With roughly 5% of the total Bitcoin supply held in custody for institutional clients — a group spanning banks, asset managers, and hedge funds — Coinbase has put forward a call for the network to begin building defences against the potential threat posed by quantum computing. What remains less clear is whether Bitcoin's network can coordinate a staged technical overhaul before that available window for action closes.
Ownership of the relevant funds gets established in Bitcoin through a cryptographic signing process tied to each transaction. Both ECDSA and Schnorr signature schemes underpin the network's cryptographic architecture, and neither has been broken by any computing hardware in current operation.
Where a quantum computer reaches the processing threshold needed to reverse-engineer a private key from its publicly visible counterpart, any holdings tied to exposed addresses become transferable by an unauthorised party. Such a device, when it possesses the capacity to undermine encryption-based security at this level, falls under the technical designation of a cryptographically relevant quantum computer — abbreviated in the field as CRQC. According to projections published by Google researchers in the original report, a machine of that kind could be operational as early as 2029.
No evidence yet places quantum computing in the position of actively undermining Bitcoin's cryptographic signatures, yet shifting the network away from its current protections is a process that analysts say could unfold across many years. Laying the groundwork at this stage would allow time to assess design options and strengthen underlying infrastructure, without implying that any verified quantum threat is already bearing down on users.
Because any shift to Bitcoin's underlying protocol depends on widespread agreement across the network, wallets, custodians, and supporting services would also require adequate time to build and verify updated security measures before those changes take hold. Proactive preparation — getting the groundwork done well ahead of any cryptographically relevant quantum computer announcement — sits at the heart of Coinbase's position, rather than letting an unplanned crisis drive the timeline.
The proposal from Coinbase centres on making transaction outputs — the data structures governing how funds are authorised for spending — flexible enough to accommodate emerging post-quantum cryptographic standards without forcing a ground-up overhaul of Bitcoin's transaction architecture each time a new signing method is adopted. Building quantum-resistant signatures into a system with adaptable outputs means those protections can be introduced, swapped out, or layered together as both the underlying technology and threat assessments shift over time.
Among the proposals being weighed, P2MR — tied to BIP-360 — and P2TRv2 both surface as candidate formats in that discussion. Supporters of incremental, staged rollouts argue that a step-by-step approach carries fewer disruptions than switching everything over at once.
Under one proposed design, the same pool of funds could be accessed through either a conventional ECDSA or Schnorr key on one hand, or a post-quantum key on the other. Adopting stronger protections before any full-scale changeover remains an option for users, though the guidance from Coinbase leaves open both the structural details and the timeline for phasing out legacy signature schemes.
Wallet-tracking dependencies in certain signature schemes are a design consideration that Coinbase identifies as meriting careful, independent review. Poor handling of historical signing-key records by a wallet application leaves open the possibility that those keys get reused, which in turn allows signature verification to be bypassed. Coinbase's position calls for stateless options to sit alongside stateful architectures, ensuring wallet operators retain access to approaches that do not hinge on maintaining complete records.
Quality of construction is identified in the proposal as a requirement in its own right. Among the technical standards put forward in Coinbase's proposal: uniform identity verification regardless of platform, safeguards against timing-based information leaks, straightforward user-facing controls, and a fallback mechanism for when the random-number generator underpinning transaction signing encounters a fault. The safeguards are designed to lower the likelihood that a post-quantum upgrade inadvertently opens up vulnerabilities in the underlying software or wallet architecture.
According to Coinbase, post-quantum Bitcoin approaches would benefit from compatibility with multiparty computation (MPC), a method through which organisations spread out key operations across multiple participants or devices rather than concentrating them in a single point. Exchanges, custodians, and larger business operators may find the transition timeline stretched or the process less straightforward if the architecture is built around single-wallet use rather than broader operational needs.
Funds held in older address formats face the possibility of becoming inaccessible if ECDSA or Schnorr spending methods are phased out or restricted at some future point. Wallets that have gone quiet over time may reflect owners who no longer hold access credentials, and certain address formats from earlier generations leave their underlying public keys visible.
Coinbase has noted that a threat actor gaining covert access to a quantum computer capable of breaking current cryptographic standards would be positioned to empty vulnerable holdings well before news of that capability reached the public. No official position on how to handle dormant, quantum-vulnerable, or permanently inaccessible Bitcoin holdings has been put forward by Coinbase.
The position put forward holds that funding questions warrant their own dedicated discussion, so that disagreement over those resources does not hold back technical safeguards for users able to move their funds — and that any recovery framework would equally need to withstand quantum-level threats. No single output format or signing method stands out as the clear priority for development teams to pursue at this stage.
The stated aim is to evaluate adaptable design options, rollout uncertainties, and how well the changes fit within existing institutional structures — all while ensuring that the question of legacy coins does not have to be resolved before the wider modernisation effort can get under way.
