Bitcoin Core, the main software used by most full Bitcoin nodes, recently released versions 30.0 and 30.1 and it came with a warning that peaked people’s interests on Tuesday. In the absolute worse case scenario, investors actually could lose their funds.
These releases included a change to the wallet migration process — the code that helps users upgrade old wallet formats into the latest versions. It contained a wallet migration bug that could delete local wallet files and permanently lock users out of their funds if there are no backups. In a worse case, that means their Bitcoin (CRYPTO: BTC) gone.
The wallet migration bug discovered in Bitcoin Core this week is a classical case of a hard-to-catch software error. It’s insignificant for Bitcoin as a whole because it’s not a consensus bug and not a network vulnerability. Bitcoin is alive and well, and still seen approaching $100,000 again this winter.
Developers have pulled the affected versions for now until a fixed version is released. But the underlying risk here is tech and portfolio concentration risk due to Bitcoin’s dominance as the cryptocurrency investment of choice, by far.
“Actual Bitcoin holders rarely use Bitcoin Core as a wallet, and instead opt for hardware wallets, or other software wallets and in both cases they usually have a seed backup. Regular holders should not be affected,” said Ivo Georgiev, CEO and founder of Ambire Wallet, a Web3 smart account wallet designed to make cryptocurrency self-custody easier. He said the most likely affected parties are miners, but miners certainly run backups of their Bitcoin so as not to lose them.
“File deletion doesn’t immediately mean loss of funds since most deleted files can be recovered on most systems if not immediately overwritten,” he said.
The official Bitcoin Core notice posted on Jan. 5 clearly states the potential for loss if wallets are deleted, but does not cite any confirmed user losses.
Community discussions on Bitcoin Talk and Github mentioned the danger for legacy wallets, with advice on how to fix it and consensus takes saying that the Bitcoin Core wallets are mainly used by advanced Bitcoiners who would have backups anyway.
Upgrades “should be boring,” said Evgeny Formanenko, vice president of engineering at the SQD Network. “Incidents like this highlight a familiar lesson in infrastructure engineering: state plus mutations plus upgrades equals risk,” he said. SQD is a Switzerland-based decentralized data infrastructure company used to power large-scale blockchain applications.
“Companies need mandatory backups. Infrastructure risk should not be surprising,” he said.
The migratory upgrade over at Bitcoin Core gives credence to some dark cloud investors out there who have been busy trying to convince investors that the system has tech problems that may surprise them. It’s not just buggy tech that can give Bitcoin holders high blood pressure.
Charles Edwards, founder of Capriole Investments, thinks BTC falls to $50,000 if the network fails to protect itself against quantum computing by 2028. His thinking is that these super fast computers will be able to break current Bitcoin encryption and expose users’ private keys to hackers.
Edwards’ warning has nothing to do with wallet upgrades. But it is part of the narrative of how the Bitcoin can be taken out with tech – either through hacked and stolen funds on a vulnerable blockchain, a rare bug, or quantum computers running the odds on passwords.
“If we haven’t deployed a fix by 2028, I expect Bitcoin will be sub-$50 thousand and continue to fall until it’s fixed,” Edwards posted on X on Dec. 16, 2025. “We have to fix this (in 2026), or enjoy the biggest Bitcoin bear market in history,” he said, adding the FTX scandal that led to billions in lost cryptocurrency holdings “will look like a cakewalk.”
Featured Image Credit: Author.
The author owns Bitcoin through the Grayscale Bitcoin Investment Trust.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
