Summary
- Former Ripple CTO David Schwartz proposed splitting wallet access among relatives and friends to strengthen Bitcoin security and inheritance planning.
- Coldcard firmware flaw exposed predictable recovery seed phrases, enabling attackers to steal 1,367 BTC across 4,500 wallets worth roughly $89 million.
- Schwartz’s custody framework separates hardware devices from PIN knowledge, reducing single points of failure for long-term asset protection and inheritance.
Former Ripple CTO and XRP Ledger co-creator David Schwartz has introduced a Bitcoin cold storage strategy following the $89 million Coldcard wallet hack. According to Schwartz, cryptocurrency holders should improve how they distribute wallet access instead of relying on a single storage method. His proposal focuses on reducing theft risks while ensuring heirs can recover digital assets.
The proposal gained attention after attackers exploited a firmware flaw in Coldcard hardware wallets that generated predictable recovery seed phrases, allowing hackers to reconstruct wallet credentials. Consequently, they drained more than 4,500 Bitcoin addresses and stole 1,367 BTC valued at roughly $89 million.
Many cryptocurrency users responded by recommending paper backups for private keys, but according to Schwartz, paper storage introduces several physical risks that users should not overlook. He explained that paper can burn, become misplaced, or be stolen without leaving any trace, therefore making stronger custody practices a better alternative than returning to paper records.
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Schwartz introduces a split-control custody model
According to Schwartz, investors can improve security by separating wallet devices from the information needed to unlock them, beginning with the creation of two additional hardware wallets using the same 24-word recovery phrase and assigning the same PIN to each device.
The owner then gives one hardware wallet to each of two trusted relatives, while sharing the PIN only with two trusted friends who have no family connection. According to Schwartz, those friends should reveal the PIN only after the owner’s death, ensuring no single participant can access the Bitcoin independently while the owner remains alive and allowing heirs to recover the assets without relying on a single individual.
Schwartz pointed to the SecuX W20 as one hardware wallet capable of supporting the arrangement, although he emphasized that the strategy depends on distributing responsibility rather than promoting any specific device.
Coldcard breach shifts attention to custody planning
The Coldcard exploit has renewed industry discussions about cryptocurrency self-custody and inheritance planning. Besides exposing weaknesses in wallet software, the incident highlighted the risks of concentrating access in one place. According to Schwartz, security improves when users eliminate single points of failure.
His proposal shifts attention to human coordination rather than relying entirely on hardware protection. Additionally, the framework aims to balance security with practical estate planning. Each participant holds only part of the information required to access the funds. Therefore, attackers face greater obstacles while legitimate heirs retain a clear recovery path.
Conclusion
Schwartz’s custody model presents an alternative response to the Coldcard security breach. Rather than relying on one device or one person, the framework distributes responsibility while preserving secure access for future heirs.
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