Bitcoin Address Reuse Exposes 4.33 Million BTC Public Keys

Recent analysis from Glassnode reveals that over 4.33 million Bitcoin (BTC), approximately 21.5% of the circulating supply, is held in reused addresses, marking a 14% increase in such balances. This trend highlights a significant issue in Bitcoin's design, which encourages users to generate new addresses for each transaction to enhance privacy and security. However, many holders continue to recycle the same addresses, leading to increased exposure of their public keys on the blockchain.

The analysis indicates that when users spend from an address, the public key is revealed, and any subsequent transactions from that address make the coins permanently visible. Glassnode categorizes the exposure into two main types: operational, which accounts for the 4.33 million BTC due to user behavior, and structural, which adds another 1.94 million BTC due to the inherent design of certain address types. Notably, legacy Pay-to-Public-Key (P2PK) outputs, which directly expose public keys, hold 1.71 million BTC, including approximately 1.10 million BTC linked to Bitcoin's pseudonymous creator, Satoshi Nakamoto.

The overall share of Bitcoin supply behind visible public keys has reached 31.2%, a level not seen since 2016. This increase raises concerns about security risks, particularly for the 1.79 million BTC held on exchanges, where exposure rates vary significantly. For instance, Coinbase has about 10% of its holdings under visible keys, while Binance and Bitfinex report much higher rates of exposure. As discussions around large-scale migration strategies to improve address security continue, users may need to reassess their storage practices, potentially moving assets to cold storage or adopting better address management techniques.

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Source: KLEA News