Ark Invest sees one-third of Bitcoin supply at risk from quantum threat

Ark and Unchained say about one-third of the Bitcoin supply remains exposed to future quantum threats, though the risk is still years away.

US investment manager Ark Invest claims that the lion’s share of the Bitcoin supply is already safe from the quantum computing breakthrough, leaving ample warning signals for builders to quantum-proof the rest of the supply.

Around 65.4% of the Bitcoin (BTC) supply is not vulnerable to the threat of a quantum computing breakthrough, but about 34.6% of the BTC supply remains at risk, according to a Wednesday white paper published by Ark Invest and Bitcoin-focused financial services company Unchained.

This includes around 5 million BTC, or 25% of the total supply, assumed migratable due to address re-use, and 1.7 million BTC, or 8.6% of the supply, assumed lost in P2PK (Pay To Public Key) addresses, the earliest form of transaction script on the Bitcoin blockchain, which locked funds directly to public keys. Another 200,000 BTC (around 1%) is assumed to be migratable due to the address type P2TR (Pay To Taproot).

This supply would be vulnerable to quantum theft if quantum computers can break Bitcoin’s elliptic curve cryptography (ECC), which would require about 2,330 logical qubits and tens of millions to billions of quantum gates, the report argued.

The paper’s estimates are far broader than those in a February CoinShares analysis, which said the realistically market-relevant portion of quantum-vulnerable Bitcoin was about 10,200 BTC, or roughly 0.05% of supply, even though legacy P2PK addresses account for a much larger theoretical exposure.

Separately, the first quantum computer facility with one million physical qubits (the equivalent of tens of billions of typical computers) is expected to be finished in 2027 by Chicago-based PsiQuantum, which raised $1 billion from BlackRock-linked funds.

Ark’s white paper argues that quantum risks will evolve over an extended period with “many intermediate warning signals” rather than an abrupt single point of failure. 

Related: Cathie Wood says ARK’s $1.5M Bitcoin bull price hasn’t changed as markets eye rally

Quantum breakthrough remains a “long-term risk,” rather than an imminent threat to the Bitcoin network, which gives the community time to “research and make plans for protecting the network” against the protracted development of quantum capabilities, the paper states.

Ark Invest foresees five stages for quantum computing advancements, but said that only the final stage of advancements will break ECC quicker than Bitcoin’s 10-minute block time.

Bitcoin held in quantum-vulnerable addresses should not be at risk until stage 3, when a quantum computer can break the 256-bit ECC key.

The white paper said that the first public key may be broken in the mid-2030s, citing a consensus target by companies including Google, IBM and Microsoft.

Quantum computers will inevitably reach stage 4 and become a threat to the Bitcoin network, which means that Bitcoin must implement a quantum-safe address format, the paper argues.

The measure will require the integration of post-quantum cryptography (PQC) into Bitcoin, such as the ML-DSA lattice-based signature scheme and the SLH-DSA hash-based signature. 

“Those standards give us confidence in the capabilities of post-quantum cryptography,” wrote Ark Invest, cautioning that upgrading to PQC on the consensus level will be more difficult due to Bitcoin’s decentralized governance structure, which requires the majority of network participants to agree to a soft fork.

The paper said Bitcoin will eventually need quantum-safe address formats and, over time, post-quantum cryptography. One draft path under discussion, BIP-360, proposes a Pay-to-Merkle-Root output type designed to reduce long-exposure quantum risk by removing Taproot’s key-path vulnerability, though it does not itself add post-quantum digital signatures.

Related: Whale's $9B Bitcoin sale was not due to quantum concerns: Galaxy Digital

However, BIP-360 is not the final solution to Bitcoin’s quantum threat, according to Chris Tam, president and head of quantum innovation at BTQ Technologies.

“The proposal introduces a new address format but critically does not include post-quantum digital signatures, which are essential for any meaningful long-term defense against quantum attacks,” he told Cointelegraph.

Magazine: Bitcoin may take 7 years to upgrade to post-quantum: BIP-360 co-author

Source: CoinTelegraph