Bitcoin and Quantum Risk: This Study Shows Which Exchanges Are Most Exposed

Bitcoin: 31.2% of BTC Supply Is Exposed On-Chain

Quantum risk is increasingly becoming a factor to consider in securing cryptocurrencies, even if the prospect of seeing a computer powerful enough to break the associated cryptographic rules is not expected to occur for several years, according to the most pessimistic estimates.

The problem? This equation has not previously taken into account the accelerated development of artificial intelligence, particularly the ability of industry giants to develop mathematical superintelligence in a much nearer future. This risk was highlighted yesterday by researcher Justin Drake, as part of a call to trigger a "bunker mode" to address it.

A warning evidently heard by the co-founder of the on-chain analysis company Glassnode, Rafael Schultze-Kraft. Indeed, he recently published on the X network a status report on the effective security of the BTC currently held, of which "6.26 million units (31.2% of its supply) are behind a public key already visible on the blockchain". Proportion of BTC Supply with Exposed Keys

This proportion is up from 24.8% at the beginning of 2021 and returns to its 2016 level. The reuse of addresses accounts for 4.33 million BTC: the address has already spent funds, so its key is public. The remaining 1.94 million BTC are exposed due to the type of script: 1.71 million in P2PK, of which 1.1 million are attributed to Satoshi, and 222,000 in Taproot.
Rafael Schultze-Kraft

In this context, how can one ensure the on-chain security of their BTC? The answer is simple: just move them to a new address to end their exposure.

Crypto Exchanges Hold 1.79 Million Exposed BTC

But then, is it safer to hold BTC on crypto exchanges? Not so sure, according to Rafael Schultze-Kraft, even beyond the simple fact of having to delegate one's private keys to a company. Indeed, he estimates in his report that cryptocurrency exchange platforms "hold 1.79 million BTC behind visible public keys", which is just under 150 billion dollars currently.

The share of the affected balance varies: 10% at Coinbase, 83% at Binance, 100% at Bitfinex. It exceeds 99% for 7 of the 15 largest balances. Fidelity holds 375,000 BTC, of which 2% are exposed, and the holdings of the governments of the United States, the United Kingdom, and El Salvador are at 0%. Grayscale is at 49%, Revolut at 99%, and Robinhood at 100%.
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BTC Balances of Exchanges According to Public Key Exposure

Since the last report on the subject published in May, the amount of exposed BTC has increased by 222,000 units. An increase in which crypto platforms account for 123,000 BTC, with a total of 57% of their balances now exposed, compared to 55% in May and 39% at the beginning of 2021.

A finding that the co-founder of Grayscale presents, however, as a simple analysis of the usage of the addresses concerned, and absolutely not as "a ranking of risks or a statement on security". It seems, however, evident that some of these platforms need to intensify their efforts in this area.

Source: Rafael Schultze-Kraft

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