A recent Glassnode analysis unveils the extent to which Bitcoin is susceptible to quantum computational threats. The report highlights that approximately 6.04 million BTC, comprising 30.2% of the total Bitcoin supply, are situated in addresses with visible public keys. Contrastingly, 13.99 million BTC maintain no exposure to public key revelation as per Glassnode’s thorough on-chain evaluation.
What are the key areas of vulnerability?
Glassnode delineates exposed Bitcoin into two classifications: “structural” and “operational” vulnerabilities. Structural vulnerabilities involve 1.92 million BTC, accounting for 9.6% of the total supply. This category predominantly involves addresses from the “Satoshi era” with Pay-to-Public-Key (P2PK) outputs, obsolete multisignature structures, and specific Taproot addresses. These addresses reveal public keys on the blockchain even if untouched.
The risk with Satoshi-era BTC is intensified by the fact that these legacy coins, possibly lost or forgotten, cannot transition to more secure address types, leaving them perpetually exposed. Although Taproot addresses are intended for improved privacy, they are considered structurally risky due to potential public key exposure on the chain.
How do exchanges and institutions fare?
Regarding operational risk, which emphasizes user behavior, around 4.12 million BTC are at risk, with approximately 1.66 million coins residing in exchange wallets. This equates to around 8.3% of all BTC, primarily due to address management practices at these exchanges.
Significant disparities exist among exchanges; Coinbase has only 5% of its BTC holdings at risk, whereas Binance jumps to 85%. Bitfinex categorizes all its holdings as operationally vulnerable. In contrast, governmental holdings in countries like the United States, United Kingdom, and El Salvador are devoid of exposure, with an impressive 99% operational security maintained in recent years.
How can exchanges enhance security?
In recent years, the proportion of BTC held securely by exchanges has decreased. In 2018, about 55% was secured, a statistic that has now dropped to 45%. Glassnode recommends reversing this trend by regularly rotating addresses and managing spending outputs effectively. Still, there is no immediate cause for alarm.
“Public keys exposed on the blockchain are a potential foundation for long-term quantum attack vulnerability. These risks can be greatly reduced with improved address management. However, there is currently no evidence of an urgent threat.” – Glassnode report
The findings emphasize the critical importance of proactive address management for Bitcoin users. Eschewing address reuse and opting for advanced security protocols could significantly enhance resilience against future quantum computational threats.
