Bitkey fast-tracks coin control feature after customer demand
Bitkey, a self-custody Bitcoin wallet by Jack Dorsey's Block, Inc., is accelerating development of a coin control feature due to persistent user feedback. This feature will allow users to label individual UTXOs and manually select which coins to include in transactions, enhancing user control. Bitkey launched publicly in December 2023 and began shipping hardware in March 2024, marking this update as a significant step forward. Bitcoin transactions use discrete chunks called UTXOs, which wallets manage automatically, but this can merge coins from different sources and reduce privacy. Coin control enables users to pick specific UTXOs to spend, label them, and keep Bitcoin pools separate, which benefits privacy and fee optimization. Community discussions on Reddit and app store reviews have shown that consolidation alone is insufficient; users want full labeling, manual selection, and freezing of UTXOs. These requested features have been standard in wallets like Sparrow, Electrum, and Trezor Suite for years, which offer granular coin control. Bitkey currently provides a UTXO consolidation tool allowing users to merge multiple UTXOs into a single one, a preliminary step toward full coin control. Unlike standard hardware wallets, Bitkey does not use seed phrases, focusing instead on a 2-of-3 multisig design where the user holds two keys and Block holds one. Bitkey uses a 2-of-3 multisig design where any two of the three keys are needed to authorize a transaction, making self-custody approachable for mainstream users. Bitkey's approach prioritizes making self-custody accessible to those who might otherwise keep Bitcoin on exchanges, with a clean mobile interface and no seed phrases.
Coldcard Bitcoin Exploit Balloons to $88 Million as Attackers Keep Draining Wallets
The Coldcard Bitcoin exploit has resulted in approximately $88.6 million stolen across 4,585 addresses in three distinct waves, according to Galaxy Research. Alex Thorn from Galaxy Research described the thefts as deliberate and programmatic, likely orchestrated using a large language model. Thorn warned that every single-signature Coldcard address created after the March 2021 firmware flaw will eventually be drained. The stolen coins had been dormant for an average of 3.18 years before being taken, indicating the victims were long-term Bitcoin holders. The funds from the three documented waves remain parked in attacker addresses and have not been moved since the thefts. One victim reported losing $1.6 million in Bitcoin on July 29th despite storing keys in a Coldcard device kept offline in a safety deposit box. The same victim expressed frustration, stating they followed all security protocols and have filed reports with police and the Ontario Securities Commission. Affected users are responding with panic, moving Bitcoin off self-custody wallets back onto centralized exchanges like Coinbase or Binance. This behavior represents a reversal of the cryptocurrency industry's usual 'not your keys, not your coins' philosophy. Galaxy Research has flagged about 600 suspected attacker addresses to federal investigators and compliance firms to aid in the ongoing investigation. Alex Thorn continues to investigate and add new Coldcard victim and attacker addresses to the research database, sharing updates publicly.
Why a DeFi platform ditched its consumer app to become the secret backend for tech giants
Spark is a lending and liquidity unit affiliated with Sky, formerly MakerDAO, issuing the USDS stablecoin and developed by Phoenix Labs with governance support from Sky. The stablecoin market is fragmenting as fintechs, exchanges, and banks launch their own dollar-linked tokens, each aiming to keep activity within their networks. Spark decided late last year to pause indefinitely its consumer-facing app, a move to avoid direct competition with Coinbase, PayPal, and Robinhood for distribution. Instead of building customer relationships, Spark supplies yield and liquidity to apps already used by consumers, focusing on a B2B and B2B2C business model. Spark's stablecoin FX layer on Uniswap helps institutions switch between stablecoins by concentrating liquidity in yield-bearing pools, migrating about $150 million into Uniswap v4 pools. This system accounted for roughly 30% of stablecoin-to-stablecoin swap volume on Uniswap and routed about $1.5 billion in its first 30 days. Robinhood Earn's $200 million vault runs on Morpho, with Spark as one of three collateral sources, showing the infrastructure model's effectiveness. Spark has made infrastructure deals with issuers like PayPal, which partnered last year to boost PYUSD liquidity against competitors like USDT and USDC. Hundreds of other stablecoins exist beyond major players, resulting in liquidity scattered across tokens and networks, which Spark aims to connect. Sam MacPherson, CEO of Phoenix Labs, said the stablecoin landscape is fragmenting further with multiple issuers like PayPal, Circle, Tether, Robinhood, and OpenUSD consortium.
