Bitcoin security, while futuristic, faces challenges with the advent of powerful quantum computing that is starting to power chips on the market.
recently, Significant movements were observed in the supply distribution of Bitcoin (BTC) Some analysts interpret this phenomenon as active “system cleansing” in the face of quantum risk, rather than simple profit-taking.
The move is also driven by concerns over the exposure of the public keys of Bitcoin addresses, and focuses on the need for protocol upgrades to ensure long-term resilience.
Market analyst Willy Wu warned the community about the impending “big and scary era of quantum computing (BSQC).” Previously, security was only focused on protecting the private key (seed phrase), but with the advent of BSQC, it has become important to protect the public key as well, Wu explains.
The reason is A sufficiently advanced quantum computer can deduce the private key from the published public key..
Woo points out that current Taproot addresses that begin with “bc1p” have a public key embedded in the address, making them especially vulnerable to Shor’s algorithm at any time. In contrast, previous formats hide the public key behind a hash, making it difficult to decrypt.
Woo suggests specific steps
To individually mitigate this risk, Woo has proposed a series of interim measures for users. The first is to create a new SegWit wallet starting with “bc1q” or use the older format starting with “1” and “3”. We will then offer to send all your BTC to this new secure address.
Third, Wu suggests continuing to accumulate Satoshi in new directions.. “Do not send BTC from this address, as doing so will expose your public key and make you vulnerable to BSQC attacks,” the analyst says.
As a fourth step, Wu believes we need to wait until the Bitcoin network is upgraded to a protocol that is resistant to quantum computing. That process could take several years, according to estimates.
The final step is when the network is not busy, BTC will be sent to a new quantum secure address developedaccepts that the private key is exposed during a short transaction, but the risk of theft is low during that short period.
Taproot migration and Bitcoin “quantization”
The chart Wu shared shows market trends that seem to support his thesis. Recently, since early 2024, the percentage of Bitcoin supply stored in Taproot (P2TR) addresses has been decreasing.
This setback in the adoption of modern formats, coupled with a shift away from even older formats, has been interpreted as a sign of a mass sale, but for Woo this is “an active migration of coins to more resilient formats.”
The logic behind this “purification” is differential quantum fragility, Wu says. The taproot address instantly exposes the public key. On the other hand, the SegWit format (P2WPKH/P2WSH) is considered more resilient as it only exposes the public key when the funds are used for the first time. Allow time for potential migration or upgrade before attack.
Therefore, the transition from Taproot and other older formats may be an effort to “quantize” BTC and move it to SegWit addresses that are not reused to increase long-term security.
Criticism of individual solutions and the need for consensus updates
Despite the proposed precautions, investment firm Capriol, through its founder Charles Edwards, expressed skepticism about the effectiveness of a strategy based solely on users’ individual behavior, such as the one proposed by Wu.
Edwards argues that if Bitcoin’s quantum security relies on perfect, meticulous user interaction, its value could be as low as $0.
The criticism is that relying on user perfection is unrealistic — people are “lazy, fallible, and have lives” — and would undermine technology adoption by eliminating transactional traffic, Edwards said.
Additionally, a persistent risk is that 30% of Bitcoin’s total supply is held in older and potentially vulnerable address formats (p2pk or lost coins) that could be stolen, flooding the market and undermining Bitcoin’s “hard money” theory.
For Edwards, “Bitcoin’s only hope lies in an agreed upon network upgrade in 2026.” While waiting for a solution at the protocol level, Capriole launched a financial product, the Quantum Index. Designed as a hedge against the risks of quantum computing. As reported by CriptoNoticias, it could impact the security of the Bitcoin network.
The index groups companies working on developing quantum technology and offers a way to alleviate fears that quantum computers will break the cryptographic algorithms that protect networks.
