Strive Vice President Joe Burnett said in a post on X that the past few weeks may be among the worst in Bitcoin’s history, as many users who bought trusted hardware wallets, generated seed phrases offline, and followed established best practices still lost significant amounts of Bitcoin because of a flaw affecting seed phrases generated by COLDCARDwallet from March 2021 onward.
Burnett said the flaw went undetected for more than five years.
A blow to confidence in self-custody
Burnett said the incident will permanently change how people think about self-custody. Self-custody will remain, he wrote, but it has already been changed for good.
For people who want direct control over large amounts of Bitcoin, he said the standard should be multi-vendor multisig. Keys, in his view, should be generated independently with different hardware and different software, then stored in separate physical locations. If that approach is not acceptable, he said users should use institutional-grade custodians.
The concentration risk of a single hardware wallet
Burnett said the current wave of Bitcoin adoption is happening through ETFs, treasury companies, and institutional custodians, and is being driven largely by people who do not want to become experts in private-key generation, hardware security, firmware, backups, inheritance planning, and physical storage.
He said there is too much concentration risk when a single key generated by one hardware wallet protects a large Bitcoin position.
Institutional custody and Bitcoin’s built-in check
Burnett also said institutional custody could eventually place too much Bitcoin in the hands of large companies, creating risks tied to censorship, seizure, and confiscation.
At the same time, he said Bitcoin’s portability and settlement properties provide an important counterbalance. Users can create a wallet and ask a custodian to send Bitcoin, moving from counterparty risk to direct ownership within minutes.
A transition point for Bitcoin custody
Burnett said that as long as Bitcoin itself remains secure, the failure of one custody model does not invalidate the underlying monetary system. Instead, it forces the market to build better tools, stronger standards, and more resilient custody architecture.
He added that this week may ultimately mark the end of one era in Bitcoin custody and the start of the next wave of Bitcoin adoption.