Quantum Threat to Bitcoin Worse Than Wallet Hacks, Coinbase Analyst Warns

Coinbase's senior investment research head, David Duong, has warned that advances in quantum computing could undermine Bitcoin's cryptographic security over the long term. His comments highlight concerns about the potential to exploit core cryptographic components such as the Elliptic Curve Digital Signature Algorithm (ECDSA) and SHA-256 hashing function according to research.

Duong noted that about 32.7% of Bitcoin's circulating supply—approximately 6.51 million BTC—is at risk due to public key reuse and legacy script types. Pay-to-Public-Key (P2PK), bare multisignature (P2MS), and Taproot (P2TR) outputs are particularly vulnerable, exposing private key information onchain.

The risk is not limited to individual wallets. Quantum computing could also impact Bitcoin's broader network security and mining structure. The potential to break cryptographic algorithms and disrupt consensus mechanisms raises concerns about the future of Bitcoin's decentralized model.

Why Is Quantum Computing a Concern?

Quantum computing presents a risk because it can run algorithms such as Shor's and Grover's, which have the potential to break current encryption standards. These algorithms could enable attackers to derive private keys from exposed public keys, potentially allowing for unauthorized transactions.

Bitcoin's security model currently relies on the computational difficulty of solving cryptographic puzzles. However, quantum computers could process these puzzles much faster, reducing the time required to compromise private keys and execute attacks.

How Are Markets Responding to the Warning?

While no immediate threat exists, the warning from Coinbase underscores the need for proactive measures. Some investors and institutions are starting to take quantum risks more seriously. For example, BlackRock included quantum computing as a risk factor in its May 2025 iShares Bitcoin Trust ETF prospectus filing.

Other financial institutions and technology firms are also assessing the potential impact. As quantum research continues to advance, more firms may add this risk to their regulatory and investment disclosures.

What Are Analysts Watching Next?

Duong emphasized that quantum mining attacks remain a lower-priority risk for now. He noted that signature security—the mechanism used to validate transactions is the central issue that requires immediate attention.

The industry is exploring solutions such as quantum-resistant signatures and post-quantum cryptographic standards. These upgrades aim to protect both current and future transactions from potential quantum threats.

Several research groups and organizations, including Chaincode Labs and the U.S. National Institute of Standards and Technology (NIST), are evaluating post-quantum algorithms like CRYSTALS-Dilithium and SPHINCS+.

Experts have differing views on the timeline for quantum threats. While some believe quantum computers could break Bitcoin's cryptography within four to five years, others argue the risk remains distant. Nonetheless, preparation for a potential quantum breakthrough—often referred to as 'Q-day'—is considered essential.

The urgency of the issue is reflected in the growing collaboration between blockchain developers, researchers, and financial institutions. The transition to quantum-resistant cryptography may take years, requiring a coordinated effort to ensure widespread adoption and compatibility.