Bitcoin’s Quantum Conundrum: Debunking the Doomsday Hype

For years, a looming question has cast a shadow over Bitcoin investors: Will “quantum computers” become the ultimate “Bitcoin terminator”? Recent research reignited these fears, but a new report from digital asset management firm CoinShares aims to definitively shatter these “overblown” doomsday prophecies. Released on February 6th, CoinShares’ study asserts that the quantum threat is not an immediate crisis, but rather a foreseeable and manageable engineering challenge.

Challenging Exaggerated Vulnerability Claims

The latest wave of concern originated from a Chaincode Labs estimate suggesting that anywhere from 20% to 50% of circulating Bitcoin could be at risk of “private key decryption” by advanced quantum technology. Christopher Bendiksen, Head of Research at CoinShares, strongly refutes this, arguing that such an estimation method is overly simplistic and conflates different levels of risk.

CoinShares’ in-depth analysis of blockchain data reveals a more nuanced picture:

• Limited Exposure from Early Address Formats (P2PK): Only older addresses that utilized the “Pay-to-Public-Key” (P2PK) format, where public keys are permanently exposed on the blockchain, possess a theoretical vulnerability. Approximately 1.6 million Bitcoin, representing 8% of the total supply, reside in these legacy addresses.
• Minimal Real-World Threat: Crucially, among these 1.6 million Bitcoin, only about 10,200 BTC are concentrated in large-value addresses—a quantity significant enough to potentially impact the market if compromised. The vast majority of the remaining Bitcoin is widely distributed across over 32,000 independent unspent transaction outputs (UTXOs), averaging roughly 50 BTC per UTXO.

CoinShares emphasizes that even under “highly optimistic” assumptions regarding quantum technology advancements, individually cracking these keys would demand an extraordinarily long time, rendering it practically unfeasible. Furthermore, claims that “25% of Bitcoin faces a quantum threat” often include “human oversights” like the repeated use of exchange addresses, risks that can be easily mitigated through updated operational practices.

It’s worth noting that in January, Jefferies strategist Christopher Wood cited Chaincode Labs’ high-risk estimates, leading him to liquidate 10% of his model investment portfolio’s Bitcoin allocation. He described quantum computing as an “existential threat that shakes the foundation of Bitcoin’s store of value.”

The Reality of Quantum Computing Power

CoinShares unequivocally dismisses the notion that a “quantum threat is imminent.”

Christopher Bendiksen references public research, highlighting the immense computational requirements: to reverse-engineer a single Bitcoin public key within 24 hours would theoretically necessitate a fault-tolerant quantum computer equipped with 13 million “physical qubits.” This represents an astounding 100,000 times the processing power of the world’s most powerful quantum computer today. To achieve the same feat within a mere hour, the required computational power would exceed existing capabilities by more than 3 million times.

“To crack current asymmetric encryption systems, at least ‘millions of qubits’ are needed. Google’s current quantum computer, Willow, only has 105 qubits, and the difficulty of maintaining system stability increases exponentially with each additional qubit.”

— Charles Guillemet, CTO of Ledger

Divergent Strategies and Industry Responses

While the quantum debate unfolds, the cryptocurrency community remains divided on defense strategies. Some aggressive factions propose a “Soft Fork” to directly destroy quantum-vulnerable Bitcoin. CoinShares vehemently opposes this, asserting it would gravely violate Bitcoin’s fundamental commitment to safeguarding private property rights.

“Destroying Bitcoins that don’t belong to you completely deviates from the spirit of Bitcoin,” Christopher Bendiksen stressed. Conversely, crypto technology expert Adam Back maintains an optimistic outlook, suggesting that Bitcoin can gradually adopt “Post-Quantum Signatures,” enabling continuous defensive evolution against future threats.

Meanwhile, MicroStrategy Executive Chairman Michael Saylor has characterized the “quantum threat” as a “FUD (Fear, Uncertainty, and Doubt)” parade within the crypto sphere. Ethereum co-founder Vitalik Buterin is also proactively preparing, having established a dedicated anti-quantum security team.

A Manageable Future for Bitcoin Security

CoinShares concludes by reassuring institutional investors: the quantum risk is currently manageable, and there is ample time to develop and implement effective solutions.