Coldcard Hack Exposes Vulnerability in Hardware Wallet Security

Hackers have stolen an estimated $116 million in Bitcoin from Coldcard hardware wallets over the past week, marking a significant breach of security in the crypto industry.

The hack is particularly surprising because it targeted users who had taken extra precautions to secure their assets, using their own randomness when generating passwords for their wallets.

The vulnerability was traced back to a 2021 software update that reduced the Coldcard wallet's password generator security from 128 bits to as low as 40 bits, making it easier for hackers to breach users' accounts.

The hack has shaken investor confidence, with Bitcoin's price dropping by around $2,000 in the three days following the first wave of hacks on July 30. However, the price has since recovered.