Fidelity Warns Bitcoin's Private Keys Face Future Quantum Risk

Fidelity Examines Bitcoin’s Quantum Vulnerability

Bitcoin’s private-key protections may eventually require replacement or supplementation, according to the Fidelity Digital Assets analysis published Sept. 1. Cryptographically relevant quantum computers, or CRQCs, do not currently exist, but sufficiently capable systems could undermine the mathematical assumptions securing transaction authorization and place funds at risk.

Fidelity Digital Assets Research identified transaction throughput as a central constraint for any future Bitcoin security upgrade:

“Minimizing key size to preserve Bitcoin’s transaction throughput remains a key concern, although the impact may be less pronounced considering the current state of a near-empty mempool.”

Private keys allow bitcoin owners to authorize transactions without relying on an intermediary. Wallets use a private key to produce a digital signature that proves control without disclosing the secret key. This relationship between private keys, public keys, and transaction signatures forms the foundation of Bitcoin ownership and self-custody.

Bitcoin’s Current Signatures Face a Future Threat

Most standard Bitcoin transactions use the Elliptic Curve Digital Signature Algorithm or Schnorr signatures. Schnorr signatures became available through Taproot, with Bitcoin Improvement Proposal 340 specifying Schnorr signatures and BIP 341 establishing Taproot’s spending rules. BIP 341 was assigned in January 2020 before the upgrade activated in 2021. Both schemes rely on the difficulty of solving the elliptic curve discrete logarithm problem with classical computers.