'AI reckoning' warning issued following $100,000,000 Bitcoin attack
One of the cryptocurrency's world's most trusted hardware wallets has just experienced an industry-shattering hack with $100 million stolen as a result, causing experts to issue an 'AI reckoning' warning for the future.
More than 500 Coldcard harware wallet users were impacted by the bug, allowing hackers to exploit predictable software-based key generation in order to access millions of dollars worth of funds, despite the gadget being designed to provide cybersecurity protections to cryptocurrency holdings with randomly generated number strings.
As shared by Forbes, Coinkite – the company behind the Coldcard wallet – warned all users who had generated a seed on version 4.0.1 or any subsequent version that they 'funds may be at risk', noting that they only became aware of the bug after users had been attacked.
The company urged its users to "proceed calmly, verify every step," noting that "updating the firmware does not repair a seed that was generated by affected firmware. A new seed must be generated and the funds migrated to a new wallet."
How has this affected the price of Bitcoin?
While Bitcoin has been trending consistently downward for the past year following a peak of around $125,000-per-coin, news of significant stolen funds has understandably prompted panic across the industry, causing the price to crash even further.
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It did thankfully manage to hold above the 'security' baseline of $60,000 despite mass fears, but prices have dropped quite low and could continue to tank in the future if attacks like this grow in frequency.
Right now there is somewhat of a recovery for Bitcoin, with prices growing by 0.54% in the last 24 hours to just over $64,000, but it's hard to know exactly where things will settle in the coming weeks or months.
Why will AI cause issues in the near future?
What is likely to cause further instability, however, is the growing capabilities of AI software — as stronger and more technologically capable tools could allow attackers to replicate attacks we have seen on companies like Coinkite with greater levels of success.
'Pledditor', a prominent crypto skeptic on X, called this recent attack the sign of a 'race against time' for investors in Bitcoin, as it appears to be almost inevitable that further exploits and vulnerabilities emerge.
"The exploit is out in the wild, public attention is on it, and everybody has access to frontier LLMs," the expert explained. "I imagine there are dozens of hacking teams now researching how to exploit this. You are in a race against time."
What happens on the flip side, however, is a wave of people seeing the crypto industry as a beacon of hope against the impending AI bubble burst, with some even speculating that Bitcoin could spike to a $1 million valuation when investments in AI rapidly transition to the leading alternative currency, even just for a short time while the markets settle.
It's little use having that increased valuation if there's going to be a risk of it being stolen, however, leading many to understandably remain wary of plunging their entire investments into the crypto coin until better news emerges — although that might never happen.