El Salvador has restructured how it stores its national bitcoin reserve, moving funds out of one repeatedly used address and into many new wallets — each capped at 500 BTC. The change, announced by the country’s Bitcoin Office, aims to reduce the damage from any single compromise and to anticipate potential future risks from quantum computing.
The concern is technical: when bitcoin is spent, the transaction reveals a digital signature on the blockchain. Today that signature is safe, but in theory a sufficiently powerful quantum computer could use it to reconstruct the private key and steal funds before a transaction confirms. By spreading holdings across many unused addresses, El Salvador limits how many keys are exposed at once and reduces the maximum loss if an address is later broken.
The government acknowledged that keeping the reserve in one public address — a choice made for transparency — increased exposure because the same keys appeared on-chain repeatedly. To balance openness with security, officials launched a public dashboard that tracks multiple addresses so observers can still verify holdings without encouraging address reuse.
Bitcoin veterans called the move sound custody practice. Adam Back of Blockstream praised splitting balances into many UTXOs rather than reusing a single address — a longstanding best practice that also improves privacy and operational security.
Most researchers say quantum machines capable of threatening bitcoin are likely years to decades away, and the network itself could adopt cryptographic upgrades if needed. Still, El Salvador’s new model is a practical, low-cost improvement that reduces immediate risks and may serve as a template for other sovereign or institutional treasuries managing large crypto holdings.
Source: CoinDesk. Read the original coverage for full details.