Quantum Threat to Bitcoin Extends Past Wallet Hacks: Coinbase Analyst Warns of Structural Risks

Bitcoin’s long-term security is facing new challenges as quantum computing advances faster than expected, according to David Duong, global head of investment research at Coinbase. The risks are no longer just theoretical and could affect a significant portion of the supply.

Duong warns that one-third of Bitcoin may be vulnerable because some wallet data is already visible on the blockchain. This includes public keys associated with older wallet types. These exposed keys could be exploited by future quantum computers to derive private keys.

Quantum computing could impact two aspects of the Bitcoin’s security model. It may break the cryptographic signatures used in transactions and potentially allow more efficient mining. Both scenarios could disrupt Bitcoin’s economic and security assumptions.

Why Did This Happen?

The vulnerability stems from how Bitcoin wallets work. When users spend from certain older wallets, parts of their cryptographic information become publicly visible. For about one-third of the total supply, this information is already exposed.

Current computers cannot exploit this data effectively. However, quantum computers have the potential to run algorithms like Shor's and Grover's at speeds that could break Bitcoin’s encryption.

How Did Markets React?

The warning from Coinbase has sparked increased concern among investors. Progress in quantum computing is moving faster than many anticipated, raising the urgency for the industry to address these risks.