Quantum computing threat erupts! Coinbase Research Director: 33% of Bitcoin may be cracked

Coinbase Global Investment Research Director David Duong warns that the pace of quantum computing advancement is faster than expected, with about one-third of Bitcoin being vulnerable to quantum attacks due to public key exposure. BlackRock has already listed quantum computing as a risk in May, and researchers predict that within 4 to 5 years, quantum computers may be able to crack Bitcoin’s encryption technology.

Quantum Computing Transforms from Theoretical Threat to Structural Risk

The threat of quantum computing to Bitcoin is no longer distant science fiction. Coinbase Global Investment Research Director David Duong issued a warning on LinkedIn, stating that the speed of quantum computing progress exceeds what the $3.3 trillion cryptocurrency industry reflects. He pointed out that even though direct attacks on Bitcoin are not imminent, the quantum threat has evolved from a distant theoretical concern to a real structural risk.

Duong wrote: “As quantum computing advances, Bitcoin’s long-term security may be entering a new phase. Investors are increasingly worried that the risks posed by quantum computing could materialize faster than previously anticipated.” This concern is not unfounded. Quantum computers are a new type of machine that leverages quantum mechanical laws to process information in ways fundamentally different from today’s computers. They are still in experimental stages, but if scaled sufficiently, they could break Bitcoin’s cryptographic techniques.

Quantum computing researcher Pierre-Luc Dallaire-Demers told media in October that he expects quantum computers to crack Bitcoin’s encryption within 4 to 5 years. This timeframe is much closer than most investors imagine. In May, BlackRock’s flagship product, the iShares Bitcoin Trust, explicitly listed quantum computing as a risk factor in its revised prospectus, indicating that institutional investors are taking this threat seriously.

Why One-Third of Bitcoin Is Vulnerable to Attacks

Wallets holding about one-third of the Bitcoin supply have publicly visible outputs, making them highly susceptible to brute-force attacks. This critical vulnerability stems from early Bitcoin technical design. In the early days, many transactions used P2PK (Pay-to-Public-Key) format, exposing public keys directly on the blockchain. Once these addresses’ public keys are exposed, quantum computers could derive the private keys from them.

Modern Bitcoin addresses (such as P2PKH and SegWit addresses) keep public keys hidden until they are spent; only during a transaction are they revealed. However, once these addresses have been used in at least one transaction, the public key remains permanently recorded on the blockchain. This means any address that has ever transacted but still holds Bitcoin could become a target for quantum attacks.

On-chain data analysis indicates that approximately 3.7 million Bitcoins (about 17.6% of the total supply) are stored in addresses with exposed public keys. Combined with early P2PK addresses, roughly one-third of the Bitcoin supply is at potential risk. Even more concerning, a significant portion of these addresses belong to early miners and long-term holders, possibly including Bitcoin mined by Satoshi Nakamoto himself.

Dual Threat Path of Quantum Computing

Bitcoin’s security relies on two cryptographic modules. The first is the Elliptic Curve Digital Signature Algorithm (ECDSA), ensuring that only the private key owner can authorize transactions. The second is SHA-256, which underpins proof-of-work mining hash functions. Duong points out that quantum computers pose two very different risks to Bitcoin.

Two Major Attack Vectors of Quantum Computing on Bitcoin

Economic Risk (Quantum Mining): If quantum computers become powerful enough, they could mine blocks at a rate far exceeding traditional Bitcoin mining efficiency, distorting the network’s incentive mechanisms.

Security Risk (Private Key Cracking): Quantum computers could derive private keys from exposed public keys, allowing attackers to steal funds from vulnerable addresses.

Priority Threat Level: Duong believes that, given current scalability limitations, quantum mining remains a lower-priority issue, with signature security being the core concern.

The second risk is more immediate and urgent. Once quantum computers reach a sufficient number of logical qubits (estimated to require millions), they could use Shor’s algorithm to compute private keys from public keys within a reasonable timeframe. This means any address with an exposed public key could be cracked within hours, leading to theft of funds.

In contrast, the threat from quantum mining is smaller. Although quantum computers could theoretically accelerate SHA-256 hash calculations, Grover’s algorithm offers only a quadratic speedup, which is far less impactful than the exponential advantage against ECDSA. Additionally, Bitcoin’s difficulty adjustment mechanism can respond to sudden increases in computational power, preventing immediate network disruption from quantum mining.

Defense Measures and the Race Against Time

The Bitcoin community is not unprepared for the quantum threat. Researchers are exploring quantum-resistant cryptographic schemes, such as hash-based signatures, to upgrade to quantum-proof solutions. These new signature schemes do not rely on elliptic curves or factorization, which are vulnerable to quantum attacks, but instead are based on the one-way nature of hash functions, which even quantum computers cannot effectively break.

However, upgrading Bitcoin protocols to incorporate quantum-resistant cryptography is not straightforward. It requires a network-wide consensus upgrade (hard fork), with all nodes and wallet software needing updates. More complex is how to handle old addresses with exposed public keys—forcing a migration could infringe on user property rights, but not migrating leaves these funds permanently exposed to risk.

Time is the most critical factor. If quantum computers achieve cracking capability before Bitcoin completes its quantum-resistant upgrade, it could lead to catastrophic consequences. Investors and holders need to closely monitor quantum computing developments and consider migrating funds to new addresses that have never exposed their public keys. For long-term holders, regularly updating to the latest address formats (such as Taproot) and avoiding address reuse are practical measures to reduce quantum risk.