This is a follow up to an article I wrote back in January called Ironies of Safety vs. Risk for Personal Self-Sovereign Assets. Since then, we’ve seen a rise in violent physical crime related to crypto. Most of us generally enjoy being correct in our predictions about the future. This isn’t one of those times. In any case, even though it’s been less than half a year, it’s been an interesting period and it’s time to re-visit this.

Have you ever seen or been involved with violence up close; either in the moment or the aftermath? I have. I’m not talking about just your schoolyard fights as a kid. I mean as in someone got seriously damaged. My experience has been mostly doing volunteer work in emergency medical services. And those incidents have typically been spur of the moment anger. Bar fights. Maybe something else. Such things can be a little scary. But what about the threat of violence? Based on a plan no less, and not just you, but maybe your family. That – to me anyway – has more anxiety.

This is what has been happening more in crypto. You’ve probably seen it in the news. Bad guys going after those they know or believe hold crypto assets. Intentional targeting. With threats of violence. Are you at risk? Anything you can do about it?

Chances are most of your day-to-day typical personal and business financial assets are reasonably secure. Sure, you can get mugged or a bank or brokerage account could be compromised. Even so, for the most part your risk will be small money on your person or some degree of limited liability, (or at least a paper trail), for account compromises. With crypto though? If you’re holding a lot of it, we’re back to the wild west. You could have the most sophisticated password management system in the world. But what are you going to do when the bad guy is holding a gun to your kid’s head?

And this is happening. Increasingly. For years I’ve thought this to only be a matter of time. Why? It’s fairly simple. When reporter Mitch Ohnstad asked American bank robber Willie Sutton why he robbed banks, the answer was, “Because that’s where the money is.” In the U.S., when When Automatic Teller Machines (ATMs) in the U.S. started showing up in the late 1960s and 1970s, this led to new types of crimes. Escalation was gradual as criminal innovation lagged adoption, but increased in the 1980s with outright coercion, and also “shoulder surfing” and card skimming. Like crypto, ATMs gave users more personal control over assets and thus, more personal exposure. Eventually, ATM camera surveillance, panic buttons and transaction limits, better lighting, etc. helped mitigate this. (Though it’s still a problem. See: ATM fraud: The evolution of an epidemic) With ATMs, society had to adapt with behavioral changes, design improvements, and regulation.

Crypto may be following a similar arc, but with even higher stakes due to the irreversibility and global portability of digital assets. And ironically, perhaps privacy. To compromise ‘traditional’ barriers to theft will obviously entail some risk. And the risk/reward will vary by criminal cohort. A down and out drug user with little to lose may not care about risk of arrest from a physical assault of an ATM user, even for a low reward of $20. But a higher end criminal likely doesn’t want to rob a home where there may be a gun owner or a dog if they can avoid it. Similarly, the bar may be technically higher to compromise financial accounts, (such as bank or brokerage), and manage value extraction before an electronic paper trail is followed. But crypto? The self-sovereign crowd is fond of saying, “Not your keys, not your crypto” to promote full control of your own wallets and assets. Unfortunately, this means if you went all in on crypto and put a couple hundred thousand worth of assets somewhere, (which might be most of your savings), all it might take to remove that from you is a random evening stroll into someone with a crowbar, knife, gun, whatever. Remember that unlike a typical theft or home invasion, chances are you need to be personally involved here. Sure, someone might break into your house when you’re not home and search for your little yellow sticky note where you foolishly wrote down your passwords or crypto wallet keys, but chances are this will be a more personal invasion. You’re going to be spending some quality time with an attacker who needs to extract your information, then execute a trade before leaving so you can’t change anything. Ideally they figure that’s that and you might not even be able to prove much anyway, so they don’t just kill you on their way out. Also ideally, you’ll regain consciousness or get the ropes off before you get hungry or have to use the bathroom.

There’s ways to maybe mitigate this as well, (and I’ll go into some of them soon), but they’re still fairly complicated for a typical user vs. a high net worth individual who’s got solid technical support. If you’re just playing a bit with crypto, then so what? You lose some money. But if you’ve got any “real” degree of assets in this space, you’d better do some more education and take some protective steps.

