El Salvador plans to divide its substantial bitcoin reserves into multiple wallets to safeguard its holdings against potential future quantum computing threats.
The Central American nation possesses approximately £500 million worth of bitcoin, having adopted it as legal tender in 2021. The Bitcoin Office of the country states that transferring the funds from a single wallet to multiple new, unused addresses will enhance the security and long-term custody of its National Strategic Bitcoin Reserve.
Quantum computers have the potential to compromise public-private key cryptography. When a bitcoin transaction is conducted, the public key is visible on the blockchain, which could make the address susceptible to quantum attacks that might uncover private keys and redirect funds before the transaction is confirmed.
To mitigate this risk, the reserve is being redistributed into numerous addresses, each containing up to 500 BTC. The Office explains that limiting the funds in each address reduces exposure to quantum threats, as an unused Bitcoin address with hashed public keys remains secure. Once funds are spent, the public keys are exposed and vulnerable. By partitioning funds into smaller amounts, the potential impact of a quantum attack is minimized.