Is the quantum computing threat exaggerated? CoinShares explains the real quantum risks facing Bitcoin

Approximately 17,000 Bitcoins are stored in early addresses with public keys visible on the Bitcoin network, theoretically exposed to quantum risks.

However, only about 10,200 Bitcoins are truly likely to impact the market, representing a tiny fraction of the total Bitcoin supply. CoinShares’ latest report clearly states that the threat of quantum computing to Bitcoin is “significantly exaggerated,” and the risk is entirely manageable.

How Does Quantum Computing Threaten Bitcoin?

The threat of quantum computers to Bitcoin mainly comes from two algorithms: Shor’s algorithm and Grover’s algorithm.

Shor’s algorithm could potentially break the elliptic curve digital signature algorithm (ECDSA) currently used by Bitcoin, while Grover’s algorithm could weaken the security margin of SHA-256, affecting mining and proof of work.

The core of this threat lies in the cryptographic technologies Bitcoin relies on. Bitcoin’s security framework is based on two cryptographic elements: the elliptic curve digital signature algorithm used for transaction authorization, and the SHA-256 hash function used for mining and address protection.

From a technical perspective, the primary quantum risk involves Shor’s algorithm potentially cracking ECDSA or Schnorr signatures, thereby exposing private keys.

Feasibility of Quantum Attacks in Reality

Current quantum computers are far from capable of posing a real threat to Bitcoin. According to CoinShares analysis, cracking a public key in one day would require a fault-tolerant quantum computer with performance far beyond today’s capabilities, and 13 million physical qubits—about 100,000 times larger than the largest quantum computer currently available.

Cracking encryption in less than an hour would require computational power 3 million times greater than current quantum computers.

Research estimates that quantum computers capable of cryptographic relevance may not appear until the 2030s or later. Quantum attacks are not an imminent crisis but a foreseeable engineering challenge, providing ample time for adjustments.

The main risk to Bitcoin from quantum computing concerns early address types, not all Bitcoins are at immediate risk.

Below is an analysis of the risks faced by different address types:

Which Bitcoins Are Actually at Risk?

The actual threat of quantum computing to Bitcoin is much more limited than many imagine. The main potential impact is on approximately 1.7 million Bitcoins that use P2PK addresses early on, accounting for about 8% of the total supply, with limited short-term systemic market impact.

Of these, only about 10,200 Bitcoins belong to a specific P2PK category that is vulnerable to quantum threats, with limited expected market impact.

The remaining approximately 1.6 million Bitcoins are scattered across numerous small addresses. Even if quantum technology advances, fully attacking these addresses could take decades.

More importantly, modern Bitcoin addresses (like P2PKH/P2SH) hide their public keys before spending, further reducing short-term quantum risks. The claim that 25% of Bitcoin supply faces risk is considered significantly exaggerated, and risks can be mitigated through address migration.

How Can Bitcoin Respond to Quantum Threats?

In response to the potential threat of quantum computing, the Bitcoin community has proposed various solutions. Practical best practices include avoiding address reuse, transferring vulnerable UTXOs to new addresses, and establishing user-facing quantum preparedness procedures.

Coinbase cites research from Chaincode Labs indicating that addressing quantum risks could follow two timelines: an immediate short-term emergency plan and a long-term standardization route.

If quantum technology suddenly advances, protective measures could be rapidly deployed within about two years by prioritizing migration transactions.

If no sudden breakthrough occurs, quantum-resistant signatures could be introduced via soft forks, but this process might take up to seven years due to larger signature sizes, slower verification, and the need for wallet, node, and fee mechanism adjustments.

The Bitcoin community has already proposed several specific technical directions, including BIP-360, BIP-347, and the Hourglass mechanism. Bitcoin can adopt post-quantum signatures, and Schnorr signatures have paved the way for more upgrades, allowing Bitcoin to continue evolving defensively.

Practical Advice and Future Outlook for Investors

For investors, the key is to assess risks rationally rather than panic excessively. From an investment perspective, quantum vulnerabilities are a foreseeable long-term engineering issue. Institutional investors should evaluate risks based on evidence and focus on long-term upgrade and migration solutions, but there’s no need for panic at present.

“Bitcoin’s quantum vulnerability is not an imminent crisis but a foreseeable engineering challenge, with ample time for adjustments,” emphasizes CoinShares in the report.

Investors can take simple measures to reduce risks. Holders might proactively migrate funds to more secure modern addresses. Staying informed about developments in quantum computing is also wise, especially when breakthroughs occur.

From a positive perspective, if the Bitcoin network demonstrates good progress in adapting to quantum threats ahead of time, it will strengthen Bitcoin’s narrative as a store of value, showcasing its ability to preserve itself under emerging technological threats.

Summary

As block height continues to increase, the number of Bitcoins categorized as “quantum risk” continues to rise. This trend reminds us that even if quantum attacks do not occur in the short term, the costs and technical preparations for migration should be initiated early.

On the Gate platform, as of February 9, Bitcoin prices continue to show market resilience. Institutional investors are viewing this risk from another angle—some are already adjusting their portfolios, considering quantum computing as a long-term risk factor.

The development of quantum computing may be faster than market expectations, but Bitcoin’s capacity to adapt should not be underestimated.