Ethereum is moving away from Poseidon at Layer 1, ending years of work around a hash function long favored in SNARK-based systems. On Aug. 13, Ethereum researcher Justin Drake said on X that the Ethereum Foundation had decided to abandon Poseidon in favor of traditional hash functions such as SHA2 or BLAKE2. The change comes after eight years of research, tens of millions of dollars in spending, and a broader reset of Ethereum’s post-quantum roadmap. The key technical driver is progress in binary-field SNARK design, which allows traditional hash functions to perform inside proving systems at speeds that were previously associated with SNARK-optimized designs. Drake said a laptop can now verify about 1 million conventional hash calls per second in a SNARK setting, while recent benchmarks from projects including Flock and SNARK.fast point to sharply improved throughput. The roadmap itself remains in place. Ethereum still expects a production-grade leanVM in 2027, followed by deployments across the consensus, execution, and data layers in 2028. The Foundation has also expanded its post-quantum work through pq.ethereum.org, weekly interoperability devnets involving more than 10 client teams, and two $1 million research prizes. The shift also comes as Solana and Starknet advance their own post-quantum plans using Falcon and BLAKE2-based transitions.

A public challenge from BitGo CEO Mike Belshe has become a flashpoint in the debate over whether artificial intelligence can actually break the cryptographic foundations behind Bitcoin. On Aug. 1, Belshe transferred 100 BTC, worth about $6.5 million at early-August prices, into a BitGo wallet address and openly challenged Anthropic to take it, after a wave of discussion around Claude’s security research and the Coldcard weak-randomness incident. When GoPlusZH checked the chain while writing, the funds were still sitting untouched. The article argues that AI is changing cybersecurity fast, but mostly by improving vulnerability discovery, exploit development, and analysis of weaker or insufficiently reviewed designs. It points to Anthropic’s incident report on Claude’s cybersecurity evaluations, as well as research showing progress against the post-quantum candidate HAWK and reduced-round AES. At the same time, it draws a sharp distinction between those results and the mature cryptographic stack used by Bitcoin, including SHA-256 and secp256k1. GoPlusZH’s main point is that real-world crypto losses rarely come from “breaking encryption” in the abstract. They usually come from implementation flaws, poor key management, phishing, social engineering, or supply-chain compromise. In that framing, AI looks less like a force that overturns mathematics and more like a powerful amplifier of existing operational and security weaknesses.

Anthropic’s Frontier Red Team said its internal model, Claude Mythos Preview, identified two cryptographic weaknesses in largely autonomous research runs, but neither result breaks encryption used in practice today. One finding targeted HAWK, a post-quantum digital signature candidate under review at the U.S. National Institute of Standards and Technology, where the model found a previously unknown symmetry in the lattice structure and cut the attack cost for HAWK-256 from 2^64 to 2^38. The work took about 60 hours and roughly $100,000 in API usage. The second result focused on a reduced 7-round version of AES-128 rather than the full 10-round AES. Anthropic said the model developed a fingerprinting method called Möbius Bridge that removed one enumeration step and ran 200 to 800 times faster than earlier meet-in-the-middle attacks. That effort took about three days and billions of tokens, with humans providing only limited guidance. Anthropic framed the results as evidence that AI can conduct cryptanalysis research, not as proof that Claude has broken modern deployed encryption. The targets were an unadopted candidate scheme and a deliberately weakened AES variant, leaving real-world systems unaffected.

Anthropic said an unreleased version of its flagship model, Claude Mythos Preview, discovered two previously unknown attacks on cryptographic algorithms, including one targeting HAWK, a post-quantum digital signature system that had advanced to the third round of the U.S. NIST competition. According to the report, the attack cuts the cost of stealing HAWK’s smallest key from 2^64 operations to 2^38, or about 67 million times less work. Anthropic said fixing the issue would roughly double key sizes, weakening one of HAWK’s main selling points: compact keys and fast signing. The report also stressed that HAWK has never been deployed and that Bitcoin still uses ECDSA, so no live crypto system was broken by the finding. Even so, the development matters because a broad push toward quantum-resistant crypto infrastructure assumes that the replacement schemes are themselves secure. The newsletter also covered a range of market and policy developments, including gains in BTC and ETH ahead of the FOMC, public backing for the CLARITY Act from BlackRock, Fidelity, Franklin Templeton, Goldman Sachs, and SoFi, fresh ETF flow data, Zcash’s Ironwood activation, and a burst of meme coin trading activity led by PIPEDOG on Robinhood chain.

A broad set of crypto and AI developments landed over the past day, spanning regulation, market structure, fundraising, protocol upgrades and security incidents. Kenya cut the paid-in capital requirement for stablecoin issuers by 40% to about $2.32 million while keeping strict reserve and redemption rules in place. Russia’s central bank published its first draft framework for organized trading in digital assets, and Myanmar passed a cybercrime law that allows life sentences for crypto-related fraud. In the U.S., Senate Republicans are still trying to move the Clarity Act before the August recess, though ethics provisions and bank lobbying remain major obstacles. On the corporate side, PayPal posted better-than-expected second-quarter results and did not address a previously reported buyout approach. Luno and Visa both outlined layoffs tied to restructuring and capital allocation, while Morgan Stanley Investment Management rolled out exchange-traded products tied to Ethereum and Solana. Zcash activated its Ironwood NU6.3 upgrade, Layer 2 TVL on Ethereum fell to its lowest level since 2023, and Bitcoin briefly dropped below $63,000 as AI and semiconductor weakness spilled into crypto. Security reports also stayed in focus, with Blockaid saying crypto losses from hacks topped $1 billion in the first half of 2026 and several fresh token incidents reported across the market.

Anthropic said an unreleased version of its Claude Mythos model uncovered two previously unknown cryptographic attacks, including one against HAWK, a post-quantum digital signature scheme now in the third round of the U.S. National Institute of Standards and Technology’s competition. According to the company, Claude identified a symmetry in HAWK’s structure that cuts the cost of recovering a secret key in the smallest configuration from 2^64 operations to 2^38, a roughly 67 million-fold reduction. Anthropic said fixing the issue would require roughly doubling HAWK’s key size, which would undercut the compactness and speed that make the scheme attractive for blockchains and other systems sensitive to signature size. The company also described a separate result on a 7-round research version of AES-128, where Claude was asked to avoid all five established families of AES cryptanalysis and invent a new approach. Anthropic said the model eventually produced a technique called “Möbius Bridge,” reducing one of the nine key bytes an attacker previously needed to guess. It also reported that Claude broke 13 rounds of LEA, though deployed LEA uses 24 rounds. Anthropic said it disclosed the findings to the algorithms’ authors and relevant U.S. government and industry partners before publication, and coordinated the HAWK finding with NIST.

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