Ethereum just outpaced Bitcoin with $365 million in ETF inflows, but on-chain data shows the real bottom isn’t in yet
Ethereum outpaced Bitcoin in July with $365.17 million in net inflows to US spot Ethereum ETFs, marking the strongest performance this year. Bitcoin ETFs attracted $172.43 million during the same period, representing their weakest monthly total since January 2024. Ethereum's July advance was supported by the launch of the Morgan Stanley Ethereum Trust, ticker MSSE, which amassed about $20 million in assets early on. Morgan Stanley's distribution network includes roughly 16,000 financial advisers managing approximately $7 trillion in client assets. The MSSE product's low 0.14% fee enhances competition among existing Ethereum-focused ETFs and could attract investors new to crypto asset managers. BitMine, the largest corporate holder of Ether, increased its holdings weekly during July, raising its balance from 5.70 million to 5.79 million ETH. In contrast, Strategy, the largest corporate Bitcoin holder, made no purchases in July and focused on increasing cash reserves and supporting preferred securities. Ethereum gained 19% in July, reaching a high of $1,970 before retreating to $1,868, while Bitcoin rose 8% but failed to surpass $65,000. The ETH/BTC ratio rose above 0.030 for the first time in three months before easing to 0.02962, reflecting Ethereum's relative strength. Despite the inflows and price gains, on-chain indicators such as MVRV and exchange-flow ratios remain above prior bottoming levels, leaving the reversal unconfirmed. The divergence between Ethereum's inflows and Bitcoin's stagnant corporate demand suggests that the structural signals for a durable cycle reversal are not yet triggered.
Bitcoin ETFs gain fresh case after $89M Coldcard drain, says Balchunas
Eric Balchunas stated on August 2 that the Coldcard security failure supports the case for U.S. spot Bitcoin ETFs for investors seeking long-term price exposure without managing private keys. Galaxy Research estimated that three suspected attack waves drained approximately 1,367.05 BTC, worth about $88.6 million, from 4,585 addresses. Galaxy described the $88.6 million figure as an "estimated observed size," indicating it remains an on-chain estimate not confirmed by Coinkite or law enforcement. Balchunas questioned whether a reportedly small hardware-wallet company can protect life-changing sums, calling the reported staffing level "a red flag." Block's Bitcoin engineering team found a firmware integration error that routed random-number generation through a deterministic MicroPython fallback instead of the intended hardware source. Coinkite's security advisory covers Mk2 and Mk3 firmware versions 4.0.1 through 4.1.9, plus seeds generated on Mk4, Mk5, and Q devices before fixed releases. The company released corrected firmware but warned that updating software does not repair seeds created earlier; users must generate new seeds and move their funds. Galaxy's latest estimate includes three suspected draining waves, with the third removing 207.7294 BTC from 1,912 addresses following a different transaction pattern. BlackRock's iShares Bitcoin Trust ETF, or IBIT, simplifies operational and custody work by managing seed creation, firmware updates, backups, and wallet migration. IBIT reported $46.52 billion in net assets on July 31 and charges a 0.25% sponsor fee, with Coinbase Custody holding private keys in segregated cold-storage wallets. IBIT is an SEC-reporting, Nasdaq-listed product, but BlackRock states the trust is not registered under the Investment Company Act of 1940. Fidelity uses Fidelity Digital Assets to custody Bitcoin for its Wise Origin Bitcoin Fund, allowing U.S. investors exposure without operating a hardware wallet.
Reader comments