What happened in the crypto world today

The crypto market opened Wednesday with three developments that illustrate the biggest challenges currently facing the industry: the struggle over Ethereum's economic policy, the risks existing even in hardware wallets that were considered particularly secure, and the future threat posed by quantum computing to the encryption systems of Bitcoin and other digital currencies.

The main storm is taking place in the Ethereum community after six researchers and developers, including Ethereum Foundation researcher Justin Drake, presented EIP-8363, a proposal for a deep change in the coin issuance mechanism and the rewards received by users operating validators on the network.

The proposal, known as Tapered Issuance Burn, seeks to burn an increasing portion of consensus rewards as the amount of Ethereum deposited in staking increases. When the volume of staking approaches 60.25 million Ethereum coins, which constitute about 50% of the coin supply, the burn rate will reach 100%, meaning the network will no longer issue new Ethereum to pay consensus rewards. The change is intended to be introduced gradually over a period of 18 months, if approved.

Behind the proposal lies a fear that too many Ethereum coins will continue to move into staking. As of the beginning of August, more than 41 million Ethereum coins are deposited in the network, compared to about 39 million in April. The authors of the proposal argue that without a change, more than 55% of the Ethereum supply could be locked in staking by 2028. Such a situation could concentrate great power in the hands of exchanges, institutional entities, and liquid staking providers, causing users to hold mainly derivatives like stETH instead of Ethereum itself.

From the perspective of Ethereum holders, reducing issuance could have a positive effect. As fewer new coins are created, the dilution of existing coin owners is reduced. Combined with Ethereum's fee burn mechanism, a decrease in issuance could even make Ethereum a deflationary asset during periods of high network activity.

However, critics warn that the price could be heavy. Independent validators are required to pay for hardware, electricity, maintenance, and infrastructure, so they might become unprofitable before large companies that operate thousands of validators and enjoy lower costs. The result could be the opposite of the proposal authors' intentions: instead of reducing centralization, the cut in rewards might push out small players and leave control in the hands of institutional entities and large staking providers.

The DeFi world is also expected to feel the change. Ethereum's staking yield serves as a base interest rate for an entire market of loans, liquid coins, leverage, and yield-generating products. A sharp drop in yield will require protocols to reprice loans, collateral, and strategies based on deposited Ethereum. Aave founder Stani Kulechov argued that the move could harm institutional demand for Ethereum and lending activity in decentralized financial systems.

It is important to emphasize that the proposal is only at an early stage. It has not yet been approved, has not been scheduled for the Hegota update, and it has not been determined that it will be uploaded to the mainnet. Discussions on its integration could continue until November, while the Hegota update itself is expected, according to current estimates, only in the second quarter of 2027.

At the same time, the Coldcard affair continues to expand. Galaxy Digital reported that at least 15 different attackers exploited the security vulnerability in the company's hardware wallets. Three waves of attacks have so far caused the loss of more than 1,500 Bitcoin, worth over $100 million. A fourth wave that is still under investigation could bring the total damage to about $130 million.

The weakness was not in Bitcoin itself, but in the way certain versions of Coldcard firmware generated the random information used to produce the wallet's recovery words. An error in the integration of the random number generator caused the system in some cases to use a deterministic and more predictable mechanism than intended, thus significantly reducing the level of randomness of the private key. The weakness existed in certain versions since March 2021 and was actively exploited in July 2026.

The significance for wallet owners is particularly severe. Installing a software update does not fix recovery words that have already been created using vulnerable firmware. Coinkite, the manufacturer of Coldcard, instructed users in the risk group to update the firmware, create a completely new Seed, and transfer the Bitcoin to it. Transferring the same recovery words to another wallet does not solve the problem, because the weakness is in the key itself and not just in the device.

The incident also sparked a debate about the role of artificial intelligence in software security. Industry executives claimed that AI models managed to re-identify the vulnerability within minutes after the details of the breach were published. However, other researchers warned that no blind and controlled test was conducted proving that the models would have managed to discover the problem before the information about it became public. In other words, AI may significantly cheapen and accelerate the discovery of breaches, but it is capable of serving both system defenders and attackers.

The third headline was provided by CNBC host Jim Cramer, who said he intends to sell the Bitcoin in his possession. His words came after IBM CEO Arvind Krishna warned him that within three to four years there will be room to start worrying seriously about the ability of quantum computers to harm the encryption systems on which digital currencies are based.

The quantum threat is not immediate. Today there is no quantum computer capable of actually breaking Bitcoin's signature mechanism on a practical scale. A study published in June determined that it is a real but limited threat, which can be reduced through an orderly transition to quantum-resistant signatures. According to the researchers, the big challenge is not necessarily the development of technological solutions, but achieving consensus and performing upgrades before the threat becomes practical.

Meanwhile, the market's reaction to Cramer's words was limited. Bitcoin is trading around $64,275, up less than 1% in a day, but still about 27.6% lower than its price at the beginning of 2026. Ethereum is trading around $1,625.

For investors, the three developments convey a similar message. The risks in the crypto market are not limited to price fluctuations. Even a technical change in staking rewards can affect the coin's value and the entire DeFi market. Even a hardware wallet can fail if its key generation is flawed, and even encryption that is considered safe today must evolve in the face of future computing technologies.

Bitcoin and Ethereum did not crash following the headlines, but the last day demonstrated once again that as crypto becomes a larger and more complex financial system, investors are required to examine not only the price but also the code, the economic incentives, and the infrastructure behind the asset.

The article does not constitute an investment recommendation.

Elroi Agam: Researcher and investment strategist combining expertise in the capital market, high-tech, and the crypto world. Provides analysis and insights for identifying investment opportunities in traditional and digital assets.