A consensual upgrade of the Bitcoin network is needed, says Edwards.
Capriole has launched a quantum index as a hedge against bitcoin risk.
The security of Bitcoin faces a challenge that, although futuristic, is beginning to move the chips in the market, it is the arrival of powerful quantum computing.
Recently, Significant movement has been observed in the distribution of bitcoin (BTC) supply through different address formats, a phenomenon that some analysts interpret not as simple profit-taking, but as a proactive “system cleansing” in the face of quantum risk.
This move, driven in part by concerns over the exposure of public keys in Bitcoin addresses, puts the spotlight on the need for a protocol upgrade to ensure long-term resiliency.
Market analyst Willy Woo has alerted the community about the imminent “age of the big, scary quantum computers (BSQC).” Previously, security focused solely on protecting the private key (the seed phrase), but Woo explains that with the advent of BSQC, it is also crucial to protect the public key.
The reason is that a sufficiently advanced quantum computer could deduce the private key from an exposed public key.
Woo points out that current Taproot addresses, which begin with “bc1p,” embed the public key in the address, making them especially vulnerable to Shor’s algorithm at any time. In contrast, previous formats hide the public key behind a hash, making it difficult to decrypt.
Concrete steps that Woo suggests
To mitigate this risk on an individual basis, Woo has proposed a series of interim steps for users. The first would be to create a new SegWit wallet starting with “bc1q” or use older formats starting with “1” and “3”. Secondly, it suggests sending all BTC to this new secure address.
Third, Woo proposes to continue accumulating satoshis in the new direction. “Never send BTC from this address, as doing so exposes the public key and makes it vulnerable to a BSQC attack,” says the analyst.
As a fourth step, Woo believes that we must wait for the Bitcoin network to upgrade to a protocol resistant to quantum computing, a process that, according to estimates, could take several years.
The last step is that when the network is not congested, BTC are sent to the new quantum safe address that is developedaccepting that, during the brief transaction, the private key is revealed, although with a low risk of theft in that short period.
Taproot migration and bitcoin “quantization”
A graphic shared by Woo illustrates a market trend that seems to support his thesis. There is a recent decline in the percentage of bitcoin supply stored in Taproot (P2TR) addresses since early 2024.
This setback in adoption of the most recent format, coupled with moves from even older formats, is being interpreted as a sign of massive selling, but for Woo this is a “proactive migration of coins towards more resistant formats.”
The logic behind this “cleansing” is differential quantum vulnerability, Woo says. Taproot addresses expose the public key immediately. On the other hand, SegWit formats (P2WPKH/P2WSH) are considered more resistant, since they only expose the public key when the funds are spent for the first time, allowing a window of time for a possible migration or upgrade before an attack.
Therefore, the move away from Taproot and other older formats could be an effort to “quantize” BTC, moving them to non-reused SegWit addresses to strengthen their long-term security.
Criticism of the individual solution and the need for a consensual update
Despite the suggested preventive measures, the investment firm Capriole, through its founder Charles Edwards, has voiced their skepticism about the effectiveness of a strategy based solely on individual user action, as proposed by Woo.
Edwards argues that if Bitcoin’s quantum security depends on users performing perfect, meticulous operations, the value could be $0.
The criticism is that relying on user perfection is unrealistic—people are “lazy, fallible, and have lives”—which would undermine technology adoption by eliminating transactional traffic, Edwards says.
Additionally, a persistent risk is the 30% of the total BTC supply held in older, potentially vulnerable address formats (p2pk or lost coins), which could be stolen, flooding the market and undermining bitcoin’s “hard money” thesis.
For Edwards, “Bitcoin’s only hope lies in a consensual network upgrade, agreed upon in 2026.” While waiting for a solution at the protocol level, Capriole has launched a Quantum Index, a financial product designed as a hedge against the risks that quantum computing could pose to the security of the Bitcoin network, as reported by CriptoNoticias.
This index groups companies working on the development of quantum technology, offering a way to mitigate the fear that quantum computers will break the cryptographic algorithms that protect the network.