One partial fix to that problem is now being formally debated for the first time.
Picture a vault that only opens if you prove you know a specific combination. You never need to reveal the combination itself; you just need to show proof that you know it that convinces the lock, and it’ll open the vault for you. That’s basically how Bitcoin (BTC +2.82%) ownership works today, and normally, it works just fine.
But there’s theoretically a way to fabricate the proofs such that any given lock can be bypassed. Nobody has ever been able to implement that particular hack yet, but if someone did at some point, it’d very likely be an existential problem for the coin and send its price toward zero. That risk is so frightening that it might even be holding the coin’s price down today — which is why, if you hold it or plan to hold it, you should know that Bitcoin’s developers just made some progress toward mitigating the problem.
Does that mean it’s worth buying today, given that one of its few life-or-death risks now looks to be solvable?
To spend Bitcoin, you create a digital signature, which is a piece of math that proves you control a private key without revealing it. The risk described above is that a sufficiently powerful quantum computer could, in theory, fabricate that piece of math and be used to steal anyone’s private keys, regardless of how diligently they had stored their coins.
Importantly, quantum computers aren’t powerful enough to actually threaten Bitcoin today. Within the next 10 years, however, they might be. Nobody knows exactly when they’ll be good enough, but the underlying technology is becoming increasingly sophisticated over time. So that’s why it’s good news that the coin’s developers have started discussing how to transition it toward a stronger security posture to prevent the problem altogether.
As of February, a new Bitcoin Improvement Proposal (BIP), BIP-360, is now under formal consideration for implementation. It will probably be edited a lot before it is advanced into implementation, assuming it ever is. Nonetheless, against a deadly long-term risk like quantum computing, that’s progress.
As favorable as BIP-360 entering the development pipeline goes, it’s important not to over-commit your capital to Bitcoin on the basis of the proposal alone.
BIP-360 will not magically make Bitcoin quantum-secure, even if it is implemented. It aims to buy time by tinkering with a couple of core technical elements of Bitcoin’s protocol and to formally start the broader conversation about the security upgrade process, which is likely to take years.
Furthermore, those who self-custody their coins will eventually likely need to take action to be protected using the new security upgrades that are rolled out. Holding your coins via a Bitcoin exchange-trade fund (ETF) is thus a lower-friction path, as the asset issuer will implement upgrades to wallet security on your behalf.
So in closing, while it’s a decent reason to buy some more Bitcoin, as BIP-360 implies that it’ll likely get less risky if it gets implemented, it isn’t a reason to back up the truck.
