El Salvador Transfers $678M Bitcoin To Mitigate Quantum Computing Threat

El Salvador’s Bitcoin Office transferred its 6,274 Bitcoin – valued at $678 million – into 14 new wallet addresses as a security measure against potential quantum computing attacks. This action follows a report from Project Eleven in April, indicating over 6 million Bitcoin, representing approximately $650 billion, could be at risk from sufficiently advanced quantum computers capable of cracking the elliptic curve cryptography (ECC) keys used to secure Bitcoin transactions. Michael Saylor, architect of MicroStrategy’s Bitcoin strategy, dismissed the threat as hype in June, anticipating protocol developers and hardware manufacturers would address any serious vulnerabilities. The move occurs amidst scrutiny from the International Monetary Fund (IMF), which reported in July that El Salvador had not made new Bitcoin purchases since February, and follows a $1.4 billion funding deal secured in December 2024 contingent on scaling back Bitcoin initiatives.

El Salvador’s Bitcoin Security Measures

El Salvador transferred its 6,274 Bitcoin, valued at $678 million, into 14 new wallet addresses as a security measure against potential quantum computing attacks, according to an announcement from El Salvador’s Bitcoin Office via X (formerly Twitter). This action aims to mitigate the impact of a potential breach by distributing the funds across multiple addresses, with each address holding up to 500 BTC. The rationale behind this move is that Bitcoin public keys become vulnerable once the Bitcoin is spent from an address, potentially allowing quantum computers to crack them if the technology sufficiently advances.

Project Eleven, a quantum research company, indicated in April that over 6 million Bitcoin, representing approximately $650 billion, could be at risk should quantum computers become capable of cracking the elliptic curve cryptography (ECC) keys used to secure Bitcoin transactions. Despite this potential risk, Project Eleven also noted that current quantum computing capabilities are far from reaching this point, as no quantum computer running Shor’s algorithm has yet successfully cracked a 3-bit key, while Bitcoin private keys contain 256 bits. Michael Saylor, architect of MicroStrategy’s Bitcoin strategy, similarly dismissed the threat as hype in June, suggesting that protocol developers and hardware manufacturers would address any serious vulnerabilities through network upgrades, potentially impacting future quantum Bitcoin security.

The actions taken by El Salvador occur amidst ongoing scrutiny from the International Monetary Fund (IMF), which published a report in July claiming that El Salvador had not made any new Bitcoin purchases since February. In December 2024, the nation secured a $1.4 billion funding deal from the IMF, contingent on scaling back its Bitcoin initiatives, although the terms of this agreement are currently disputed.

Tether Revises Blockchain Strategy

Tether, the issuer of the USDT stablecoin, has revised its plans to discontinue smart contracts on five blockchains – Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand, following feedback from the communities of these blockchains. Initially intending to freeze these contracts, Tether will now allow tokens to remain transferable on these chains, but will discontinue direct issuance and redemption.

Of the affected blockchains, Omni Layer holds the largest net circulation of USDT at $82.9 million. Tether began phasing out support for these blockchains in August 2023, halting minting on some chains in June 2024. Currently, Tron and Ethereum lead USDT adoption, with $80.9 billion and $72.4 billion in circulating supply, respectively.

The total market capitalization of stablecoins currently stands at $285.9 billion, with USDT and USDC leading at $167.4 billion and $71.5 billion, respectively. Analysts predict the stablecoin market will continue to grow, potentially reaching $2 trillion by 2028, particularly with the recent passage of the GENIUS Act in the US, which is expected to reinforce the dollar’s role as the world’s leading reserve currency.

Stablecoin Market Outlook

El Salvador has transferred its 6,274 Bitcoin – valued at $678 million – into 14 new wallet addresses as a security measure against potential quantum computing attacks. This move, announced by El Salvador’s Bitcoin Office via X (formerly Twitter), aims to mitigate the impact of a potential breach by distributing the funds across multiple addresses, each holding up to 500 BTC. The rationale behind this action is that once Bitcoin is spent from an address, its public keys become vulnerable, potentially allowing quantum computers to crack them should the technology advance sufficiently.

Project Eleven, a quantum research company, indicated in April that over 6 million Bitcoin, representing approximately $650 billion, could be at risk if quantum computers become capable of cracking the elliptic curve cryptography (ECC) keys used to secure Bitcoin transactions. However, the firm also noted that current quantum computing capabilities are far from reaching this point, as no quantum computer running Shor’s algorithm has yet successfully cracked a 3-bit key, while Bitcoin private keys contain 256 bits. Michael Saylor, architect of MicroStrategy’s Bitcoin strategy, similarly dismissed the threat as hype in June, suggesting that protocol developers and hardware manufacturers would address any serious vulnerabilities through network upgrades, potentially addressing concerns around quantum Bitcoin security.