A Quantum Computer Could One Day Break Crypto Security — Coinbase Is Preparing Now

Coinbase is warning that the crypto industry needs to prepare for a post-quantum future, developing post-quantum custody technology while contributing engineers and funding to network security efforts. The company says uncertainty remains over when quantum computers could threaten digital assets, making early preparation essential.

Crypto exchange Coinbase (Nasdaq: COIN) has started preparing its custody systems and infrastructure for a future in which powerful quantum computers could defeat the cryptography protecting Bitcoin, Ethereum and other blockchain networks.

“A large-scale quantum computer capable of breaking current cryptography will eventually be built. No one knows exactly when. But the work to prepare needs to start now, not when it’s urgent.”

“The cryptography that secures virtually every major blockchain is vulnerable when it arrives. The threat is not imminent, but the timeline is genuinely uncertain,” Lunglhofer added.

The warning does not suggest that quantum computers can currently defeat the cryptography securing major blockchains. Instead, Coinbase argues that upgrading global blockchain systems, moving millions of users and replacing vulnerable cryptographic methods could take years, making early preparation essential.

The proposed updates build on NIST’s wider effort to modernize cryptographic standards as quantum computing advances. The revisions are intended to help federal agencies and industry adopt quantum-resistant technologies while maintaining interoperability.

Coinbase is developing PQ-CoreKMS, a post-quantum version of its proprietary key management system that protects approximately 99.9% of the assets it holds in custody. Its existing CoreKMS system relies on multiparty computation (MPC), which distributes control of private keys so that no single party can reconstruct a customer’s full key.

Within the next year, Coinbase plans to introduce an automated signing system that combines secure enclaves, secret sharing, and threshold cryptography, enabling support for multiple post-quantum signature algorithms as blockchain networks begin adopting them. Over the following two to three years, Coinbase researchers intend to expand MPC capabilities further to accommodate lattice-based and potentially other post-quantum signing schemes.

In parallel, the exchange is cataloging cryptography used across its infrastructure, including systems that protect customer data and authentication. Coinbase plans to rank each system according to its importance, exposure, and migration difficulty.

Coinbase will co-host a working session with Stanford in August for Bitcoin Core developers, researchers, and cryptographers. The group will examine potential migration strategies and the technical challenges involved in moving bitcoin to quantum-resistant security.

“No one company can solve this alone. The only way through is together: researchers, developers, protocols, and companies all moving in the same direction,” Lunglhofer concluded, emphasizing:

“The quantum future is coming, and the time to start preparing is now.”