Coinbase Prepares Post-Quantum Bitcoin Custody System

Coinbase is preparing for a post-quantum future by designing a bitcoin custody system that can adapt to any signature scheme Bitcoin may adopt.

According to Yehuda Lindell, Coinbase's chief cryptographer, the exchange is working on a system that can accommodate various post-quantum signature schemes. Currently, it is unclear which scheme Bitcoin will use in practice, and Lindell believes it is unlikely that one single scheme will become widely adopted.

Coinbase manages approximately $2500 billion in assets for institutions like BlackRock. However, many post-quantum signature schemes may be 'unfriendly' to traditional multi-party computation (MPC), which relies on key splitting. Lindell stated that researchers are exploring related solutions, but these are still in the experimental phase.

To address this issue, Coinbase is researching an alternative architecture centered around programmable hardware security modules (HSMs). Private keys will be encrypted with post-quantum cryptography and assembled only within a physically secure HSM. Lindell noted that while completion time is uncertain, once finished, he 'will be able to say I can support any scheme,' without worrying about supporting schemes that some blockchains might adopt but others cannot.