Coldcard Exploit Shows Air-Gapped Wallets Are No Guarantee Against Losses
Cryptocurrency holders often hear that their private keys are the key to accessing and moving funds on a blockchain. In fact, the phrase 'not your keys, not your coins' reflects this idea. An air-gapped wallet takes this philosophy a step further by keeping those private keys completely isolated from the internet.
An air-gapped wallet is a type of non-custodial wallet that never connects to the internet or any online networks. This makes it much harder for hackers, malware, and phishing attacks to access a user's funds. Several companies build hardware wallets specifically designed to operate without an internet connection, including ELLIPAL, Keystone, Foundation Devices, Blockstream, and Coldcard.
However, even air-gapped wallets are not completely secure. The recent exploit of the Coldcard wallet, which has resulted in losses totaling $114 million in Bitcoin, highlights this issue. The breach was especially notable because Coldcard has long been considered one of the most security-focused Bitcoin hardware wallets.