Why Was the Coldcard Failure Possible and What’s The Solution?

Last week thousands of crypto hodlers became victims of an exploit to one of the cold wallet brands that resulted in 1,719 BTC being stolen. I’m referring to the ColdCard incident that you might have heard of. As of right now it’s projected that the total figure will exceed 2,055 BTC (~$130+ million). This estimate includes a suspected fourth wave of thefts and additional addresses currently under investigation. Galaxy Research warns the final number could be higher as more victims come forward.

The issue wasn’t a faulty hardware chip. It was a software bug.

Coldcard’s firmware was supposed to generate seeds using the device’s hardware random number generator. Instead, due to a silent fallback in the code, some devices used a much weaker software random number generator seeded from predictable values. As a result, seeds that should have contained 128 bits of entropy ended up with only about 40 or 72 bits.

If this doesn’t mean anything to you, imagine you need to create a secret password that no one in the universe can guess. To do this, a hardware wallet has a special physical chip inside it designed to act like a high-tech dice tower. In most hardware devices, and when operating properly, it should roll the digital equivalent of 128 dice (for 12-word seeds) or 256 dice (for 24 seed words). This way the number of possible combinations is so huge (more than the atoms in the universe) that no computer could guess it. This is what “128 bits or 256 bits of entropy” means: maximum, unbreakable randomness.

How it works: This chip measures tiny, chaotic physical noises (like electronic static) that are impossible to predict. But Coldcard defaulted to just 40 bits for models Mk2 & Mk3, while models Mk4/Mk5/Q generated seeds with ~72 bits of entropy. This is too weak, and with the use of AI hackers were able to crack these seeds that users generated, and it’s how thousands of users of these wallets ended up losing all their crypto overnight.

I’m proud to say that ColdCard was not one of the brands I ever recommended to my followers, it’s just not one that I used or trusted enough. But what about the other major hardware wallets? How do they generate randomness, and are they safe?

Let’s look at Ledger, Trezor, SafePal, Onekey, Ellipal, Era, Keystone, and Tangem since these are all popular brands that I have reviewed here and I recommended to all of you.

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The Core Problem: Entropy Bits Explained Simply

Before comparing devices, here’s a quick breakdown on the Bits of Entropy.

• 128 Bits (12 Words): The standard for most mobile wallets. It offers $3.4 \times 10^{38}$ combinations. This is currently unbreakable by any existing computer.
• 256 Bits (24 Words): The gold standard for cold storage. It offers $1.1 \times 10^{77}$ combinations. This provides a massive safety buffer against future computing advances.
• The Danger Zone (<100 Bits): Anything below 100 bits is vulnerable. The Coldcard bug dropped security to ~40 bits (Mk3) or ~72 bits (Mk4/5), making seeds guessable by modern hardware in minutes.

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Device-by-Device Breakdown

1. Coldcard (Mk4 / Mk5 / Q): The Cautionary Tale

• Status (Pre-August 2026): 🚩 CRITICAL FAILURE. Due to the “Yasmarang” bug, seeds generated between 2021 and July 2026 had only ~72 bits of entropy.
• Status (Post-Fix): ✅ Safe. Updated firmware now correctly uses the hardware TRNG to generate 256 bits.
• The Lesson: Even with great hardware, a single line of code can bypass security.
• Safety Net: Coldcard offers a Dice Roll feature. If you used this (50+ rolls), your seed is safe regardless of the bug, as the dice provided the entropy.

2. Trezor Safe 5: The “Mixing” Champion

• Entropy Generated: 256 Bits (Default).
• Method: Trezor does not trust a single source. It mixes entropy from three independent sources:
  1. The Device’s Microcontroller (TRNG).
  2. The Secure Element Chip (TRNG).
  3. Your Computer/Phone (Host OS).
• Why It’s Safe: Even if the device chip is flawed (like Coldcard’s was), the entropy from your computer ensures the final seed remains a strong 256 bits. This architecture makes a silent failure nearly impossible.
• Where to buy it: from their official website.

3. Ledger Stax: The Certified Vault

• Entropy Generated: 256 Bits (Internally), though often defaults to 128 Bits (12 words) for user convenience.
• Method: Ledger relies entirely on its Secure Element (ST33K1M5). This chip has a built-in True Random Number Generator (TRNG) certified under AIS-31 and Common Criteria EAL6+.
• Why It’s Safe: The randomness is generated inside a “black box” chip that is physically isolated from the rest of the device. It leverages chaotic physical phenomena on the silicon, making it immune to software fallbacks like the one that hit Coldcard.
• Note: You must manually select “24 words” in settings to get the full 256-bit seed; otherwise, it gives you 12 words (128 bits), which is still secure but less robust.
• Where To Buy: from their official website

4. Keystone Pro 3: The Triple-Redundancy King

• Entropy Generated: 256 Bits (Default).
• Method: Keystone uses a unique Triple Secure Element architecture. It mixes TRNG output from:
  1. The Main Microcontroller.
  2. Secure Element #1.
  3. Secure Element #2.
• Why It’s Safe: Like Trezor, it uses redundancy. If one chip fails or is compromised, the other two ensure the final seed is a full 256 bits. It also supports Dice Roll entropy for users who want to bypass hardware trust entirely.
• Where To Buy It: I have a discount code you can use if you are purchasing this device, go directly to their official site and enter CRYPTOCORNER at checkout.

5. SafePal X1: The Dual-Chip Mixer

• Entropy Generated: 256 Bits.
• Method: SafePal combines entropy from its Application Chip and its Secure Element (EAL 5+). It also mixes in device-specific data (like unique IDs) to ensure uniqueness.
• Why It’s Safe: The dual-chip approach prevents a single point of failure. Both chips are certified, and the mixing logic ensures the output is a full 256 bits.
• Where To Buy: from their official website.

