Approaching

In brief

• Experts fear a quantum computer could one day be used to access billions of dollars of ancient Bitcoin.
• That could result in an immediate drop in Bitcoin’s price during a so-called liquidation event.
• There may be a solution, but time is running out, they say.

Some members of Bitcoin’s community are quick to shrug off advancements in quantum computing, but behind closed doors, influential cryptographers and business leaders are concerned about a potential catastrophe.

A computer strong enough to reverse engineer wallets’ private keys could one day disrupt Bitcoin’s market, flooding exchanges suddenly with ancient Bitcoin and sending prices spiraling, computer and security experts explained at a private luncheon last week—a short walk away from The Venetian’s cavernous Bitcoin 2025 conference rooms in Las Vegas.

Although the threat was once viewed as far-off, experts now believe that Bitcoin’s community has less than a decade, even a handful of years, to put contingency plans in place. Among those who advocated for preparedness, as opposed to industry-wide denial, was Jameson Lopp, CTO and co-founder of self-custody service Casa.

“It’s difficult to say that we have decades because it seems like the timelines are getting compressed,” he said. “The real question is: Can Bitcoin come together and find consensus on how to mitigate this threat before it really becomes an existential crisis?”



The luncheon at the Delilah at Wynn Las Vegas, a modern-day supper club, was hosted by Anduro, a multi-chain layer-2 network incubated by Bitcoin miner Marathon Digital, and Evertas, a crypto insurance company founded in 2017. The discussion was led by Anduro Senior Protocol Engineer Hunter Beast and Marathon Director of Engineering Michael B. Casey.

The event, which explored potential solutions, secured RSVPs from members of the U.S. Treasury, according to a person familiar with the matter. The Treasury was not in attendance, however, according to a separate person familiar with the matter.

“Liquidation event”

Companies including Google and Microsoft have invested billions of dollars in researching quantum computing, making it an effective space race among the world’s tech elite.

Using particles that can act like both individual units and waves simultaneously, their experimental machines are able to crunch complex calculations that would otherwise take today’s machines thousands of years. (An in-depth breakdown can be found here.)

Bitcoin is vulnerable to quantum computers that could reverse-engineer private keys, enabling a bad actor to steal assets belonging to Bitcoin’s pseudonymous creator Satoshi Nakamoto, leading exchanges, and abandoned coins mined by early network participants.

Last week, a research paper from Google posited that breaking the so-called RSA encryption backing the security of private keys might require 20 times fewer quantum resources than experts previously estimated. In theory, a public key is all that they would need.

Beast and Casey say that Bitcoin’s algorithms could be cracked with zero warning. And based on the network’s current structure, a bad actor would likely be incentivized to collect as many keys as they can before potentially accessing billions of dollars of Bitcoin in one fell swoop.

A study published by Deloitte found that 25% of Bitcoin’s circulating supply is vulnerable to quantum attacks because their associated wallets’ keys had been exposed. That sum, totaling 4 million Bitcoin at the time, is worth nearly $42 billion, based on current prices.

The reality is that an attacker would get far less. If algorithms backing Bitcoin are cracked, then it could immediately depress the asset’s price during a “liquidation event,” the experts said. 

To be sure, Bitcoin can be secured against quantum threats by moving funds to a wallet that hasn’t had its public key exposed yet. Nevertheless, that’s impossible for actors that have lost their keys, or impractical for exchanges that let the public make on-chain deposits.

“It’s a huge coordination problem,” Beast said, emphasizing that the community should be leaning towards “preparedness” as opposed to “denial.”

“Biggest short of all time”

At present, Bitcoin’s community would have two options if a quantum computing attack occurred: Absorb the market impact that quantum computers have on Bitcoin and move on, or start confiscating assets. The latter option, in many ways, would conflict with Bitcoin’s ethos as an asset specifically built for self-custody.

Beast is the author of BIP 360, a proposal aimed at introducing certain address types that leverage post-quantum cryptography. Because experts aren’t sure just how strong quantum computers could grow, the proposal features address types with varying levels of security.

According to Casa’s Lopp, quantum signature schemes “are massive in terms of data size,” and they would likely ignite “a version of the block size debate” that centered on Bitcoin’s transaction overall throughput. The debacle split Bitcoin’s community and ultimately led to the creation of Bitcoin Cash after years of acrimonious debate over Satoshi Nakamoto’s vision for the network.

Even then, Beast’s solution would require that Bitcoin owners move their assets to a new address type, from your average user to the biggest crypto exchange.

Casey’s solution, which has not been assigned a so-called BIP number that’s used to track proposed software changes, is aptly dubbed “hourglass.” He believes that it could stretch out the dilemma of quantum-accessed coins to eight months from a few hours.

There’s a certain type of Bitcoin address, named pay-to-public-key, or p2pk, that’s especially vulnerable to quantum attacks, he said. The format is outdated—most new wallets use hash-based signatures now—but it was standard for Satoshi Nakamoto and the first Bitcoin miners.

By limiting the number of transactions from p2pk addresses that can be included in one block, Casey said the community would have more time to explore other solutions. As a pseudo-legitimate way to access coins, it may also encourage bad actors to target abandoned Bitcoin addresses—coins that nobody would end up missing—as opposed to real users.

What’s more, the network would have a better way of assessing how many actors have access to strong quantum computers. If only one p2pk-based transaction was allowed per block, attackers would have to bid against each other to get their transaction included. In theory, that could dampen the market impact, as those fees are awarded to Bitcoin miners.

As Bitcoin’s community mulls solutions to a seemingly inevitable threat, Project 11 is among those involved, offering a Bitcoin bounty to anyone that’s able to break a “toy version” of algorithms underlying the network and $2 trillion worth of assets.

“Bitcoiners do not want to hear this story,” Alex Pruden, a Project 11 co-founder and former U.S. army infantry and special operations officer, said during the event’s Q&A portion.

Amid the jargon, one Wall Street veteran and mathematician, however, floated a more personal solution in the event that a quantum computing attack depresses Bitcoin’s price.

“Open the biggest short of all time on Hyperliquid,” he said, referring to the rapidly rising decentralized exchange.

Edited by James Rubin

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