Bitcoin’s Quantum-Resistant Upgrade Has to Work for Big Custodians, Coinbase Tells Developers

Coinbase set out what it wants from Bitcoin‘s shift to signatures that can resist a future quantum computer, and much of its list traces back to how a large custodian actually signs transactions.

Holding roughly 5% of all BTC in existence by its own count, the exchange described the post as “an input to an open discussion, not a set of instructions or a final Coinbase position.”

Coinbase argued the work should start before anyone proves the threat is real. “We believe it is important to begin preparing well ahead of any CRQC announcement,” the company wrote in the post, referring to a cryptographically relevant quantum computer, one able to derive private keys from exposed public keys. It said changes to Bitcoin’s consensus rules, and the migrations that follow, can take years.

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Coinbase said it favors an output type that lets new post-quantum signature schemes be added or replaced later without a full redesign. It pointed to BIP-360, a draft that would create a Pay-to-Merkle-Root (P2MR) output through a soft fork by dropping Taproot’s key path, and to a design called P2TRv2.

The exchange also floated a 1-of-2 hybrid, in which the same coins could be spent either with a classical ECDSA or Schnorr key or with a post-quantum key. That would let active wallets add protection before the network settles what happens to older signature types.

Stateful signature schemes could be smaller and faster, but Coinbase wrote in the post that managing their state “is notoriously error-prone and could even lead to forgery.” It said its signing servers run independently across zones, which a scheme needing an exclusive lock on each key and its state would make infeasible. If stateful schemes are adopted, Coinbase wants a stateless fallback. Separately, it listed SHRINCS, a compact hash-based draft that itself pairs a stateful signing path with a stateless backup, as a candidate to evaluate alongside ML-DSA, SLH-DSA and FN-DSA.

It also wants Bitcoin’s options to include at least one scheme with promising compatibility with multi-party computation (MPC), which splits signing control across parties, describing that in the post as “a consideration for scheme selection, not a request for the Bitcoin community to develop a particular MPC protocol.”

Coinbase said it would be useful to consider whether and how holders who move late could still migrate after any cutoff for legacy signatures, and wrote in the post that legacy funds, including dormant and lost coins, are “best treated as a separate governance and engineering problem.” That question has already drawn pushback: Cardano founder Charles Hoskinson argued that BIP-361, a draft that would phase out legacy ECDSA and Schnorr spending, would in practice require a hard fork.

Earlier this year, Google researchers described how a fast quantum machine could target bitcoin transactions in the minutes before they are confirmed.

Related Listen: Why a Hidden Public Key Still Can’t Protect Your Bitcoin From Quantum Computing

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