Some Quick Level Sets

Let’s just level set in a few sentences: It’s time to move past the skeptics about crypto. Crypto is a thing now and will increasingly be a thing in the future. However user hostile initial user experiences were and still are, whatever the challenges may be, the many use cases for crypto are showing themselves to have very real value. 1Q2025 crypto market cap was about $2.8T, down after reaching $3.8T in January. (2025 Q1 Crypto Industry Report) Volumes are generally up over the years for trading, remittances, transfers of various sorts. As we move through 2025, we’re seeing multiple countries moving into or considering Bitcoin for at least some of their foreign reserves. A great deal of the action here is commercial. That is, it’s behind the scenes in managing global payment rails or internal corporate transfers and so on. As things accelerate though, we’ll see more at the consumer and household level.

Crypto is here. It’s staying. It’s growing. The mess of the interfaces and challenges in use will be mitigated over time. In the 1990s, people stuttered over trying to say WWW and interact with any website. Now… well… a lot of websites and apps are still challenging. But we’re all in.

Great. For any decent sized firm, services and best practices are increasingly available for security and safety. But for individuals?

Regarding All Solutions

Your first goal is to not be a target, but assuming you become one, the question is how to escape without being killed or badly injured. The trick will be the need to demonstrate your funds are protected beyond a certain amount while not aggravating your attacker to the point where they decide in anger to simply punish you in any case. Perhaps your only recourses might be a) give them whatever your smaller limit transaction might be, b) convince them it’s not worth it to go from attempted theft to actual assault when there’s zero to be gained. You may get away with this. After all, these people are perhaps evil, but not stupid.

The Unique Nature of Crypto Custody

Some argue that custodial wallets aren’t really “wallets” at all since you don’t have the keys. Whatever. Call them wallets, call them accounts, one good thing here is that these are easy. Yes, your funds are at risk of hacks here as well. And you don’t have things like FDIC insurance. But assuming these are reasonably secure in and of themselves, how do you deal with the physical risk issue?

Many of these services, (such as Coinbase, Kraken, others), have various means to prevent unauthorized or coerced transfers. You might be able to trade all you want, but there can be hard withdrawal caps such as daily send limit, unless there’s special setups. There are typically daily limits by default with varying account verification levels, withdrawal whitelisting, time delays on new addresses, and for some advanced users, custom policies and role-based controls.

The very principles that make cryptocurrency revolutionary also introduce unique security vulnerabilities when it comes to physical threats.

Self-custody means self-responsibility. When you hold your own private keys, you are solely responsible for their security. There’s no bank or institution to call if your keys are compromised through physical coercion. There’s also no centralized authority to reverse a transaction or freeze an account. Once a cryptocurrency transaction is broadcast to the blockchain and confirmed, it is irreversible. There’s no “undo” button, nor can a central authority freeze funds, even if they were transferred under duress. (You may have heard of some crypto projects where a major hack was reversed by freezing some kind of blockchain or smart contract. This is true, but very rare, and only for massive things. And in the sweet irony that is irony, hardcore crypto folks don’t even like this because it’s not censorship resistant. That is, if you can stop something bad, you can stop anything. Which is hardly all that free and sovereign. Again… that’s the thing I’ve always loved about irony. It’s so… ironic.)

Anyway, this leads – generally – to instant transfer, irreversible transactions. While this enables rapid global transfers, it also means that once coerced into sending crypto, there’s no recovery mechanism within the system itself. The attacker can quickly move the funds to another address, making them virtually untraceable in the traditional sense. Finally, anonymity coupled with decentralization makes users more attractive targets and harder to trace attackers. While pseudonymous, the perceived anonymity of cryptocurrency transactions, coupled with its decentralized nature, can make users more attractive targets for criminals who believe their illicit gains will be harder to trace compared to traditional financial crimes.

Real-World Cases of Physical Threats

The rise of physical threats related to crypto is not theoretical; it’s a grim reality that has emerged in recent years. These incidents range from targeted home invasions to street-level “crypto muggings.”

News reports have increasingly documented cases where individuals known or believed to hold significant cryptocurrency have been targeted. These can include:

• “Crypto muggings”: Individuals are approached in public, sometimes after being tracked from a crypto event or known to be involved in the space, and forced to unlock their phones or hardware wallets to initiate transfers.
  
