Coinbase, Custodian of 5% of Existing Bitcoin, Outlines…

Coinbase has outlined recommendations for preparing Bitcoin against future quantum-computing threats, emphasizing the need for coordinated protocol upgrades, institutional custody compatibility and protections for potentially vulnerable holdings. In an October 13, 2026, publication authored by Shashank Agrawal, the cryptocurrency exchange said it holds approximately 5% of all Bitcoin currently in existence, underscoring its significant exposure to the network's long-term cryptographic security. With roughly 20 million BTC already mined against Bitcoin's maximum supply of 21 million, Coinbase's reported custody share represents approximately one million BTC. The figure reflects assets held in custody, rather than Bitcoin owned by the company itself.The recommendations address the possibility that sufficiently powerful quantum computers could eventually compromise the elliptic-curve digital signatures used to authorize Bitcoin transactions. Coinbase stressed that its proposals represent contributions to an ongoing technical discussion, rather than finalized recommendations or approved changes to Bitcoin's protocol.

Coinbase Proposes Flexible Signature Systems and Phased Migration

A central recommendation involves introducing Bitcoin output structures capable of accommodating different quantum-resistant signature algorithms without requiring repeated fundamental protocol redesigns. Coinbase identified Pay-to-Merkle-Root (P2MR), proposed under Bitcoin Improvement Proposal 360, and P2TRv2 as potential approaches offering this flexibility. The company also proposed evaluating hybrid spending mechanisms that would allow transactions to be authorized using either existing ECDSA/Schnorr signatures or post-quantum alternatives during a transition period. Such arrangements could allow users and institutional custodians to prepare their holdings before decisions are finalized about restricting legacy cryptographic signatures.Coinbase emphasized that selecting replacement algorithms requires evaluating their impact on Bitcoin's limited block space, transaction fees, verification performance and hardware-wallet compatibility. Among the candidates identified were ML-DSA, SLH-DSA, FN-DSA and SHRINCS, with the latter combining compact stateful signatures and a stateless fallback. The company cautioned that stateful signature systems introduce operational risks because accidentally reusing signing states can enable forgery. It also emphasized compatibility with multi-party computation, which allows institutions to distribute cryptographic key control rather than relying on a single signing authority.

Dormant Bitcoin and Institutional Custody Complicate Transition

Another significant challenge concerns Bitcoin held in older addresses where public keys are already exposed, alongside funds whose owners have lost access to their private keys. Coinbase's quantum advisory council previously estimated that approximately 6.9 million BTC could face exposure through publicly revealed keys, including around 1.7 million BTC associated with older Pay-to-Public-Key outputs. The company suggested evaluating recovery mechanisms, migration deadlines and potential restrictions on legacy spending while acknowledging that these approaches raise difficult questions about ownership rights. Coinbase has already begun developing PQ-CoreKMS, a quantum-resistant version of its institutional key-management infrastructure. In July, the company announced plans for an initial post-quantum signing pipeline within approximately one year, followed by more advanced multi-party computation capabilities over the subsequent two to three years. The exchange has also supported Bitcoin security research through developer collaboration and participation in the Bitcoin Security Consortium. No quantum computer has publicly demonstrated the capability to break Bitcoin's cryptographic signatures at the scale required for practical attacks. Coinbase nevertheless argues that preparation should begin before such technology becomes available, given the potentially lengthy process of securing consensus, upgrading wallets and migrating holdings across the Bitcoin network.