Comprehensive Analysis of a New Bitcoin Improvement Proposal Against Quantum Threats

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Innovative Bitcoin Proposal: Fortifying the Network Against Quantum Computing

In a groundbreaking move, Casa’s co-founder, Jameson Lopp, along with five other contributors, has introduced a draft proposal aimed at strengthening the Bitcoin network against the looming threat of quantum computing. Titled “Post-Quantum Migration and Legacy Signature Sunset,” this proposal was shared on GitHub on July 14. It advocates for a gradual phase-out of outputs protected by the current ECDSA and Schnorr signatures. The proposal emphasizes the necessity of this proactive measure, suggesting that failing to upgrade could lead to the loss of access to one’s funds.

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Strategic Plan to Shield Bitcoin from Quantum Computing Vulnerabilities

Every public key visible on the blockchain holds the potential to have its private key deciphered by a powerful enough quantum computer. The proposal highlights that approximately 25% of all Bitcoin have their public keys exposed on-chain, making them vulnerable to quantum attacks. This category includes early P2PK outputs, notably the estimated one million BTC believed to be under the control of Bitcoin’s mysterious creator, Satoshi Nakamoto.

The authors cite the National Institute of Standards and Technology (NIST) which completed three production-grade post-quantum signature algorithms in 2024. Academic forecasts suggest that a quantum computer capable of breaking cryptographic security could emerge as early as 2027 to 2030. Furthermore, advancements in quantum factoring algorithms are reportedly accelerating by up to 20 times, swiftly narrowing Bitcoin’s security window.

Proposed Phases for a Secure Transition

To counteract the threat, the proposal outlines a sequence of soft-fork phases linked to the proposed P2QRH post-quantum output type, as defined in BIP-360:

• Phase A: Initiates three years after the activation of P2QRH, prohibiting the transfer of funds to quantum-vulnerable addresses and guiding new coins towards quantum-safe scripts.
• Phase B: Commences two years later on a predetermined date, when nodes will reject transactions dependent on ECDSA/Schnorr keys, rendering older outputs non-spendable.
• Phase C: This optional phase, subject to further research, may allow owners who missed the deadline to retrieve funds using a zero-knowledge proof of their BIP-39 seed possession.

The rationale behind the document is clear: a successful quantum attack on Bitcoin could result in severe economic upheaval and widespread damage across the ecosystem. By setting a definitive deadline, the authors aim to overcome what they term “upgrade inertia” among wallets, exchanges, and custodians, traditionally causing protocol roll-outs to be prolonged over extended periods.

Implications for Bitcoin Stakeholders

Each group of stakeholders faces significant choices. Miners risk producing invalid blocks post Phase B if they do not upgrade, though they may benefit from larger blocks and increased fees from more substantial post-quantum signatures in the meantime. Institutional holders could face fiduciary responsibility if they neglect the migration schedule, while exchanges might encounter instant insolvency if quantum attackers deplete custodial hot wallets. For individual users, the deadline transforms an abstract, distant threat into a concrete, immediate challenge.

Future Implications and Industry Debate

Coins left in quantum-vulnerable scripts would become irretrievably frozen, reminiscent of Satoshi’s early assertion that “lost coins only make everyone else’s coins worth slightly more.” The proposal reverses this perspective for coins recovered via quantum means, labeling them “a theft from everyone.” Although still in draft form and lacking a BIP number or activation path akin to Taproot, the proposal is already setting the stage for what is likely to be a vigorous debate over backward compatibility and handling dormant balances. If enacted, this migration could surpass SegWit and Taproot in logistical and financial complexity, impacting an estimated quarter of the 19.7 million BTC currently in circulation.

As of now, the authors have issued a stark challenge to the Bitcoin ecosystem: either coordinate on a proactive timeline or face the consequences of reacting to an emergency only after the first quantum theft occurs.

At the time of writing, Bitcoin’s market price was $118,623.

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