• Home invasions: Criminals force their way into a crypto holder’s home, often at gunpoint, and compel them to transfer funds from their digital wallets.
  
• Kidnappings for crypto ransom: In some extreme cases, individuals have been kidnapped with the explicit demand for cryptocurrency as ransom.

While specific names are often withheld for victim privacy, reports from law enforcement agencies and cybersecurity firms highlight patterns. One widely reported case involved a man in New York being held at gunpoint and forced to transfer $1.8 million in Ethereum. Another saw a victim forced to drive to their home to access a cold wallet. While official, comprehensive statistics are still emerging, reports from organizations like Europol (see: Internet Organised Crime Threat Assessment (IOCTA) 2024) and various cybersecurity firms indicate a growing trend. News outlets like The Wall Street Journal, The New York Times, and specialized crypto news sites frequently cover these incidents, underscoring the escalating physical risk.

Comparison with Other Asset Classes

Understanding the unique physical risks of crypto requires a comparison to how other asset classes are typically secured and stolen.

Traditional Financial Holdings (e.g., bank accounts, stocks)

Your bank account or brokerage holdings are held by regulated financial institutions. While you might be coerced into giving up your login credentials, the institution itself has multiple layers of security, including multi-factor authentication, transaction monitoring, and often manual review for large or unusual transfers. These holdings are custodied by institutions and not easily accessible under duress without authentication.

Transfers of traditional assets typically involve intermediaries (banks, brokers) who have processes for verification and security. This slows down the transfer process and creates opportunities for intervention. Victims can notify authorities to freeze transactions or accounts. If your bank account is compromised, you can immediately contact your bank and law enforcement to freeze transactions or accounts, limiting potential losses. Banks and brokerages employ sophisticated fraud detection systems, and institutions provide fraud detection and insurance. Furthermore, many traditional accounts are covered by government-backed insurance (like FDIC in the U.S.) up to certain limits, protecting against institutional failure or certain types of fraud.

Physical Portable Assets (e.g., gold, cash, gems)

Like crypto, physical assets such as cash, gold bullion, or valuable gems can be stolen through direct physical force. If someone takes your physical cash, it’s gone. These assets also pose physical risk due to their tangible nature and immediate transferability.

However, the key difference is that these assets must be physically located and transported. An attacker needs to be physically present to take them. You cannot “send” physical gold remotely, as they still require physical possession and cannot be sent remotely. This limitation, while seemingly a disadvantage or similar to an in person coercion of an account, also limits the speed and global reach of a theft.

Crypto as a Hybrid Risk

Cryptocurrency presents a unique hybrid of risks, combining the immediate transferability of physical cash with the remote accessibility of digital assets, but without the traditional safeguards. Crypto is portable like gold, but also remotely transferable. You can carry your entire crypto fortune on a small hardware wallet or even just memorized seed phrases. This makes it incredibly portable, similar to gold. However, unlike gold, once you are coerced, that fortune can be instantly transferred across the globe with a few clicks, making physical presence for the transfer itself unnecessary.

Crucially, crypto is not easily recoverable or insured. As discussed, the irreversible nature of blockchain transactions means stolen crypto is rarely recovered. There is no equivalent of FDIC insurance for self-custodied crypto. Finally, it’s perceived as easier to liquidate and harder to trace. While sophisticated blockchain analysis is developing, criminals often perceive crypto as easier to liquidate into fiat currency and harder to trace than traditional stolen assets, increasing its attractiveness as a target.

Personal Security Implications

Given these risks, individuals holding significant crypto assets must adopt a multi-faceted approach to personal security.

When it comes to home security and operational security (OpSec), the most paramount rule is to avoid disclosing crypto ownership. Do not discuss your crypto holdings, investments, or involvement in crypto with anyone you don’t absolutely trust. This includes social media posts, public forums, and even casual conversations. As a practical matter, it’s probably too late for that. People often discuss trading in online forums, at parties, wherever. For those with substantial holdings, consider investing in robust home security systems, including alarms, reinforced doors and windows, and potentially a dedicated safe room to harden your physical environment and make your home a less attractive target for opportunistic criminals. But really, the more important thing is to consider making the bulk of your funds largely inaccessible, even to yourself, except perhaps for the amounts you are actively trading. And even then, set them up to make withdrawal a major undertaking. You’re basically trying to make sure there’s more risk than reward for targeting you.

