ARK Invest Reveals That 34% of Bitcoin Supply Could Be Compromised by Quantum Computers

ARK Invest and Unchained, in a joint report, shared a noteworthy assessment of Bitcoin’s long-term risks stemming from quantum computing.

According to the report, approximately 34.6% of the circulating Bitcoin supply is exposed to long-term risks in the face of potential major breakthroughs in quantum computing. In contrast, 65.4% of the current supply is considered relatively safe for now.

The study argues that the quantum threat does not pose an immediate crisis for Bitcoin, but it is an important issue that needs to be closely monitored and prepared for in the long term.

The report states that current quantum computers are far from capable of breaking the elliptic curve cryptography used by Bitcoin. According to the researchers, existing systems are still in an early stage called “NISQ” and require thousands of logical qubits and much deeper error-correcting processing capacity to reach a level that could threaten Bitcoin’s cryptographic infrastructure. Therefore, ARK Invest and Unchained argue that quantum risk should be considered as a gradual process that could unfold over years or even decades, rather than a sudden “Q-day” scenario.

According to the report, a significant portion of the Bitcoin supply vulnerable to quantum threats resides in legacy address types. Approximately 1.7 million BTC are estimated to be in old P2PK addresses and largely lost. Additionally, around 5.2 million BTC are in reused addresses or in some other address types, including portable Taproot addresses, which could theoretically be transferred to more secure addresses. Thus, approximately 35% of the supply is considered vulnerable to quantum risk, while 65.4%, equivalent to approximately 13 million BTC, is seen as more resilient under current conditions.

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One of the notable topics in the study was the BIP-360 proposal, discussed within the Bitcoin community. This proposal aims to reduce quantum sensitivities on the key-path side of Taproot and mitigate these risks with a new output type called “Pay-to-Merkle-Root.” According to the report, BIP-360 stands out as a significant step towards increasing quantum resilience while preserving Taproot’s functionality. However, the authors point out that integrating post-quantum cryptography into the Bitcoin network will be a challenging process, both technically and governance-wise.

ARK Invest and Unchained also added that the Bitcoin ecosystem has already begun preparing for the quantum threat. They noted that Coinbase has formed a quantum computing advisory board, the Ethereum Foundation has established a dedicated team for post-quantum preparations, and Strategy is preparing to launch a Bitcoin security program. However, the report states that there is still no clear consensus on which post-quantum solution should be preferred for Bitcoin, and that the issue of whether or not to freeze older coins that are at risk could create serious debate in the future.

The report also considers three different scenarios. The pessimistic scenario predicts an unexpected and rapid leap in the quantum field, catching the BTC community off guard, while the optimistic scenario anticipates a slowdown in quantum development and a transition to more mature, tested solutions for Bitcoin. The most likely balanced scenario suggests that quantum computers could take 10 to 20 years to become a real threat to BTC, giving Bitcoin developers enough time to mature and implement post-quantum solutions.

*This is not investment advice.

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