Why the Coldcard and Liquid Network Hacks Were the Worst in Bitcoin’s History

When evaluating the sheer amount of bitcoin lost, the recent exploits of the Coldcard hardware wallet and the Liquid Network sidechain do not rank as the most serious security incidents in the history of crypto. However, they represent a far more dangerous development than the relatively common exchange hacks of the past.

In previous crypto disasters, the faithful could point to viable excuses involving user error, such as the use of centralized, unregulated exchanges or interacting with complex smart contracts that could be buggy and lead to a loss of funds. For example, many feared that the Mt. Gox hack and subsequent bankruptcy in early 2014 would destroy the nascent financial technology, and a similar phenomenon occurred with the collapse of FTX roughly eight years after that. But these exchanges have since been replaced with more serious, regulated options, ultimately culminating in the approval and launch of bitcoin exchange-traded funds (ETFs) from the likes of BlackRock and Fidelity.

That said, these more recent security failures did not occur on completely centralized, custodial platforms where a hardcore bitcoin believer could easily chime in with, “not your keys, not your coins” in the aftermath of the hack. Instead, these situations involved highly trusted systems employed by diligent users who followed well-established security practices.