Bitcoin Custody Crisis: AI-Powered Attacks Spark Diversification Push

A recent wave of AI-powered attacks on the Bitcoin ecosystem has led to a renewed focus on diversifying custody methods. The attacks, which targeted various layers of the ecosystem, from physical wallets to exchange services, highlight the importance of spreading risk across different storage solutions.

In response to these incidents, Azul María Alonso, Regional Growth Manager at Tangem, proposed the 80-15-5 rule for distributing Bitcoin holdings among cold self-custody, hot wallets, and exchanges. According to this formula, 80% of funds should be stored in cold self-custody, such as hardware wallets disconnected from the internet, while 15% should be allocated to hot wallets connected to the internet.

The final 5% can remain in an exchange, a centralized platform where private keys are under the control of the company. Alonso emphasized that this rule is not a fixed norm but rather a flexible recommendation, and users should consider their individual needs when distributing their Bitcoin holdings.