Coinbase Outlines Bitcoin Quantum Options, Leaves Legacy Funds Unresolved

Coinbase has outlined technical options for preparing Bitcoin (BTC) for post-quantum security, including address and signature changes, while leaving policy for older funds open to discussion.

Coinbase presents the material as input to an open discussion, not a settled design or timetable. It recommends treating address structure and signing method as separate choices: an address holds funds, while a signature demonstrates control and authorizes spending.

BIP-360, also called P2MR, and P2TRv2 are among the address approaches. BIP-360 would need further work to support post-quantum signatures. Coinbase also considers hybrid addresses that accept either a conventional signature or a post-quantum one to spend funds. That arrangement could support a transition, but keeping the conventional path available would preserve the risks tied to that method.

The signature candidates are ML-DSA, SLH-DSA, FN-DSA (Falcon) and SHRINCS. ML-DSA and SLH-DSA are standardized; SLH-DSA relies on hash functions and has larger signatures. FN-DSA is smaller but harder to implement securely and has not been standardized. SHRINCS is an experimental Bitcoin-specific option with demanding key-management requirements. The candidates differ in signature size, implementation difficulty and how they manage signing keys.

Coinbase recommends evaluating signature size alongside block capacity, network throughput, fee costs, hardware-wallet support and the time needed to move higher-risk holdings. It also calls for weighing stateless signatures, which do not track prior key use, against stateful designs. Stateful methods may allow smaller signatures, but restoring a wallet backup and reusing a key could expose funds to forged transactions.

Compatibility with custody systems is another consideration. Some institutional providers split key control among multiple servers, and signature options differ in how well they fit those setups.

Coinbase lists possible transition measures without arranging them into a fixed sequence. They include voluntary transfers to new addresses, hybrid spending, methods to hide public keys during transfers, and policies affecting new outputs, sends to legacy outputs or spending from those outputs. Options for older funds include a signature sunset, freezing assets, rate limits or a rescue mechanism.

The treatment of dormant or lost BTC is a separate governance and engineering question that can proceed alongside technical work on signatures. If a recovery system is considered, it would need quantum-resistant protections and safeguards for people who lose recovery credentials, face system overload or miss a deadline.

Coinbase recommends evaluating technical feasibility and compatibility with wallets and nodes that do not upgrade.