The treasury of El Salvador owns over 6,000 Bitcoins. Its total holdings are currently worth roughly $700,000,000. These coins had been associated with one private key. Yesterday El Salvador announced that it would split its funds into 14 wallets in order to protect the funds from quantum computing. You can confirm using a blockchain explorer that this has indeed happened.
The most oversimplified takes say El Salvador has protected its Bitcoin reserves from a quantum computing attack by moving from one wallet to 14 wallets. But moving money from one private key to 14 private keys does not it itself offer any protection against quantum computing. It only means that stealing the funds would take 14 times longer. Unsurprisingly the original announcement is more nuanced than the online commentary on the announcement.
For reasons explained in the previous post, Bitcoins are safe from quantum attack until they are spent. You don’t need to reveal your public key to receive Bitcoins, only a hash of your public key. But you do need to reveal your public key to spend Bitcoins.
As far as I know, the one key that until recently held all of El Salvador’s Bitcoin reserves had never spent coins, and so the public key was never made public. If so, the reserves were already safe from quantum computing attacks, at least to the extent that the reserves are safe now. So, strictly speaking, yesterday’s move did not increase the security of the reserves from quantum attack.
What yesterday’s move accomplished was making it easier to spend part of the reserves. Now one of the wallets could spend reserves, revealing the public key associated with part of the reserves rather than a single key associated with all the reserves.
Splitting one large wallet into multiple smaller wallets is a good move, for reasons that have nothing to do with quantum computing. But there is a quantum angle here, namely that the split reduces the risk of quantum computing attack when some of the funds are spent.
There are proposals to harden the Bitcoin protocol against quantum attacks, and perhaps El Salvador can avoid spending from some or all of its wallets until one of these proposals is implemented.
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