What is going on?
This is not a vulnerability in bitcoin itself, but in the way some COLDCARD wallets generated their seed phrase. Hundreds of wallets have already been drained, and Coinkite confirms the flaw has actually been exploited.
When are you at risk?
Based on current information, you may be at risk when:
- you use a single-signature COLDCARD Mk3;
- the wallet was created between 2021 and 2023;
- you don't use a passphrase;
- you didn't use dice rolls when generating the seed.
Do you use a passphrase, or did you generate the seed with enough dice rolls? Then the risk appears considerably smaller.
What exactly went wrong?
A seed phrase forms the basis of your wallet's security. It has to be generated completely at random, so no one can reconstruct the same key.
Because of a firmware error, since March 2021 the COLDCARD in some cases used a much weaker source of randomness than intended. This created a much smaller set of possible private keys, so an attacker could work them out with enough computing power.
For the average user, this is what matters most: if your wallet falls under the affected situation, a firmware update alone is not enough. The seed itself stays vulnerable.
Important: a firmware update alone does not fix this. If your wallet falls under the affected situation, your seed stays vulnerable until you move your coins to a new seed phrase.
What should you do?
Do you recognise your situation above? Then several security researchers advise taking action as soon as possible.
- Create a new wallet with a completely new seed phrase.
- First check with a small test amount that everything works correctly.
- Then move your entire bitcoin balance to the new wallet.
- Don't use the old seed phrase after that.