Coinbase holds approximately 15% of all Bitcoin currently in circulation, making the exchange a critical focal point as the cryptocurrency world prepares for the advent of cryptographically resistant quantum computing. For over 13 years, Coinbase has earned the trust of major financial institutions by safeguarding digital assets at scale. The company is now sharing its perspective on Bitcoin’s post-quantum readiness, believing Coinbase frames a successful migration as a multi-year process requiring a comprehensive strategy that protects funds and preserves Bitcoin’s core principles.
Coinbase Assesses Fifteen Percent Bitcoin Risk from Quantum Computing
Coinbase estimates that approximately fifteen percent of all BTC in existence is held by the company, making it one of the largest crypto custodians in the world. This assessment stems from the company’s internal analysis of the risks facing its institutional clients and its own custodial holdings, and informs its proactive engagement with the broader Bitcoin development community.
Coinbase frames its role not as dictating solutions, but as contributing to a collaborative effort to secure the cryptocurrency against quantum computing advancements, the company says. Coinbase’s custody platform, built over thirteen years of experience safeguarding digital assets, already incorporates institutional-grade operational controls, secure key generation and continuous monitoring, all of which will be important in mitigating quantum risks.
The exchange is actively convening discussions with Bitcoin developers and researchers, and providing engineering resources to support open-source work through its participation in the Bitcoin Security Consortium. “We want to contribute to the community’s efforts and help create the conditions for careful, sustained progress,” the company stated in a recent publication detailing its perspective. A key consideration for Coinbase is the design of a post-quantum output type that allows for the introduction and replacement of quantum-resistant signature systems without requiring a complete overhaul of the Bitcoin network, according to the company.
The company believes this flexibility is vital for a smooth transition and advocates for approaches like P2MR (BIP-360) and P2TRv2, which appear to offer this capability. Coinbase would welcome a system allowing active wallets to use post-quantum constructions even before a final legacy-signature policy is established. This phased approach, they argue, would accelerate adoption and minimize disruption.
Evaluating potential post-quantum signature schemes requires specific criteria beyond generic TLS or PKI rankings, as Bitcoin signatures are permanently stored and verified by every node on the network. Coinbase emphasizes the importance of deterministic, cross-platform verification, constant-time implementations and resistance to signing random number generator failures. The company highlights the need for schemes that are compatible with Multi-Party Computation (MPC) signing, a technique that provides strong protection against key theft, particularly for large organizations facing constant cyberattacks.
“When implemented effectively, MPC can provide strong protection against key theft, and it is an important layer of defense for large organizations that face constant attacks on their infrastructure,” the company explained. The potential for stateful signatures, where the validity of a signature depends on the history of key usage, presents a significant operational challenge for large exchanges like Coinbase.
These exchanges rely on multiple server instances operating independently to process signatures with low latency and high availability. Stateful signatures, however, would require exclusive read and write locks on a key during signature generation, effectively eliminating independent operation. This limitation is a critical factor in Coinbase’s evaluation of potential post-quantum schemes. Coinbase also stresses the importance of considering scenarios where wallet owners may be unable to migrate their funds to post-quantum safe outputs before a potential cutoff date for older signature types.
The company believes it would be beneficial to explore mechanisms for these users to migrate their funds afterward, acknowledging that such an approach would involve tradeoffs. They maintain that this discussion can and should proceed independently of the technical work on adding post-quantum signature support, preventing delays in overall progress.
The company advocates for a strong candidate list of post-quantum algorithms to include finalized standards, candidates progressing through standardization, assumption-diverse alternatives and Bitcoin-native constructions with a credible security and operational rationale. Specifically, Coinbase suggests evaluating ML-DSA, SLH-DSA, and FN-DSA once standardized, alongside compact or assumption-diverse candidates that could significantly alter the tradeoff space. Proposals, they add, should also detail contingency plans for scenarios such as unrecoverable secret keys, proof system failures, or expired rescue deadlines.
“It would also be helpful for proposals to describe what happens when the owner has no recoverable secret, the proof system fails to scale, or the rescue deadline expires,” the company noted. Coinbase’s assessment of the quantum threat to Bitcoin, and its proactive engagement with the community, reflects the scale of its holdings and its commitment to long-term security.
The company’s perspective, while not a definitive solution, provides valuable input to the ongoing discussion and emphasises the urgency of preparing for a post-quantum future for the leading cryptocurrency. They express gratitude to the researchers, developers and builders already tackling these challenges, and look forward to continued collaboration on Bitcoin’s post-quantum future.
Flexible Output Designs Support Post-Quantum Bitcoin Migration
The company believes flexible output types, such as P2MR (BIP-360) and P2TRv2, would enable the phased implementation of quantum-resistant cryptography, allowing early adopters to use post-quantum constructions while maintaining compatibility with existing infrastructure. Coinbase would welcome an approach in which active wallets can use a PQ-capable or hybrid construction before the final legacy-signature policy is settled.
They emphasize that addressing the fate of inaccessible or abandoned coins requires careful debate, but that this discussion should not impede the ongoing technical work to integrate post-quantum signature support into Bitcoin. The company frames this as a matter of providing a credible migration path for all users, recognizing that a one-size-fits-all solution may not be feasible.
One possible transition design is a 1-of-2 construction. The same funds have two alternative spending paths, one authorized by a classical ECDSA/Schnorr key and one authorized by a PQ key. While stateful PQ signature schemes could be smaller and faster than stateless ones, managing state in digital signatures is notoriously error-prone and could even lead to forgery. If stateful signatures are supported, we think it is important to also have a stateless option available.
Robust implementations. We hope the evaluation process will place strong weight on deterministic, cross-platform verification, constant-time implementations, clear parameterization and resistance to signing RNG failures.
This experience has provided unique insights into the operational and security requirements of institutional customers, shaping their recommendations for a robust and practical post-quantum migration strategy. Coinbase emphasizes that its contributions are intended to stimulate open discussion, not to dictate a specific course of action.
MPC-Friendliness and Late Migration Paths for Bitcoin Wallets
Coinbase, custodian to approximately 15% of all Bitcoin in existence, prioritizes Multi-Party Computation (MPC) compatibility when evaluating potential post-quantum signature schemes, recognizing its value as a key defense against key theft for large organizations constantly targeted by infrastructure attacks. The company views MPC as an important layer of security, extending beyond the selection of a quantum-resistant digital signature scheme itself, and actively seeks schemes that integrate effectively with MPC protocols.
Coinbase frames this as a proactive measure, acknowledging that Bitcoin consensus changes and ecosystem migrations are protracted processes spanning years, and preparation must begin well in advance of any definitive announcement regarding cryptographically relevant quantum computers (CRQC), the firm reports. The company recognizes that some users may face challenges in migrating their funds and believes exploring options for late migration is important, even if the optimal approach and its associated tradeoffs remain open questions.
This consideration is separate from the technical work of adding post-quantum signature support, allowing both efforts to proceed in parallel. “We believe it would be useful to consider whether and how those users could migrate their funds afterward,” the company states, emphasizing the need for inclusivity in the transition process. This design element is not a request for the Bitcoin community to develop a specific MPC protocol, but rather a consideration for scheme selection, aiming to enhance the overall security profile of Bitcoin transactions.
These technical considerations are critical for ensuring the reliability and security of post-quantum signature schemes within the Bitcoin ecosystem. The company intends to make its needs and concerns visible, allowing them to be weighed alongside those of other stakeholders. “Our goal is to make our needs and concerns visible so they can be weighed alongside everyone else’s,” Coinbase asserts, reinforcing its commitment to open collaboration.
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