-source wallets will best both the hot wallet and the cold wallet.

Now, some users will be more cautious regarding the storage of their assets.

Every year, a large number of people die in car accidents (around 1.2 million, according to online data), yet that doesn't stop the global population from using cars, does it? That is why I believe the recent incident won't "kill" the HW market for these devices. After all, they remain one of the best ways to store cryptocurrencies (with the possible exception of Coldcard). Furthermore, a vulnerability in one company's device doesn't mean that all these devices have suddenly become useless trinkets.

Because they forgot the Mt. Gox and FTX sagas (as well as what happened with other exchanges) all too quickly.

Everyone makes their own choice. There is no need to reproach anyone for that.

Well, not everyone chose the path you described. Some people still remain true to the "traditions" and principles of self-custody.

Do we need yet more predictions that won't affect the final outcome? Time will tell where this all leads. I expect quality control for these devices to improve, as no serious manufacturer would want to repeat Coldcard's "success".

I think you are dramatizing the situation; I believe that peopl (or at least some of them) continue to trust hardware wallets and wouldn't give up self-custody for anything in the world.

Who among those reading this has thrown away their hardware device (unless it’s a Coldcard)? Is there anyone?

I also believe that what is happening now is temporary and after sometime when the panic of what what happened to Coldcard, had died down many Bitcoin holders would reconsider their stance about totally abandoning hardware wallets, many might abandon using Coldcard for a very long time but it won't affect other hardware wallet brands. Although we cannot blame anybody that is in a haste to abandon hardware wallets entirely because before now it's seemed as if hardware wallets were the peak of self custody then this happened to show that they can be vulnerable just like third party custodians. If you compare self custody and third party custody you will agree that despite what has happened with Coldcard that self custody remains the better choice for a decentralized cryptocurrency like Bitcoin. 'Not your keys not your coins' is still relevant despite any self custody setbacks.

Worth reading the vendor advisory before anyone in this thread decides anything about custody models, because one line in it is the actionable part: updating the firmware does not repair an existing seed.
https://blog.coinkite.com/coldcard-mk3-seed-generation-warning/

The failure is in seed generation, not in anyone getting access to a device. Mk2 and Mk3 firmware 4.0.1 through 4.1.9 are affected, and seeds made on Mk4, Mk5 and Q before the fixed releases carry roughly 72 bits of entropy where 128 was expected. Coinkite's exception is narrow: at least 50 fair, independent, private dice rolls at seed creation, and they don't consider that seed at risk from this issue alone. A strong unique BIP-39 passphrase lowers the exposure but leaves the seed as it is.

Which is also the answer to the OP. The guarantee that broke was device-level, not custody-level. Moving the same seed to an exchange fixes none of that. It just puts a counterparty on top of it.

Wise people would not jump into another stuff that bears more risks just because a more secure one has been compromised. The best course of action to take is to take extra precautionary measures and be more educated in updating the firmware, setup backup, and be updated with security advisories.  


Well, it would only take another attack/hack on  custodial wallets, CEX, or even Bitcoin ETFs, for people to realize that everything is vulnerable to hacking and that the most important thing is having full control over your asset. This will not last long when people start realizing again about the weight of the phrase "not your keys, not your bitcoin".

worth splitting that in two. galaxy has this cluster at 1,158.81 BTC from 2,673 addresses, sitting unspent across seven attacker addresses. the mixing that's been reported is a different cluster. nothing is both unmoved and mixed. 

flagged isn't frozen either. those coins can move any time he wants. the wall is at cash out.

and on entropy: a weak seed looked exactly like a good one, nothing to test for. which is why 2-of-3 from three coldcards of the same era isn't three failures, it's one failure three times.

Not forever or leave self-custody but they will be more carefully selecting the hardware wallets. They will research deeper before choosing the wallets so they will be sure that is the best wallets for them.

If they return to centralized exchanges, they will let other party hodl their Bitcoin which is not good. No one knows the exchanges can run how long and nothing bad happening. The effect can be short-lived or a long-lasting one, depends on awareness about the important of the research they will do finding the wallet.

But I guess this will only temporary and people will select the hardware wallet that can help them to hodl Bitcoin.

In a certain way this can be called the "elephant" in the room... since everyone must be aware on how to use private keys/seeds for a certain grade of security. 
As we know there are some cases where we are taking the risks but no one can trust third party keys with substantial amount of funds.
With or without this incident has not changed anything on the protocol by itself. bitcon continue to work pretty fine.
It could be appears something new about the use of AI on exploitation of certain kind of sw/hw.
The industry of HW would continue fine, there is always a market for this. there are many ways to use bitcoin...

People can think ETFs are safer than exchanges because regulations on ETFs are stricter than centralized exchanges but risk still exists. Most Bitcoin Spot ETFs don't store and secure bitcoins by themselves as they likely are fearful that they can do security mistakes and lose bitcoins. Then, they decided to use custodial services with a most favorite one chosen is Coinbase.

If Coinbase has something wrong in security and their treasury exploited, it will cause severe troubles for many Bitcoin Spot ETFs, then exchanges and consequently many cryptocurrency users.

Bitcoin ETF trackers and custodians.
https://blockworks.com/analytics/bitcoin-etf/tracker