Insider Brief
- Coinbase urged early preparation for Bitcoin’s transition to quantum-resistant security, citing the years needed to update network rules and migrate funds.
- The company called for evaluating signature systems that balance security, transaction costs, wallet usability and institutional custody requirements.
- Coinbase said debates over dormant or inaccessible coins should proceed alongside technical work so they do not delay quantum-resistant protections.
- Image: Photo by PiggyBank on Unsplash
Coinbase says Bitcoin should begin preparing for quantum computing threats before a machine capable of breaking its cryptography is announced.
In a blog post outlining its technical priorities, the cryptocurrency exchange and custodian said protecting Bitcoin will require more than selecting a new digital signature system. The transition must also work for ordinary wallets and institutional custody, limit demands on the network and address funds whose owners cannot or will not move them.
Coinbase described the migration as a complex, multiyear undertaking. Changes to Bitcoin’s shared rules and the movement of funds across its ecosystem can take years making advance preparation important even before the threat becomes certain, according to the post.
The company said it holds about 5% of all bitcoin in existence, giving it a substantial stake in how the network approaches the problem. It is preparing its own systems, holding discussions with Bitcoin developers and researchers, and supporting open-source work through engineering resources and participation in the Bitcoin Security Consortium.
The post is an input to an open discussion rather than a final Coinbase position, the company said, ading that it does not establish a migration deadline or announce an agreed Bitcoin upgrade.
Coinbase’s main recommendation is to keep technical preparations moving while the community debates what should happen to abandoned or inaccessible coins.
Company leaders write: “Some questions, including how to handle abandoned or inaccessible coins, are difficult and deserve thoughtful debate. In our view, that discussion can continue alongside the technical work to add post-quantum signature support to Bitcoin.”
More Than a New Signature
Digital signatures authorize bitcoin spending. They allow the network to check that a transaction was approved by the holder of the relevant secret key.
The potential threat described by Coinbase is a quantum computer powerful enough to defeat the cryptography behind existing signatures. If that capability emerged, exposed public keys could put funds at risk. Public keys are the information used to verify signatures; private keys provide the authority to spend.
Coinbase wants Bitcoin developers to evaluate protections for both funds already exposed and newly created funds. It also wants a design that can accommodate different quantum-resistant signature systems over time, allowing an algorithm to be replaced or supplemented without rebuilding the entire structure.
The company pointed to proposals known as P2MR, associated with Bitcoin Improvement Proposal 360, and P2TRv2 as approaches that appear to offer that flexibility. These concern how Bitcoin records the conditions that must be met to spend funds.
According to Coinbase, a suitable design would conceal public keys until needed, avoid a spending route vulnerable to quantum attacks and allow future signature algorithms to be added. It would also need an address format that wallets, exchanges and payment tools could adopt with little difficulty.
Those protections must fit Bitcoin’s operating constraints. Transaction space is limited, and computers independently checking the blockchain must be able to verify transactions without excessive demands on their resources.
Coinbase said evaluations should measure transaction size, fees, verification work and the time required to migrate vulnerable funds. A system that performs well in a general cryptography test might impose different costs when used across Bitcoin.
According to the post, comparisons developed for internet security do not translate directly because Bitcoin signatures are retained permanently and verified by the network’s nodes.
Choosing Protection That Works in Practice
Coinbase called for a reproducible evaluation tailored to Bitcoin, covering established standards, systems still moving through standardization and alternatives based on different security assumptions.
Its proposed evaluation set includes ML-DSA, SLH-DSA and FN-DSA when standardized, along with other credible candidates. These are different approaches to digital signatures intended to resist quantum attacks.
The company also identified SHRINCS, a compact candidate based on cryptographic hashes, as worth evaluating. According to the post, its draft combines a smaller signing approach that requires careful recordkeeping with a fallback that does not require that history.
That tradeoff illustrates one of Coinbase’s main concerns. Some signature systems may produce smaller signatures and verify them faster, but require a signer to track which signing steps have already been used.
These are called stateful systems and reusing a signing state can allow forgery, Coinbase warned.
For a person managing a wallet, a failed update or an old backup could create that problem. Checking previous blockchain transactions would not necessarily resolve it because a signature or an update might never have reached the blockchain, the company said.
For an exchange, the challenge extends to coordinating servers operating independently across different locations. Coinbase said its systems use that arrangement to process signatures quickly and remain available during failures.
A stateful signature system could require exclusive access to a key and its associated record during signing. Restoring from backup would also require a reliable way to determine the current signing state.
Coinbase therefore wants clear guidance for wallet providers and an option to sign without maintaining state.
Institutional custody introduces another requirement. Coinbase said at least one signature option should have promising compatibility with multiparty computation, or MPC, which allows multiple participants to cooperate in signing without placing all signing authority in one location.
The company described MPC as an important defense against key theft for organizations facing persistent attacks. It said compatibility should inform the choice of signatures, while emphasizing that it was not asking Bitcoin developers to create a particular MPC protocol.
Moving Funds and Handling Late Arrivals
Coinbase favors evaluating ways to let active wallets prepare before the community settles a final policy for existing signatures.
One possible arrangement would give the same funds two alternative spending routes, one using an existing signature and another using a quantum-resistant signature. Users could initially rely on the familiar route, with the other available when needed or required.
That proposal is a transition mechanism, rather than a requirement that every transaction use both signatures.
The company also wants developers to examine quantum-resistant-only options for early adopters, methods that reduce public-key exposure during migration and staged rules for creating and spending funds under older formats.
What happens to coins left behind could prove especially difficult.
Coinbase listed several categories requiring attention, including funds with permanently exposed public keys, reused keys, dormant holdings still controlled by their owners and funds whose keys or recovery information have been lost.
It also raised the possibility of quantum theft occurring before the public learns that a capable machine exists.
Potential responses discussed in the post include restrictions on older signatures, freezes, limits on spending and mechanisms to rescue funds. Coinbase presented these as options for evaluation, not settled recommendations.
Any rescue mechanism would have to demonstrate that it could withstand quantum attacks and could not be exploited by an attacker who knew only an exposed public key, the company said. Proposals should also explain what happens when an owner has no recoverable secret or misses a rescue deadline.
Coinbase said developers should consider a route for legitimate users who migrate late if Bitcoin eventually limits or ends spending through existing signatures. How such a route would work, and what compromises it would require, remain open questions.
The company acknowledged that no single solution may satisfy Bitcoin’s technical limits and the needs of every user, custodian and institution. Its immediate aim is to put those requirements into the discussion while work on quantum-resistant signatures continues.
The team concludes: “We are grateful to the researchers, developers, and builders already working on these questions, and we look forward to continuing to collaborate with the community on Bitcoin’s post-quantum future.”
Read the post here.