Crypto▲ Bullish
How a Flawed Random Number Generator Cost $116M in Bitcoin
A Coldcard firmware flaw led to $116M in bitcoin losses from weak private keys. Understand how public key cryptography works and what it means for wallet security.
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In July 2026, researchers found that Coldcard hardware wallets had been generating weak private keys for five years. A build flag in the firmware told the device to skip its dedicated hardware randomness chip. The result was predictable entropy. An attacker reverse-engineered the weakness and began draining wallets on July 30, taking about $116 million in bitcoin before the vulnerability became public.
The incident illustrates a fundamental lesson about public key cryptography. The security of a key pair depends on the randomness used to generate the private key. A 256-bit key is theoretically unbreakable, but a flawed random number generator makes it worthless.
Every cryptocurrency wallet uses a key pair: one private key and one public key. The private key is a random 256-bit number. The public key is derived from it using elliptic curve multiplication on the secp256k1 curve. This is a one-way function. Computing the public key from the private key takes a fraction of a second. Reversing the process requires solving the elliptic curve discrete logarithm problem, which has no known efficient solution.
Wallet addresses are not public keys. They are derived from public keys through hashing. In Bitcoin, SHA-256 and RIPEMD-160 produce a 160-bit hash, encoded as a Base58 string. In Ethereum, Keccak-256 is used, and the last 20 bytes become the address. The hashing adds a layer of protection: an address that has never sent a transaction has never exposed its public key on-chain, offering theoretical resistance against future quantum attacks.