Developers behind Bitcoin’s BIP-110 soft fork have officially paused its activation following a serious security flaw discovered in Coldcard hardware wallets. This bug has exposed user funds to theft by generating wallet seed phrases with significantly less randomness than expected, making them vulnerable to guessing attacks. The unexpected timing of this exploit forced the community to halt the rollout indefinitely.
Udi Wertheimer, a prominent developer supporting BIP-110, recommended that anyone running BIP-110-compatible nodes revert to standard Bitcoin software immediately. The update, designed to limit the amount of data packed into Bitcoin transactions for one year starting December 1, 2025, had already struggled to gain traction among miners and users. It aimed to address blockspace congestion by preventing overuse of transaction data, though critics argued it was an overreach in governing user actions.
The flaw was exposed by Coinkite on July 30. Their Coldcard wallets had been creating seed phrases with only 72 bits of entropy instead of the industry-standard 128 bits since March 2021. This drastic reduction in randomness means attackers could more feasibly guess a wallet’s master key and drain funds. Coinkite has been advising Coldcard users to move their cryptocurrency to new wallets, but the number or value of stolen assets remains undisclosed.
BIP-110 needed to secure 55% of miner support over a two-week window to activate, but had only ever reached about 2.6%. Even with mining pools nearly unanimous in voting yes, the soft fork would not have met the threshold by the time the delay was announced. Industry figures like Michael Saylor warned about risks to Bitcoin’s neutrality, while Blockstream CEO Adam Back highlighted the chance of chain splits due to insufficient consensus requirements.
This development comes amid ongoing debates in the Bitcoin community about how best to manage blockspace and transaction data. The Coldcard exploit has now created a pause, as developers regroup and address urgent security concerns before revisiting the soft fork’s future.
This article is for informational purposes only and should not be taken as financial advice.
