What if someone develops a quantum computer swift enough to breach your bitcoin wallet security and steal your digital assets?
This concern occupies everyone’s thoughts, because certain estimates indicate such a quantum machine, while non-existent today, might emerge within a few years.
Nasdaq-listed cryptocurrency platform Coinbase, which manages approximately 5% of all existing bitcoin on behalf of clients like banks, asset managers, and hedge funds, has expressed its perspective on that matter via a recent blog post, outlining the measures it feels Bitcoin requires to remain secure against a potential future quantum hazard.
Its primary argument is to begin preparations immediately rather than waiting for the danger to materialize, while addressing the issue of abandoned coins separately.
To understand the exchange’s proposals, it helps to comprehend how Bitcoin’s security mechanisms function and the manner in which a quantum computer might compromise them.
The lock and key
Imagine a bitcoin wallet as a mail receptacle featuring a slender horizontal slit at the top and a key possessed solely by the proprietor. The exposed slot, through which anyone can deposit letters inside, represents the wallet’s public key. Conversely, the private key serves as the physical instrument that opens the box. Maintained strictly within the owner’s possession, this private key stays concealed from external observers and protects the Bitcoin situated inside the wallet.
When a user transmits bitcoin, their wallet employs the private key to generate a digital signature, acting as an unalterable stamp. The network verifies this against the user’s public key; if they correspond, the transaction gains approval.
The Bitcoin blockchain relies on two protocols, termed ECDSA and Schnorr, for generating and confirming these digital signatures. These remain exceptionally secure currently because existing computers lack sufficient processing power to crack the underlying mathematics and reverse-engineer a user’s private key from its digital signature or public key.
Enter the quantum risk
A sufficiently robust quantum computer, one that might materialize by 2029 according to Google researchers, could execute precisely that: reverse-engineer a private key starting from a public key and empty holders’ bitcoin wallets.
Investigators designate a machine possessing that capability as a cryptographically relevant quantum computer, or CRQC.
The proposed remedy involves post-quantum, or PQ, cryptography. Put simply, this means novel signature techniques capable of resisting quantum attacks.
According to Coinbase, merely selecting a new security protocol proves insufficient. They contend that a comprehensive upgrade to safeguard Bitcoin from quantum computers must protect legacy and modern assets alike, fit efficiently within Bitcoin’s restricted data capacity, and permit standard computers to maintain network operations. Furthermore, it must accommodate both massive crypto platforms and everyday users, alongside presenting a definitive strategy for older coins that might never transfer.
Coinbase wants to move now
Such initiatives need to commence without delay, principally because Bitcoin’s decentralized framework, frequently lauded as a benefit over centralized institutions, also complicates the execution of modifications.
As the exchange articulated, “Bitcoin consensus changes, and ecosystem migrations can take years.” Consequently, action must begin “well ahead of any CRQC announcement.”
Bitcoin developers are already evaluating proposals designed to construct quantum defenses.
Measures proposed by Coinbase
Separating the “container” from the signature: Stated plainly, Bitcoin should be structured so that its transaction architecture accommodates novel post-quantum signature variants without necessitating a complete reconstruction of the network. Such a design would simplify the addition, replacement, or combination of quantum-resistant signatures over time. Two proposals, P2MR (BIP-360) and P2TRv2, appear to supply this degree of adaptability, according to Coinbase.
Staged protection: Coinbase favors a strategy permitting active wallets to adopt quantum-resistant or hybrid signatures prior to Bitcoin finalizing its regulations regarding legacy signature formats. One viable transition involves a “1-of-2” configuration: identical bitcoin could be spent utilizing either a traditional ECDSA or Schnorr key, or a post-quantum key. This mechanism would allow users to shield their assets sooner, without mandating an immediate universal migration or risking unexpected loss of access.
Use of state: Certain post-quantum signature frameworks require the wallet to maintain chronological data, termed “state,” subsequent to each signature. These schemes utilize numerous one-time signing keys, and the wallet must track which ones have been deployed to ensure no key ever gets reused. Should a wallet recover from an out-of-date backup or fail to preserve that log, it might inadvertently reuse a key. Such an error enables an adversary to forge a valid signature. Stateful signatures can remain more compact and efficient, yet they present greater potential for misuse. If Bitcoin adopts them, Coinbase believes the network should additionally support stateless alternatives that omit this record-keeping requirement. This approach would afford users and wallet developers a safer alternative while minimizing the threat of misplaced funds or fraudulent transactions.
Robust implementations: Coinbase hopes the evaluation framework assigns significant weight to software functioning reliably across architectures, verifying signatures consistently everywhere, preventing secret data leakage via timing vulnerabilities, utilizing precise configurations, and remaining secure even if the random-number generator deployed during signing encounters failure. This would elevate the dependability of quantum-resistant bitcoin wallets and mitigate the likelihood of software bugs, security breaches, or financial losses.
MPC-friendliness: For Coinbase and numerous clients, post-quantum protocols must integrate smoothly with multi-party computation, or MPC. When executed correctly, MPC assists in shielding private keys against theft while introducing a critical defense tier for large-scale enterprises encountering continuous assaults on their infrastructure. This capability would simplify the process for exchanges, custodians, and major corporations to secure bitcoin independently of relying upon a single individual or device to store a key.
A path for wallets that migrate late: Should Bitcoin eventually restrict or terminate ECDSA and Schnorr spending capabilities, certain participants might retain assets residing in legacy wallet structures. Coinbase asserts it would prove beneficial to evaluate whether—and through what means—such users could transfer their holdings to quantum-secure outputs at a later date. The appropriate methodology and associated trade-offs remain open questions. This proactive step would prevent certain participants from losing access to their bitcoin should they fail to upgrade promptly. Discussions on this matter can occur in parallel with, and distinct from, the technical endeavors aimed at incorporating post-quantum signature backing, ensuring it does not obstruct that progress.
Forgotten coins
Finally, not all participants will transition to post-quantum frameworks in time, particularly wallets that have remained inactive for extended periods. Certain assets belong to individuals who misplaced their cryptographic keys. Furthermore, specific bitcoin resides within antiquated address formats that left public keys exposed.
Coinbase expresses concern that an entity might covertly construct a quantum apparatus and begin draining holdings from these wallets “before the public learns.”
The exchange abstained from taking a definitive stance regarding the handling of these coins, asserting instead that the debate should be addressed independently to prevent delays in securing other accounts. It emphasized that any rescue operation must maintain quantum-safe properties, or malicious actors could exploit the recovery mechanism itself.
Originally published at https://www.coindesk.com/tech/2026/10/14/coinbase-which-holds-5-of-all-bitcoin-wants-the-quantum-fix-started-now.
