The Vice President of Bitcoin Strategy at Strive, Joe Burnett, described the past week as “possibly one of the worst weeks in the history of Bitcoin.”
The statement suggested that large holders ought to trust institutional custodians more than hardware wallets.
Why did Strive’s VP of strategy call out the worst week in Bitcoin’s history?
A firmware exploit led to the loss of ~1,082 BTC, worth about $70 million, from Coldcard hardware wallets.
The theft caused Burnett to warn large holders about hardware wallets, encouraging institutional custodians instead. The thief pounced on weak seed randomness before carting away users’ funds.
The flaw was found in version 4.0.0. Coinkite shipped that version from a code commit on March 1, 2021, and patched it in version 4.21. Coinkite is the company behind Coldcard.
The price of Bitcoin stayed more or less the same, hovering around $63,000 through the weekend. Although Santiment recorded the most negative Bitcoin social sentiment ever, a reaction that could be traced to the horror of watched-over keys failing.
Why Burnett says the setup was more critical than the mistake
What caused Burnett to be uneasy wasn’t carelessness per se. According to Burnett, victims of the attack purchased a genuine device, generating their seed offline and sticking to the recommended playbook, but still lost their coins. He surmised that a self-custody arrangement with a single point of failure is not strong enough and can break in different ways.
Burnett differentiated between the risk of a self-custody arrangement and how institutional custodians operate. In his view, large firms like Fidelity and BitGo operate differently from the exchange minefield of the pre-COVID era.
Burnett bluntly stated that institutional custodians look to avoid the same trap.
CZ, the founder of Binance, responded to the same attack by urging holders to spread their coins across wallets as “nothing is 100%.”
Strive’s position in the Bitcoin trade
Strive is a company built around holding Bitcoin. Strive trades on the Nasdaq with the ASST ticker, with Matt Cole as its CEO. The company ranks as the seventh-largest public company holder with 20,000 BTC valued at nearly $1.3 billion as of late July.
Burnett is one of Bitcoin’s loudest proponents. He predicts Bitcoin will be at $11 million per Bitcoin by Q1 of 2036. He posits that AI-driven deflation will force central banks to keep expanding the money supply, which will lead to such prices.