Victims of the security incident that occurred yesterday are still feeling severe shock and trauma, the incident had an immediate impact on crypto users, where short-term trust for hardware wallets became wary.

I once read in one of the information on X an incident that occurred with a Coldcard wallet, Many investors or crypto users are switching and looking at Bitcoin ETFs at this time, even though the relevant parties are taking steps to tighten supervision and security verification, a sense of trauma still surrounds crypto users as a whole.

I think it will take a long time to restore the positive impact on investors to use hardware wallets to store Bitcoin today.

There is no doubt that this has caused a lot of people to even think twice about Bitcoin in general, and some have changed their mindsets on means of keeping their Bitcoin, but moving them to a CEX is not the better option because security issues with CEX are almost certain all the time. There is a case of Bitmart shutting down without properly notifying its users of the suspension time for deposits, and now they have even restricted withdrawals, and so many people have their coins worth hundreds and thousands of dollars stuck in that exchange and same goes with the FTX fall that affected lots of customers.

I just think, this whole issue will create more awareness for the self custody industry to stay more security conscious and add more layers to their security level if it's possible. And for the effects being long term or short term, I think humans are designed to let go quickly and the incident wasn't of global scale that affects all self-custody wallets, so it will be short-term and improvements will be done in this field to prevent it from happening again.

Hardware wallet is still the best wallet to store your bitcoin regardless of the Coldcard incident. I don't think this will make people no longer rely on hardware wallet because exchanges have crashed and people are still storing their bitcoin in centralized exchange. What I believe will happen is that hardware wallet users will be more careful and wouldn't rely totally on the wallet producer for maximum security.

I would not say "millions in BTC losses" instead, "BTC worth millions of dollars" is much better because the first line could make someone new to this incident think that the Coldcard hack caused people to lose millions of BTC.

No, people won't avoid HW wallets just because of this single incident. Most hardware wallets are still safe, like Trezor, because the community is already discussing flaws or vulnerabilities, so I don't think you have to worry about it that much.

I wouldn't use an exchange unless I knew enough about it. I am sure you haven't heard about BitMart exchange. They have halted withdrawals and given users an August 26 deadline to withdraw, which looks suspicious. Have you heard about it? I am sure you haven't, because if you had, exchanges wouldn't be your choice, but maybe only top exchanges would be your choice.

But exchanges, especially under political pressure, can cause a lot of trouble. Therefore, self-custody should not be abandoned so quickly just because of one drawback.

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.

Someone make a similar post in a different board and my reply was that you will be the one to decide which risk you can manage
Exchanges can never take over from self custody
If we look at the ratio at which hacks, freezing of accounts and shutdown on exchanges to that of self custody
Self custody is still the best option
The coldcard fear caused won't last long

No point living in fear like this to be honest with you. So many people advise avoiding centralised exchanges like Binance etc for storing your assets when many of them actually store them there themselves even though it's not the most secure way logically.

Why? Convenience! More secure ways like hardware wallets etc definitely offer more peace of mind etc, but they lag behind in the convenience department especially when dealing with transactions regularly. The coldcard incident will probably push more users to reputed cexs IMO.

Well, the impact will surely not be permanent because people forget things over time. It is true that it is probably one of the worst incidents that has happened within the Bitcoin ecosystem where a wallet manufacturer became the reason for people to lose so much money, and what makes it worse is that it's a hardware wallet and not a software wallet or custodial wallet where users are usually at the risk of getting compromised. However, people will move on, the market will move on, and over time, using hardware wallets will be normalized again.

There has been so many incidents in the history of this industry where people lost so much money in hacks or other incidents, especially with centralized exchanges where exchanges either got hacked, or bankrupt or scammed people, but we can see that centralized exchanges are still largely used today, which proves that people move on over time and the effects of such hacks or exploits are only temporary and not permanent.

My question is, do all self-custody wallets have this problem? Because in this case, Coldcard actually has security issues like this, while other self-custody wallets don't have this problem. Well, I don't deny that some people panic easily and immediately choose to store their assets on exchanges and ETFs, but they're just handing their assets over to the lion's den --- which only makes them more vulnerable because they're trusting a third party to manage their assets.

This coldcard incident is just one of the lessons that we have learned over the years and that is anything can happen even while being extra security conscious as long as it concerns Bitcoin holdings and investment.  Who's to say that such an incident can't happen to those running to ETF or CEX for safety. It's just one of those things that makes the network grow stronger and self custodians seek out better ways like using multi sig or dice rolls or coin flip mechanics or vaults to secure their asset.

In my opinion, self custody is getting more matured and shows that even trusting devices to hold your asset isn't as secure as you think. You just got to know that and know peace and be rest assured to find a better means to be ahead and secured.