6. Onekey Pro: The Certified Standard

• Entropy Generated: 256 Bits (Capable), but defaults to 128 Bits (12 words).
• Method: Relies primarily on the TRNG inside its EAL6+ Secure Element.
• Why It’s Safe: The chip itself is rigorously tested and certified. However, because it relies heavily on this single chip (unlike Trezor’s mixing), users must trust the chip manufacturer’s certification.
• Where To Buy: Go to their official website.

7. Era Wallet: The “Human” Mixer

• Entropy Generated: 256 Bits (Default).
• Method: Era collects entropy from five sources, including:
  1. MCU TRNG.
  2. Secure Element TRNG.
  3. Touch Input (Your swipes).
  4. Camera (Visual noise).
  5. Accelerometer (Motion).
• Why It’s Safe: By adding “human entropy” (your physical interaction), it ensures that even if the chips were flawed, the seed would still be random. Note: Early units had a bug where the SE wasn’t used, but this was patched.
• Where To Buy: Use this link if you want to buy Era Wallet with my discount.

8. Ellipal Titan 2.0: The “Trust” Approach

• Entropy Generated: 256 Bits (Claimed), often defaults to 128 Bits (12 words).
• Method: Uses a TRNG inside its EAL5+ Secure Element.
• The Catch: Ellipal’s firmware is closed-source. While they claim to generate 256 bits, there is no public code to verify this. You must trust their word that the chip is being used correctly and not bypassed by a bug.
• Recommendation: Due to the lack of transparency, it is safer to import a seed generated elsewhere (e.g., via dice rolls) rather than trusting Ellipal to generate it.
• Where To Buy: From their official website and use coupon code CRYPTOCORNER at checkout to get my discount when buying any of their products.

9. Tangem: The Banking-Grade Chip

• Entropy Generated: 256 Bits (Internal Key), 128 or 256 Bits (Seed Phrase).
• Why It’s Safe: Tangem uses the same high-grade chips found in passports and banking cards. These chips are independently audited, giving high confidence that the 256-bit internal keys are truly random.
• Method:
  • Seedless Mode: The card generates a 256-bit key directly inside its Samsung Secure Element (EAL6+). No words are created.
  • Seed Phrase Mode: If you choose to create a backup phrase, the app generates 12 words (128 bits) by default, though 24 words is an option. This isn’t the safest method though, since your seed will be displayed on your phone app, thus creating a point of failure in case your phone was already compromised.
• Where To Buy: You can get 10% discount on any Tangem products with my code CRYPTOCORNER on their official website. Apply the code at the checkout page.

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Comparison Summary Table

Device	Default Entropy	Max Entropy	Sources Mixed	Open Source?	Risk Level
Trezor Safe 5	256 bits (24w)	256 bits	3 (Device + SE + Host)	✅ Yes	✅ Lowest
Keystone Pro 3	256 bits (24w)	256 bits	3 (MCU + 2x SE)	✅ Yes	✅ Lowest
Coldcard (Fixed)	256 bits (now 24w)	256 bits	2 (MCU + SE)	⚠️ Partial	⚠️ Medium (Bad History)
SafePal	256 bits (24w)	256 bits	2 (MCU + SE)	✅ Yes	✅ Low
Ledger Stax	128 bits (12w)*	256 bits	1 (SE Only)	❌ No	✅ Low (Certified)
Onekey Pro	128 bits (12w)*	256 bits	1 (SE Only)	⚠️ Partial	✅ Low (Certified)
Era Wallet	128 bits (12w)*	256 bits	5 (Sensors + Chips)	⚠️ Partial	✅ Low
Tangem	128 bits (12w)*	256 bits	1 (SE Only)	❌ No	✅ Low (Certified)
Ellipal Titan 2	128 bits (12w)*	256 bits	1 (SE Only)	❌ No	⚠️ Medium (Blind Trust)

*Note: Devices marked with an asterisk default to 12 words (128 bits) for simplicity but can generate 24 words (256 bits) if you change the settings.

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Final Verdict: Who Should You Trust?

1. For Maximum Verifiable Security: Choose Trezor Safe 5 or Keystone Pro 3. Their “mixing” architecture ensures that a single bug cannot compromise your seed, and their open-source code allows the community to verify this.
2. For Certified Isolation: Ledger Stax and Tangem are excellent choices. They rely on high-grade, independently certified chips that are physically designed to prevent the type of software fallback that hurt Coldcard.
3. For Coldcard Users: If you generated a seed before August 2026 without using dice rolls, move your funds immediately. If you updated and generated a new seed after the fix, you are safe.
4. For Ellipal Users: Due to the closed-source nature, some users prefer to generate the seed elsewhere (using another device or dice) and import it into the Ellipal, but the best practice is to use the optional extra word (called passphrase) which makes it even more secure, since it’s not generated by random, but by you. This way, it becomes very hard for someone to crack your seed. It’s my top choice in fact.

The Golden Rule: No matter which device you choose, if it offers a 24-word (256-bit) option, use it. If the device allows you to add a passphrase (extra word or even a combination of words) use it. This is not the same a pin code or pass code that you use to unlock the device, it’s a word or phrase that is added to your seed and without it, a hacker cannot steal your funds. It is the single best defence against both current brute-force attacks and future uncertainties. Most of the devices I listed above give you this option, if unsure about it, just check (do a quick google search).

You can also download my eBook guide to all major crypto wallets – hot and cold, I talk about the differences between these, which ones I recommend from my personal experience and I go through all of the top hardware wallets there, so you can make the right choice which is the wallet for you. It’s a free eBook, just get it from this link.

Stay informed and level up your crypto strategy

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. The content of this post reflects solely my own opinions. Purchasing cryptocurrencies poses considerable risk of losses.

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