Key Highlights
- Coinbase released a report examining how cryptocurrencies should address abandoned or dormant coins in a post-quantum world.
- The report warns that sufficiently advanced quantum computers could eventually break current cryptographic standards such as ECDSA and Schnorr signatures.
- One proposed approach would set a deadline for migrating to post-quantum signatures, after which unmoved coins relying on legacy cryptography would be burned.
Coinbase’s Independent Advisory Board on Quantum Computing and Blockchain has released a new report, titled Post-Quantum Migration and Abandoned Coins, that tackles one of the most complex challenges facing the crypto industry in a post-quantum future.
The report, published on Thursday, examines the tradeoffs involved without endorsing any specific solution. It urges the crypto community, particularly Bitcoin, to begin serious technical planning and governance discussions well before quantum computers pose a practical threat to current cryptographic standards like ECDSA and Schnorr signatures.
Debate emerges over fate of vulnerable coins
Quantum computers capable of breaking elliptic curve cryptography could eventually allow attackers to derive private keys from public addresses. This raises a critical question for dormant or lost coins: should they be protected, burned, or left at risk?
The report outlines two primary positions:
Position 1: Burn Vulnerable Coins
Advocates argue that once post-quantum signatures are enabled, a deadline should be set after which legacy signatures are no longer accepted. Unmoved coins would effectively be burned.
Proponents say this would prevent a sudden influx of quantum-recovered coins that could crash prices and harm responsible holders. It could also mitigate risks such as sanctioned actors (e.g., nation-states) quietly seizing large amounts of Bitcoin. They view inaction as creating a negative externality for the entire network.
Position 2: Do Nothing Beyond Enabling New Addresses
This stance emphasizes property rights and Bitcoin’s decentralized ethos. Owners should have the right to take the risk, and the network should not interfere with ownership.
Critics of burning argue it could set a dangerous precedent for network-level confiscation that could later be exploited for other reasons. They also highlight practical issues, noting that it is impossible to perfectly distinguish between truly lost coins and those held by owners facing temporary barriers.
Intermediate approaches under consideration
The report also explores multiple compromise approaches:
- The Hourglass Proposal: Limits how many coins from vulnerable P2PK addresses can be spent per block, preventing a sudden supply shock.
- BIP-361: Allows users to reclaim funds using zero-knowledge proofs tied to seed phrases after legacy signatures are disabled.
- PACTs: Enables users to privately commit today to a future quantum-safe transaction using Bitcoin’s timestamp feature.
The Advisory Board also makes two clear calls.
The first is to begin technical planning and migration efforts now. Support for post-quantum signatures should be developed independently of decisions regarding abandoned coins.
The second is to provide greater clarity. The community needs transparent communication about timelines and potential migration paths to reduce uncertainty for users.
Blockchain networks begin planning for quantum security
Coinbase’s report highlights that quantum computers capable of breaking current cryptographic systems are not an immediate threat, preparation is important. Early planning could help preserve trust, network security, and economic stability as the industry moves toward quantum resilience.
Other blockchain projects are also taking steps in this direction. Recently, Stellar announced its Quantum Preparedness Plan (QPP), a proactive initiative to migrate the network to quantum-safe cryptography.
The plan intends to allow every Stellar account to support quantum-resistant signatures while preserving existing addresses and transaction history. According to the announcement, users would be able to add quantum-safe signers through a native protocol upgrade by the end of 2027, strengthening the network’s long-term security against future quantum computing threats.
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