6 Million Bitcoins Exposed to Quantum Risk

Some six million bitcoins, or 30% of the issued supply, are exposed to the quantum risk of theft.

Analytics provider Glassnode said those bitcoins have exposed public keys, making them vulnerable to the risk that quantum computers may eventually be able to break their encryption and figure out private keys used to move BTC from their identifying public keys.

The risk to bitcoin from quantum computing is still theoretical, with some experts saying it is a decade or even decades away, while others fear that it could be closer. The U.S. government has set 2035 as the date by which all government data must be quantum-resistant.

There are ways the Bitcoin protocol could be updated to address this quantum risk, but doing so is likely to be a slow and, in some places, controversial process.

Glassnode divides the at-risk supply into two categories: structural exposure and operational exposure. The former are the most at risk, as they reveal their public key by design.

Structurally exposed bitcoins include many of those mined in the earliest days of the Bitcoin blockchain, including Satoshi Nakamoto’s 1.1 million coins. A total of nearly two million bitcoins, about 10% of the total supply, are structurally exposed.

There are about four million operationally exposed bitcoins, or about 20% of the total. These bitcoins are exposed because they have been moved in a way that exposed their public keys. This can be addressed by key and address management techniques.

Cryptocurrency exchanges hold about 40% of the operationally unsafe bitcoins. Some have minimal exposure, like Coinbase, with just 5% of its bitcoin supply exposed. Bitfinex, Gemini, Coincheck, Derebit, Crypto.com, and bitcoin.de all have 100% exposure, while Bybit has 92% and Binance 85% exposed. Among ETFs, Fidelity has just 2% exposed, while Grayscale has about 50%, and Robinhood, Franklin Templeton, and WisdomTree are at 100%, Glassnode said.

The structurally unsafe category contains a large percentage that may be difficult or impossible to migrate, as they are abandoned or have lost private keys.

“The operationally unsafe bucket is larger and reflects how coins are managed in practice,” Glassnode said. “Within that bucket, exchanges represent a large, labeled, and potentially migratable subset.”