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Culture War Roundup for the week of August 3, 2026

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Grand Theft Crypto, Episode LXXVI

New week is here, time for new culture war happening is here. Maybe it belongs to finance thread, but both cryptocurrency and cryptocrime are now inseparable part of our culture.

Coldcard Hardware Wallet Flaw Linked to $70 Million Bitcoin Theft in 41 Minutes

An attacker drained 1,196 Bitcoin addresses in 41 minutes on July 30, taking 1,082.65 BTC worth about $70.2 million at the time.

Yes, safe crypto technology had proven to be unsafe once again. Follow the links in the article for more nerd details.

Why is this important? This time, this not due any fault or slip at the user side - their only mistake was trusting the professionals of Coinkite business operating since 2013 and considered one of the best by everyone in crypto.

Bitcoin is not to blame, Bitcoin worked as intended. The random numbers generated by Coldcard were not random.

Little parable for non nerds to grok what is it all about:

You have big pot of gold, and are very afraid you will lose it. Where to hide your treasure? You want to stay anonymous, you do not want anyone ever know that you are a rich man.

Fortunately, your bank provides deposit boxes, fully anonymous where anyone with key can come and withdraw the deposit, no questions asked.

Now, you have problem where to hide the key, so you do not lose or misplace it. No worry, you buy safe, made by trustworthy long established manufacturer that is 100% secure from crackers. You put your key inside, and feel relieved.

Until one day, you find the safe empty, the key vanished. You hurry to bank in panic, and your greatest fears come true. Someone was there, and emptied your deposit box. Your treasure is gone.

What happened? The super secure safe was unsafe. There was manufacturing fault that enabled anyone to open it if he knew about it. Some criminal mastermind learned about the vulnerability (For more mastermind points, he worked in the safe manufacturing company and put the fault there himself. For maximal mastermind points, he founded and operated the company himself, in a proper long con.) sneaked to your safe and squirreled away the key.

If your rage is pointed at bank, it is misplaced. Rightful target of your rage is the thief (good luck finding him, the chap can be now in Uruguay, Uganda or Uzbekistan, the world is big) and the safe company (good luck recovering anything from them). Just say farewell to your wealth and learn to love the hobo life.

Now, what are lessons of the episode?

1/ Another proof that crypto hadn't brought world peace and harmony as some more devoted fans promised, but crypto made crime cool again. Grisly, retarded and boring ordinary everyday crime stays, but evil genius was conjured from pages of pulp novels to reality.

2/ Trust no one. If you want to make you crypto stash really secure, you need to make your own random number generator, this means using the gold standard of physics, radioactive decay. No randomer random events can be found in this universe.

Too much work? Say good bye to crypto and invest in white powder. What you put in your nose, no one can take away from you ever again.

edit: links

Here is a linkedin-free writeup. Low entropy key generation is an oldie but a goodie -- I recall when ssh keys generated with Debian had this problem.

For this particular story, I think that the morale is that rather than worrying about increasingly far-fetched modes of attack ("yes, you can keep your key on an airgapped encrypted OpenBSD laptop, but what if someone steals that laptop and manages to brute force the passphrase, would you not prefer some hardware encryption where the chip clears itself after three wrong passphrase entries?"), you should worry about "what if my niche crypto implementation is not as secure as anticipated?"

Also, if you make hardware wallets, auditing that the crypto is implemented correctly seems to be (not to put too fine a point to it) THE ONE JOB YOU HAD? Most failing cryptography fails not because the math is unsound, nor because someone has a quantum computer with sufficient memory, but simply because implementations are hard and people write buggy code. I know enough about crypto to not try to roll out my own implementations. "Key generated from low entropy PRNG" is a failure mode we had before. I recall Truecrypt simply prompting you to type a lot of noise simply because they did not wholly trust their supposed hardware randomness sources.

The #ifndef vs #if thing is likewise fun -- sure, usually it is not that harmful.

I will go out on a limb and say that this seems exactly the kind of bug an enterprising cybercriminal would discover with the help of an unfettered LLM these days. Being a hardware wallet where all the paranoid people park their coins makes it a juicy target, of course.

you should worry about "what if my niche crypto implementation is not as secure as anticipated?"

Or in this case, "What if the person writing it is a blind idiot monkey?"

Getting true random noise is trivially easy in microcontrollers and only a complete idiot would use something like micropython in such security critical application.

Key generated from low entropy PRNG" is a failure mode we had before.

The rather infamous Debian SSH key generation vulnerability was like this, and was way back in 2008. Ironically, that one was introduced by following the guidance of an automated security checking tool, and impacted Debian and related distributions.

Someone did point out this vulnerability was discovered shortly after one frontier model or another was released. But then again, there are new models every day, so who knows.