- Coinbase warns that Bitcoin’s transition to quantum-resistant security could take years.
- BIP-360 and P2TRv2 could support new signatures without separate transaction formats.
- Dormant Bitcoin wallets and exposed public keys complicate quantum security upgrades.
Coinbase has called for Bitcoin developers to begin planning a transition to quantum-resistant security, warning that changes to the network and its wallets could take years.
The exchange outlined challenges extending beyond choosing new digital signatures, including transaction fees, verification costs, and the treatment of coins that cannot be moved to upgraded wallets.
Proposed Bitcoin Upgrades Raise Capacity Questions
Coinbase identifies existing ECDSA and Schnorr signatures as systems that Bitcoin may need to replace or restrict. Coinbase said preparation should begin before a cryptographically relevant quantum computer emerges, given the time required for consensus changes and widespread wallet upgrades.
It highlighted BIP-360, which proposes a Pay-to-Merkle-Root output structure, and P2TRv2 as possible approaches for supporting different signature systems. Such designs could allow new algorithms to be introduced without creating a separate transaction format for each one.
The exchange recommended comparing candidates including ML-DSA, SLH-DSA, FN-DSA once standardized, and SHRINCS. Its proposed criteria cover signature size, verification speed, hardware-wallet support, and the effect on block capacity. Larger signatures could increase fees and the time needed to migrate vulnerable funds.
Legacy Bitcoin Wallets Complicate the Transition
Coinbase also described a phased approach that could give wallet holders a quantum-resistant spending option while retaining existing signatures temporarily. One possible design would provide two alternative authorization paths, allowing developers to introduce protection before deciding when older signatures should be restricted.
However, dormant coins create a separate problem. Some Bitcoin outputs have exposed public keys, while other funds remain inaccessible since their owners have lost their keys. The paper raised possible rescue mechanisms, spending limits, and restrictions but did not endorse a single solution.
Another concern involves stateful quantum-resistant signatures. These can be smaller or faster, according to the report, but require reliable tracking of previous signing operations. Accidental reuse of the signing state could permit forgery, especially when backups or multiple servers are involved. Coinbase called for a stateless alternative to remain available.
The company also identified compatibility with multi-party computation, which distributes signing responsibilities, as a consideration for institutional custody. Coinbase says it holds approximately 5% of the existing Bitcoin supply.
Bitcoin’s transition to quantum-resistant security will require more than adopting new cryptographic signatures. Developers must also address transaction capacity, wallet compatibility, institutional custody, and the treatment of funds that cannot be migrated. Coinbase’s call for early planning highlights the need to evaluate these trade-offs before quantum computing poses a credible threat to Bitcoin’s existing security.
Related: Bitcoin’s Quantum-Resistance Roadmap Is Taking Shape
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