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AI could widen Bitcoin custody risks beyond cryptography

A recent review points to custody stack weaknesses, including software and firmware issues that can affect how seed entropy is generated and later acted on by wallets.

Reported · Written up by our desk · Market Structure

Bitcoin security concerns may be shifting from core cryptography to the broader custody stack, where private keys depend on software, firmware, chips, and human choices, CryptoSlate writes.

The outlet highlights a case discussed in a 2026 technical disclosure by Coinkite, where an integration change pushed wallet seed generation toward a MicroPython software fallback instead of an intended hardware random number path. Coinkite said later affected models still mixed some secure element entropy, and it advised users to replace seeds and migrate funds for those created under the affected conditions.

CryptoSlate also cites prior wallet-level supply chain and software risks, including an incident where malicious releases of Ledger’s dynamically loaded Connect Kit library led users to sign draining transactions. The report says Ledger stated its infrastructure, code repositories, and integrated decentralized applications were not impacted, but the hostile transaction software reached the approval step before a hardware wallet could sign.

The analysis concludes that as AI tools improve at finding seams across code paths, build systems, and devices, even cold storage may warrant closer scrutiny, because risks can arise long before a seed phrase is turned into words through BIP-39 entropy and checksum steps.

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