New solution could save old Bitcoin wallets from quantum threats

We have entered an era where the potential threat posed by quantum computers is growing, and Bitcoin is no exception. While current technology is not yet capable of cracking the structure and encryption of the blockchain, research is showing alarmingly rapid progress, and Bitcoin developers are working hard to protect hundreds of billions of dollars worth of assets even after a breakthrough.

A new development is already generating speculation about how, in some cases, owners could recover their Bitcoin holdings if current digital signatures become obsolete and old BTC is no longer safe.

A new identification method for the quantum age

Quantum security solutions company Project Eleven has presented a post-quantum proof system that uses zk technology to allow a user to prove ownership of a bitcoin wallet without having to reveal their private key or seed phrase. The method is based on the key derivation system of modern HD wallets that comply with the BIP-32 standard.

The essence of the solution is that although a sufficiently advanced quantum computer could theoretically calculate the private key associated with a public key, it would still not be able to decrypt the master key that forms the basis of the entire key tree. This means that only the original owner would be able to authentically prove that they really own the wallet, and thus be able to move their coins to a future, quantum-safe address.

“Quantum computers may be able to derive a private key from a public key. However, they cannot reverse engineer the hash process that generated it. A wallet’s key derivation system can therefore serve as the ultimate proof of ownership, even in the quantum era.”

Not all bitcoins will be saved

However, the development is not yet a universal solution, as it can only be used for BIP-32-based seed phrase wallets that have been around since 2012. The oldest wallets – including those supposedly linked to Satoshi Nakamoto – are still at risk, as there is no master key that would serve as proof.

This puts a different spin on an earlier proposal that would freeze BTC that cannot be protected from quantum computers. According to BIP-361, Bitcoin could gradually phase out the current signature system, and coins that have not been moved by a specified deadline would be permanently locked.

This was previously raised by Binance founder CZ, who said that in the event of a quantum attack, Satoshi’s funds should simply be frozen because there is no other option to protect them. However, the new proof-of-concept system shows that there is a way back, at least for owners of more modern wallets, so the debate is no longer just about freezing, but also about the possibility of recovery.