Regarding travel risk, holding significant crypto on a hardware wallet or having easy access to seed phrases while traveling abroad significantly increases vulnerability. If you’re targeted in a foreign country, recovery options may be even more limited. Consider using custodial services for large amounts when traveling or limiting the crypto you carry.

Advanced attackers can use blockchain wallet tracking to identify significant holders and potentially link them to real-world identities, creating a direct threat. In spite of what you’ve heard about crypto being private or pseudonymous, the reality is most people can likely be found by clever and motivated attackers. If the new shoes you left in your shopping cart at some esoteric shopping website can ping you with reminders via email and when you visit some little online forum somewhere, do you really think someone can’t somehow tie your crypto wallet back to you? Yes, it’s different. But not terribly much. It only takes one identifiable link, on IP address, one hack of an on ramp service… once a wallet id / account is tied to a real world identifier… Tag! You’re it.

Solutions and Mitigations

Your first goal is to not be a target, but assuming you become one, the question is how to escape without being killed or badly injured. The trick will be the need to demonstrate your funds are protected beyond a certain amount while not aggravating your attacker to the point where they decide in anger to simply punish you in any case. Perhaps your only recourses might be a) give them whatever your smaller limit transaction might be, b) convince them it’s not worth it to go from attempted theft to actual assault when there’s zero to be gained. You may get away with this. After all, these people are perhaps evil, but not stupid. The great irony here, of course, is that you’ll be intentionally making it more challenging to operate with our self-sovereign totally in your control funds. Maybe custodial funds aren’t so bad after all. Remember, the main benefit to some of these crypto funds is as much – or more – philosophical and political than practical. If you’re concern is government taking things from you? OK, crypto. If you really believe crypto may be a safe(r) haven for funds than fiat currencies when traditional currencies fail? OK, crypto. If you think things will mostly work out just as they always have, (even after recessions and so on), well… maybe too much in crypto isn’t a good idea. For you. This is the choice. Unless you’re willing to do the work to protect your assets when you’re essentially going to behave as your very own “Bank of You.”

Custodial Wallets

Some argue that custodial wallets aren’t really “wallets” at all since you don’t have the keys. Whatever. Call them wallets, call them accounts, one good thing here is that these are easy. Yes, your funds are at risk of hacks here as well. And you don’t have things like FDIC insurance. (At least not yet.) But assuming these are reasonably secure in and of themselves, how do you deal with the physical risk issue?

Many of these services (such as Coinbase, Kraken, and others) have various means to prevent unauthorized or coerced transfers. You might be able to trade all you want, but there can be hard withdrawal caps such as daily send limits unless there are special setups. There are typically daily limits by default with varying account verification levels, withdrawal whitelisting, time delays on new addresses, and for some advanced users, custom policies and role-based controls. These features can act as a crucial speed bump against coerced transfers, giving you time to alert authorities or for the attacker to realize the futility of their efforts. You might be thinking “so what?” But the reality is, not many bad guys can easily hold on to people for days or weeks without serious risk to themselves. You’re just not a good target any more than the bad guy wants to rob the house with the barking dogs.

Cold Wallets with Time Locks or Multisig

Implement smart contracts or protocols that delay withdrawals or require multiple parties to approve from a cold wallet. This means even if an attacker gains access to your keys, they cannot instantly drain your funds. Similarly, multi-signature (multisig) wallets require multiple private keys to authorize a transaction. For example, you might need two out of three keys (yours, a trusted family member’s, and a lawyer’s) to move funds. The inherent delays or the need for multiple parties to cooperate can significantly deter attackers expecting instant transfers who are looking for immediate gratification and fear prolonged exposure. Using such tools complicates things. Only you can decide at what asset level this effort becomes worth it.

