A group of experienced Bitcoin developers has outlined a new proposal to prepare the network for the inevitable threat of quantum computing.

The initiative, led by Jameson Lopp, Christian Papathanasiou, Ian Smith, Steve Vaile, and Pierre-Luc Dallaire-Demers, focuses on safeguarding vulnerable Bitcoin held in older address types that may be compromised by future quantum breakthroughs.

25% of Bitcoin faces quantum computing risk

The proposal noted that around 25% of all Bitcoin eventually could be at risk if a cryptographically capable quantum computer emerges.

According to the developers, these assets are held in addresses that have already exposed their public keys, making them potential targets for these sophisticated computing machines.

Due to this, the developers stressed that this is not a hypothetical issue for the distant future but a serious risk that requires proactive mitigation.

They warned that a successful quantum attack wouldn’t just impact market value; it could severely undermine trust in the network’s ability to function securely. They stressed:

“An attack on Bitcoin may not be economically motivated – an attacker may be politically or maliciously motivated and may attempt to destroy value and trust in Bitcoin rather than extract value. There is no way to know in advance how, when, or why an attack may occur. A defensive position must be taken well in advance of any attack.”

Three-phase strategy for a quantum-safe transition

To prepare for this threat, the team has laid out a three-phase plan to gradually migrate users from quantum-vulnerable addresses to post-quantum secure alternatives.

The first phase would allow Bitcoin to be sent only to new address types called P2QRH, thereby nudging the network toward quantum resilience. This transition is expected to begin three years after the implementation of BIP-360.

The second phase would invalidate all spends from legacy cryptographic signatures, effectively freezing unupdated addresses after a predetermined block height. According to the developers, this could be roughly five years after phase one begins.

The third and final phase would provide a method for users who missed the migration window to recover their legacy funds using zero-knowledge proofs tied to their seed phrases. However, this step is still under research and would be optional.

Community reaction

Jacob Youngman, a Bitcoin commentator, expressed concern that the changes might lead to the confiscation of inactive or legacy-held coins, possibly including those linked to Satoshi Nakamoto.

According to him:

“The best we can do would be to give users an opt-in solution that protects them from quantum computers.”

However, Lopp addressed the criticism, stating that inactive wallets are just as likely to be exploited by malicious quantum actors if no action is taken.

Mentioned in this article

GameStop (GME) shares fell 11.7% in after-hours trading after announcing a $1.75 billion private convertible senior note offering — extending its debt financing strategy that could fund additional Bitcoin purchases.

GME had already slid 5.34% to $28.55 during normal trading hours on Wednesday after GameStop reported a first-quarter revenue fall of 17% in after-hours the day before. 

GameStop recently bought $513M in Bitcoin

The US video game and consumer electronics retailer didn’t explicitly state that the proceeds would be used to fund additional Bitcoin purchases, but said it intends to make investments in a manner consistent with GameStop’s investment policy in addition to potential acquisitions.

Part of GameStop’s most recent $1.5 billion raise through convertible notes was used to purchase 4,710 Bitcoin (BTC) — worth $513 million at the time — on May 28.

Convertible senior notes have been an increasingly common financial instrument for public companies seeking to bolster their Bitcoin treasuries. 

GameStop’s 4,710 Bitcoin stash currently positions it as the 13th largest corporate Bitcoin holder, according to BitcoinTreasuries.NET data.

The $1.75 billion private offering carries a 0% interest rate, with the convertible senior notes due on June 15, 2032.

The offering includes an option for initial purchasers to buy an additional $250 million in notes. 

Related: The Blockchain Group to raise $340M for Bitcoin treasury

The notes are convertible into either cash, GME stock, or a mix of both, depending on GameStop’s decision.

GameStop fell earlier on Q1 results

The latest offering comes as GameStop reported a $44.8 million profit in the first quarter, reversing a $32.3 million loss from Q1 2024. 

However, revenues fell 17% to $732.4 million, missing industry expectations and triggering a considerable fall in after-hours on June 10.

GME shares have been down since first Bitcoin purchase

According to Google Finance, GME shares have fallen 18.5% since GameStop confirmed its first Bitcoin purchase on May 28.

When factoring in the 11.7% fall in after-hours, GameStop has now erased all the gains it made since March 25, when it first announced plans to invest in Bitcoin.

GME’s stock movement contrasts with most public companies that have seen their share prices rise after announcing Bitcoin purchases or plans to do so.

Magazine: Older investors are risking everything for a crypto-funded retirement

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