Coinbase is urging the Bitcoin network to start planning for quantum-resistant security, citing its responsibility for safeguarding roughly 5% of all Bitcoin held on behalf of banks, hedge funds, asset managers, and other clients. Although quantum computing does not currently pose a confirmed threat to Bitcoin’s cryptography, the exchange believes the network should begin preparing for a potential transition before the technology advances further.
Bitcoin relies on digital signatures to confirm that a transaction is authorized by the owner of the funds. Its current security framework uses ECDSA and Schnorr signatures, which remain resistant to attacks from today’s computing systems.
However, a sufficiently powerful quantum computer could potentially derive a private key from an exposed public key. This could allow an attacker to gain unauthorized access to Bitcoin protected by a vulnerable signature scheme.
Such a machine is commonly known as a cryptographically relevant quantum computer (CRQC). The report points to projections from Google researchers suggesting that this level of quantum computing capability could emerge by 2029.
Preparing Bitcoin for this possibility involves more than developing new cryptographic technology. Because the network is decentralized, protocol upgrades require coordination among developers, users, miners, wallet providers, exchanges, and custodians. These participants would also need time to test and deploy new security mechanisms.
Coinbase argues that preparations should start before a CRQC becomes a reality, rather than waiting for a potential security crisis. While there is no evidence that quantum computers are currently breaking Bitcoin’s digital signatures, a network-wide migration could require years of development and coordination.
Beginning early would provide time to evaluate technical options, improve infrastructure, and prepare users for future changes without implying that Bitcoin faces an immediate quantum attack.
Coinbase Calls for Adaptable Quantum-Resistant Bitcoin Infrastructure
Coinbase wants Bitcoin’s transaction outputs, which specify how funds can be spent, to accommodate post-quantum cryptography without requiring a fundamental redesign whenever new signature methods become available.
A more adaptable structure could allow developers to introduce, replace, or combine signature schemes as quantum research advances and security requirements change. Coinbase has identified P2MR, associated with BIP-360, and P2TRv2 as possible approaches for further consideration.
The company also favors a gradual transition rather than requiring all Bitcoin holders to upgrade at once. One potential arrangement would allow a transaction to be authorized through either a traditional ECDSA or Schnorr key or a post-quantum key.
This hybrid approach could help users adopt stronger security while the broader network prepares for a complete migration. However, Coinbase has not selected a final implementation or established a timetable for phasing out existing signature methods.
Stateful signature schemes present another technical concern because they require wallets to maintain accurate records of signing-key usage. If these records are lost or incorrectly managed, improper key reuse could create opportunities for signature forgery.
To reduce this risk, Coinbase recommends evaluating stateless alternatives alongside stateful cryptographic designs. This would give developers more flexibility and reduce reliance on perfect record-keeping.
Coinbase Highlights Software and Wallet Security Requirements
A successful migration will depend on more than choosing quantum-resistant cryptography. Coinbase stresses that the implementation must also protect against software vulnerabilities and operational failures.
Its recommendations include consistent signature verification across platforms, safeguards against timing-based information leaks, understandable security settings, and protection against failures in the random-number generators used to create signatures.
These measures are intended to prevent new vulnerabilities from emerging as Bitcoin adopts stronger cryptographic protections. Reliable implementation and extensive testing will be essential to ensuring that the upgraded systems perform as intended.
Institutional compatibility is another key requirement. Coinbase wants post-quantum Bitcoin schemes to support multiparty computation (MPC), which distributes key operations among multiple participants instead of relying on a single individual or device.
This feature is particularly important for exchanges, custodians, and financial institutions managing large Bitcoin reserves. If a new scheme works only with individual wallets, organizations handling substantial holdings could face additional migration difficulties.
Legacy Bitcoin Creates Unresolved Quantum Security Questions
A future decision to limit or discontinue ECDSA and Schnorr transactions could leave some funds in older address formats. Certain legacy addresses have exposed public keys, while some inactive wallets may belong to holders who have lost their private keys.
Coinbase warns that an attacker with access to a CRQC could potentially target vulnerable Bitcoin holdings before the technology’s capabilities become widely known.
The exchange has not endorsed a specific solution for dormant, quantum-exposed, or potentially lost Bitcoin. Instead, it believes the issue should be debated separately so disagreements over legacy funds do not prevent developers from advancing security measures for users who can migrate to safer formats.
Any proposed mechanism for recovering or otherwise handling vulnerable legacy coins would also need to account for quantum-related risks.
For now, Coinbase’s focus is on evaluating adaptable transaction designs, addressing implementation weaknesses, and ensuring that future cryptographic schemes can accommodate both individual wallets and institutional infrastructure.
The treatment of legacy Bitcoin remains an open policy question. Starting the technical work early could give the network more time to prepare, coordinate upgrades, and strengthen its defenses before quantum computing becomes a demonstrated threat to Bitcoin’s current signature systems.