Social Recovery and Shamir’s Secret Sharing

Shamir’s Secret Sharing is a cryptographic algorithm that allows you to break up keys among trusted parties or devices. This allows you to break your private key (or seed phrase) into multiple “shares.” A certain number of these shares (e.g., 3 out of 5) are required to reconstruct the original key. You can distribute these shares among trusted individuals or store them in different secure locations. Social recovery mechanisms, often built on smart contracts, allow a group of designated “guardians” to help you recover access to your wallet if you lose your keys or are coerced. However, it’s crucial to use well-audited and reputable implementations of social recovery and Shamir’s Secret Sharing, as vulnerabilities in the underlying smart contracts could negate their security benefits. As the Paradigm article “Demystifying the North Korean Threat” highlights, even sophisticated schemes can be exploited if there are weaknesses in their design or implementation. Just remember if you need 3 out of 5, you’d better hope a few of your buddies aren’t in the same car wreck.

Multi-location Seed Storage

Reduce the risk of coercion by ensuring no single person has full access. Never store your entire seed phrase in a single, easily accessible location. Distribute parts of it across multiple secure, geographically diverse locations. This way, even if you are physically coerced, you can truthfully state that you do not have immediate full access to your funds. The attacker would then have to track down multiple locations, significantly increasing their risk and effort. You may get to keep your money here. Probably your life. Though also probably have a high likely hood of a non-trivial beating.

Crypto Custodians or Trust Services

For individuals with very large crypto holdings who prefer to offload the security burden, professional crypto custodians or trust services offer a solution. These are often regulated entities that employ institutional-grade security measures, including multi-signature schemes, cold storage, robust cybersecurity, and often insurance policies. By choosing to offload responsibility to regulated entities with risk controls, you give up self-sovereignty but gain significant peace of mind regarding physical threats. If you have this level of wealth, you may already be employing personal security. But even if not, your funds are protected similarly to your bank or brokerage. If you tried to do some massive short term transaction to some odd place, the company isn’t going to do it. They’ll more likely call the police. That’s what you signed up for in the first place.

Legal and Regulatory Protections

As crypto adoption grows, there’s a pressing need for legal frameworks for recovering stolen crypto that facilitate the recovery of stolen crypto assets. This includes improved international cooperation for tracing and freezing funds, as well as clearer legal avenues for victims. This clearly won’t work for failed states or internationally lawless states where crypto theft is actually an intentional revenue source and outright have cybercriminal safe zones. (How Myanmar Became a Global Center for Cyber Scams, Cryptocurrency in the War Zone)Additionally, promoting public awareness and law enforcement training is crucial. Educating the public about the physical risks of crypto and training law enforcement agencies on how to investigate and prosecute crypto-related physical crimes are crucial. This includes understanding blockchain forensics and the unique challenges of crypto theft. This, however, is obviously not something to count on any time soon.

Policy & Community Responses

Beyond individual actions, there’s a growing need for broader policy and community-level responses to address the physical risks associated with crypto.

A key question is: Should crypto wallets have emergency features (e.g., duress passwords)? The idea of “duress passwords” for crypto wallets is gaining traction. This would involve a secondary password that, when entered, triggers a predetermined action; perhaps sending a small amount of crypto to a decoy address while alerting a trusted contact or initiating a time lock on the main funds. This could give victims a safe way to appear compliant without losing all their assets, but more importantly triggering an immediate call for help.

The core ethos of cryptocurrency is decentralization and self-sovereignty. However, this must be balanced with the practical realities of personal safety. The community needs to explore solutions that enhance security without compromising the fundamental principles of decentralization, balancing decentralization with personal safety.

Hardware wallet manufacturers could integrate duress features. Centralized exchanges could further enhance their security protocols to detect and prevent coerced transfers. Decentralized finance (DeFi) platforms and smart contract developers could explore incorporating more sophisticated security features like time locks and social recovery mechanisms directly into their protocols. This highlights the role of hardware wallet makers, exchanges, and DeFi platforms in enhancing user safety.

Conclusion

Cryptocurrency offers unprecedented financial power and self-sovereignty, but it comes with unique personal security trade-offs that are starkly different from traditional finance. Holding crypto safely requires a proactive and comprehensive approach that encompasses both robust technical safeguards and thoughtful physical precautions.

