A new argument is circulating in Bitcoin security circles: obscurity never protected anyone, and AI has just made that fact impossible to ignore. Writing in Bitcoin Magazine, Colin Crossman uses the Coldcard hardware wallet exploit as a case study for why hiding source code no longer offers meaningful protection, if it ever did.
The flaw itself was mundane in isolation. A preprocessor guard error in Coldcard's firmware routed seed generation to a weak pseudorandom number generator — MicroPython's Yasmarang — instead of the device's hardware entropy source. On affected models, that collapsed effective randomness to roughly 40 bits, far below what's needed to make seed phrases unguessable. The bug shipped in March 2021 and sat exposed in public firmware for more than five years before attackers began draining wallets, eventually compromising 4,585 addresses and stealing close to $90 million according to Galaxy Research tracking.
The obscurity argument collapses
Crossman's central claim is that the distinction between open and closed source is becoming irrelevant to attackers, not just defenders. Coinkite, Coldcard's maker, had actually moved away from a fully open GPL license toward MIT with a Commons Clause restriction after a competitor, Foundation Devices, reused its code — a defensive move aimed at protecting intellectual property. That license change did nothing to stop the vulnerability from being found and exploited. As Crossman puts it, “a compiled program has no choice but to tell the truth,” since a processor needs the real instructions to execute regardless of what license sits on top of the source.
The widely held assumption inside the industry, per the piece, is that AI systems were behind the flaw's discovery — capable of analyzing publicly available firmware and surfacing the guard error that human reviewers missed for half a decade. That claim lines up with a broader pattern this year: security researchers have separately reported that an AI model surfaced a four-year-old bug in Zcash's codebase that could have allowed unlimited token issuance, triggering a sharp selloff before it was patched, and threat-intelligence teams have documented LLM-driven agents automating wallet-draining attacks with increasing independence.
Related: German Lightning Developer Admits Security Fears Kept Him Out of Bitcoin
Precedent, not novelty
Crossman situates the Coldcard case alongside older lessons about the limits of code visibility either way. Heartbleed sat undetected in OpenSSL, a fully open codebase, for two years. The xz backdoor exploited the trust built into open-source contribution models to smuggle in a supply-chain attack. And the “Milk Sad” vulnerability in libbitcoin drained wallets seeded from weak 32-bit values before public disclosure caught up. None of those bugs were secret because the code was closed, and none were prevented because the code was open.
What the piece recommends instead
The proposed shift is toward what Crossman calls disciplined design rather than a fight over licensing. That means assuming any distributed code will eventually be read by adversaries, running AI-assisted audits before release rather than waiting for outsiders to find flaws first, building reproducible builds that trace cleanly back to source, designing systems that fail closed, and spreading key material across independent hardware implementations rather than trusting a single device's entropy source. The underlying warning for holders: once a cryptographic weakness is theoretically findable, treat it as already lost, because the tools to find it are no longer scarce.
