Mishaboar said malware on a disconnected computer can still capture seed phrases, while Galaxy Research said the Coldcard hack has confirmed losses of 1,719 BTC, with total damage potentially rising to $130 million.
Dogecoin community contributor Mishaboar urged users to reassess wallet security after the Coldcard exploit, arguing that neither offline wallet creation on a standard PC nor everyday software wallets should be assumed safe for long-term storage. He said wallets hold private keys rather than coins, so any compromise of the device used to generate or store those keys can put funds at risk, including when malware captures a seed phrase on a disconnected computer and transmits it later once the machine reconnects. In an August 8, 2026 X post, Mishaboar contrasted hardware wallets, which he said keep seeds and keys inside a dedicated chip isolated from the internet, with software wallets on always-connected phones or computers. He warned that ordinary users cannot easily assess risks such as weak seed generation, backdoors, information leaks, malicious updates, insecure backups, or obscure derivation paths. He said software wallets can still be useful as hot wallets for limited balances, payments, trading, or smart contract interactions, but should not be relied on for long-term savings. The warning came as Galaxy Research described the Coldcard breach as the third-largest crypto hack of 2026, with $111 million, or 1,719 BTC, confirmed stolen and total losses possibly rising to $130 million as additional coins are verified. Galaxy Research said a firmware bug dating to March 2021 weakened seed randomness on some Coldcard wallets, reducing key strength from 128 bits to as little as 40 bits and enabling brute-force attacks without physical access. For stronger DOGE protection, Mishaboar recommended spreading holdings across devices from different reputable brands, adding a passphrase, and keeping physical backups of seed phrases and passwords offline.