The “Wild West” narrative surrounding crypto security is evolving, not just in terms of digital threats, but increasingly in the physical realm. True decentralization must include decentralized thinking about personal risk and security architecture. It’s no longer enough to just protect your digital keys; you must also consider how to protect yourself and your loved ones from those who seek to coerce them.

“There’s two classes of failure: those who thought and never did, and those who did and never thought.” – Laurence J. Peter

As product people, we may have some dev experience. Or not. Either way, we should know about risk. We know when deploying products the bottom line is what value we’re putting out there and is it worth more than the costs. The risk comes into play depending on how far out on the edge we’re going. Upon failures, regardless of cause, who takes the first hit and is invited to seek out other career options? Typically product. Perhaps a whole division. And yes, perhaps a whole company. I’ve seen this up close and been a part of it a couple of times. Still, when building the new, at some point we have to do as Richard Branson says, “Screw it, let’s do it.”

I understand I might be hopping on this train bit late. While I thought my rant was semi-on-time, while typically sitting on my draft over weeks, others have piped up and said things well or better. Such as this thread from Simon Wardley about Vibe Coding in general.

Fine. OK. So I’m not first. That’s ok. Here’s my perspective from the product side anyway…

Here’s the Too Long, Didn’t Read (tl;dr): I believe the whole Vibe Programming thing is going to result in some tragically bad outcomes. Yes, perhaps also some exceedingly rare big wins. But mostly not. And yes, many of us now have spectacular tools for faster prototyping and testing. That’s great. Will this collective benefit be worth the costs of what I think might be some stunning failures coming soon to a web thing near you? Maybe. Tough call. Stay tuned. Now I have to mention my favorite quote from that Wardley comment thread I came across: “Just make sure you hire lots of really good lawyers and fire extinguishers then. Or, hire some software engineers … you’ll need them.”

Here’s my bottom line and if you buy off on it, you can just skip the whole rest of the article:

The latest Gen AI tools for coding and product design and production are amazing. I’ve quickly adopted them myself and find them super useful. And yet, they’re still super scary. Anyone actually delivering production product with these things is sending a lot of risk and waste out into the world. And I think we’re going to sense the fallout from that soon enough.

[Read more…]

Sometimes things happen in adjacent markets or industries that can impact us in unexpected ways. I’m a product person, not a finance person. But part of our role as product people should be to look around corners even if they’re a bit outside our typical realm. To try to understand what’s coming next. Because macro trends, (or as author John Naisbitt called them way back in 1988, Megatrends), are things we can take advantage of or potentially be crushed by.

What’s happening with global finance could easily impact a lot of our products. Especially in terms of how we handle payments, crypto, AI and any international interactions. I’ve noticed some finance types talking about the potential for de-dollarization due to crypto trends. But I think a lot of what I’ve seen is missing an entirely separate, but related, trend in AI. Specifically, trends in agent capabilities that could be a major catalyst for acceleration in crypto financial capabilities.

As I’ve been working a bit with both blockchain and crypto technology, I’m noticing more of a convergence. Or maybe a collision, of two formerly somewhat separate industries. In blockchain, ERC-4337, Account Abstraction, we’re going to see more functional crypto wallets. (Plain language takeaway: We’ll see easier to use tools for doing crypto things.) And we also have EIP-7521, “The Intent Standard.” (Plain language takeaway: This is a structured format for expressing user “intents” in Ethereum-like environments. So instead of submitting exact transaction steps, users express desired outcomes (e.g., “swap 1 ETH for best available USDC”), and decentralized solvers determine the optimal execution path. Again, a major jump in ease of use.) As well, we’re seeing maturing tools and services for institutional players as more start to realize, “like it or not, ready or not, we’re going to have to play here.”

Next up… In AI, we have attempts, (still nascent), battling over MCP (Multi-Agent Communication Protocol). There’s no standard here yet. (Plain language takeaway: This will enable AI agents to exchange structured messages, coordinate actions, and collaborate across systems in a consistent, interoperable way.)

I’m sensing, (or at least, this is my thesis here), when these things grow up a bit, they will potentially cause, (or at least enable), a drastic acceleration of de-dollarization.

[Read more…]