Coinbase unveils plan to protect Bitcoin from quantum threats

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Coinbase unveils plan

How Coinbase proposes to protect Bitcoin

According to the company, the upgrade should protect both newly created and existing Bitcoin funds, including those held at addresses with exposed public keys. It must also account for the blockchain's limited capacity, preserve independent transaction verification, and ensure compatibility with ordinary wallets and institutional custody systems.

One of Coinbase's main proposals is to separate the structure used to hold funds from the signature algorithm. This approach would allow new cryptographic solutions to be introduced or outdated ones to be replaced without completely redesigning the system. The exchange identified P2MR (BIP-360) and P2TRv2 as promising options.

The company also supports a gradual transition to quantum-resistant cryptography. For example, wallet holders could use a hybrid system that provides two alternative ways to access the same funds: through a traditional ECDSA or Schnorr signature, or through a new algorithm resistant to quantum attacks.

What challenges remain

Coinbase also highlighted the characteristics of cryptographic algorithms themselves. According to the exchange, systems that use signatures requiring information about previous operations to be stored should also offer alternatives that do not have this requirement. Errors in managing the state of such systems could create vulnerabilities and allow attackers to forge signatures.

Another important requirement is compatibility with multiparty computation (MPC). This technology allows cryptographic key operations to be distributed among multiple participants, reducing the risk of key compromise. Coinbase considers it particularly important for large organizations that constantly face cyberattacks.

Lost or inaccessible Bitcoin presents another challenge, as its owners may be unable to transfer funds to newly protected addresses. Coinbase acknowledges that resolving this issue will require extensive discussion, but believes it should not delay the development of quantum-resistant signatures.

Why preparations cannot wait

Coinbase emphasized that work must begin long before the emergence of a quantum computer capable of breaking modern cryptographic algorithms. Changes to Bitcoin's consensus rules require coordination among network participants, while subsequent upgrades to wallets and infrastructure could take years.

The exchange believes Bitcoin can maintain its status as the most trusted cryptocurrency even in the era of quantum computing. To achieve this, developers, infrastructure operators, and other market participants need to agree on technical solutions and the sequence of their implementation.

Coinbase has not yet proposed a definitive roadmap for upgrading the network. The company hopes its recommendations will provide a foundation for discussions among developers and help prepare Bitcoin for potential threats without compromising its security or decentralization.

Why quantum computers pose a threat to Bitcoin

The main threat posed by quantum computers is their potential ability to break the cryptographic algorithms that underpin Bitcoin's security. A sufficiently powerful quantum computer could derive private keys from public keys, allowing attackers to gain access to other users' funds and transfer them without authorization. Addresses whose public keys have already been exposed on the blockchain would be particularly vulnerable.

However, quantum computers are not yet powerful enough to carry out such attacks. Their development nevertheless creates long-term risks for cryptocurrencies, as transitioning to new security algorithms would require extensive upgrades to wallets, infrastructure, and the Bitcoin network itself. This is why Coinbase is calling for preparations to begin well before the threat becomes a reality.

As a reminder, Ethereum has pledged to become resistant to quantum attacks by 2029.

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