Entropy-Aware Cryptographic Primitives for Secure Key Management in Legacy Cryptocurrency Wallets

Abstract

Legacy cryptocurrency wallets, particularly those developed during the early phases of blockchain adoption, often operate in environments with limited entropy availability, compromising the security of private key generation and digital signature schemes. In such systems, inadequate randomness can lead to predictable keys and repeated nonce reuse, making them susceptible to key recovery and signature forgery attacks. This paper presents an in-depth study of entropy-aware cryptographic primitives that are designed to mitigate such vulnerabilities. We examine historical entropy generation mechanisms across various early software and hardware wallets, identify entropy deficiencies, and evaluate real-world exploits that stem from such weaknesses. Furthermore, we propose enhancements involving hybrid entropy models and hash-based key derivation functions (HKDF) to strengthen the randomness quality while maintaining compatibility with legacy systems. Experimental validation using emulated environments of early wallets shows that our proposed approach significantly improves key unpredictability and digital signature reliability, without introducing prohibitive computational overhead. These findings underscore the critical need for entropy resilience in legacy systems to uphold cryptographic integrity in blockchain applications.