Coinbase, which safeguards around 5% of the total Bitcoin supply for clients including banks, hedge funds, and asset managers, is calling on the Bitcoin network to begin preparing for quantum-resistant security. While the threat is not considered immediate, the central concern is whether Bitcoin’s decentralized ecosystem can coordinate a gradual transition before quantum computing advances enough to undermine existing protections.
Bitcoin transactions depend on digital signatures to verify that individuals have the authority to spend particular funds. The network currently uses ECDSA and Schnorr signature schemes, which remain secure against today’s available computing technology.
A sufficiently advanced quantum computer could potentially compromise these systems by calculating a private key from an exposed public key. If successful, an attacker could gain the ability to spend Bitcoin associated with the compromised key.
A machine capable of breaking widely used cryptographic systems in this manner is called a cryptographically relevant quantum computer (CRQC). The report cites research projections from Google suggesting that such a system could potentially become available by 2029.
The challenge extends beyond developing new cryptographic methods. Bitcoin’s decentralized structure requires extensive coordination before major protocol changes can be adopted. Wallet developers, exchanges, custodians, and other service providers would also need sufficient time to implement and test the necessary upgrades.
Coinbase believes preparations should begin well in advance of a potential CRQC breakthrough instead of waiting until the threat becomes urgent. Although quantum computers have not been shown to be breaking Bitcoin’s signatures today, migrating the network to new cryptographic standards could take several years. Early planning would allow developers to assess solutions and update infrastructure without suggesting that an immediate attack is underway.
Coinbase Advocates Flexible Designs for Quantum-Resistant Bitcoin
Coinbase wants Bitcoin’s transaction outputs, which determine the conditions for spending funds, to accommodate post-quantum cryptography without requiring a fundamental redesign of the transaction system whenever signature technology evolves.
A flexible structure could make it easier to introduce new quantum-resistant signatures, replace existing methods, or combine multiple approaches as research develops. Coinbase identifies P2MR, linked to BIP-360, and P2TRv2 as possible designs for further evaluation.
The exchange also favors a phased migration instead of forcing all users to switch simultaneously. One proposed approach would allow funds to be spent using either traditional ECDSA or Schnorr signatures or a post-quantum key.
Such a hybrid model could give Bitcoin holders an opportunity to adopt stronger security before a complete network transition. However, Coinbase has not selected a final design or established when conventional signature methods should be retired.
Stateful signature schemes require additional scrutiny because their security depends on maintaining accurate records of signing-key usage. If a wallet loses or mishandles this information, improper key reuse could potentially enable forged signatures.
Coinbase therefore supports evaluating stateless alternatives alongside stateful schemes. Providing multiple options could reduce the risk of making wallet security dependent on flawless record-keeping.
Implementation Security Remains a Major Priority
Moving to quantum-resistant cryptography will require more than selecting a stronger signature algorithm. Coinbase emphasizes that software implementation and operational reliability must also be addressed.
The company recommends consistent signature verification across platforms, protections against timing-based information leaks, clear security configurations, and safeguards against failures in the random-number generators used during signing.
These measures would help reduce the possibility that a cryptographic upgrade introduces new software vulnerabilities or weaknesses in wallet operations. Thorough implementation and testing will be essential to ensuring that new security standards deliver their intended benefits.
Institutional adoption is another important factor. Coinbase wants post-quantum Bitcoin schemes to support multiparty computation (MPC), which distributes key operations across multiple participants rather than concentrating them in a single device or individual.
This compatibility is particularly important for exchanges, custodians, and large financial organizations responsible for managing substantial Bitcoin holdings. Solutions designed primarily for individual users could make institutional adoption more complicated and delay the broader migration.
Legacy Bitcoin Holdings Present Difficult Policy Questions
A future decision to restrict or discontinue ECDSA and Schnorr spending could leave some Bitcoin holdings in older transaction formats. Certain legacy address types have exposed public keys, while some inactive wallets may belong to owners who have lost access to their funds.
Coinbase warns that an attacker with access to a CRQC could target vulnerable holdings before the technology’s capabilities become publicly known.
However, Coinbase has not proposed a definitive policy for dealing with dormant, quantum-exposed, or potentially lost Bitcoin. Instead, it argues that the treatment of these funds should be discussed independently so that disagreements over legacy holdings do not delay security improvements for users who can migrate to new formats.
Any mechanism intended to recover or otherwise address vulnerable legacy coins would also need to withstand quantum attacks.
For now, Coinbase’s immediate priority is to encourage research into adaptable transaction formats, assess the risks associated with implementation, and ensure that new cryptographic systems work for both individual users and institutions.
The broader policy debate surrounding legacy Bitcoin remains unresolved. Beginning technical preparations early could give the network more time to develop and coordinate a transition before quantum computing poses a demonstrated threat to its existing signature systems.
