Bitcoin public-key exposure climbs to 35.4% of supply, sparking quantum‑security debate

Glassnode’s latest on‑chain analysis shows that 7.12 million Bitcoin, equivalent to 35.4% of the total issued supply, are linked to publicly visible public keys. The metric, released in a November 10 X post, separates structural exposure—where a script design reveals a key—from operational exposure caused by wallet practices such as address reuse. The rise from 6.04 million BTC (30.2%) in May indicates a 5.2‑percentage‑point increase in exposure over six months.

Address reuse drives most of the exposure

According to Glassnode, reusing an address after a spend leaves any remaining or newly received coins attached to a public key already recorded on the blockchain. This operational exposure now accounts for nearly 73% of all visible keys. Within the reuse category, funds held on exchanges represent roughly 45%, meaning that a substantial portion of the exposed supply is tied to exchange wallets that often reuse addresses for convenience. The firm cautions that moving coins to fresh addresses can eliminate this form of exposure.

Quantum‑risk proposals remain drafts

Researchers behind BIP 360 propose a soft‑fork that would replace pay‑to‑public‑key outputs with pay‑to‑Merkle‑root constructions, effectively removing the key‑path spending option in Taproot while preserving script‑tree functionality. A companion draft, BIP 361, outlines a roadmap for migrating away from legacy ECDSA signatures toward post‑quantum signature schemes once a new output type is standardized. Both drafts emphasize voluntary adoption; no binding deadlines have been set, and the Bitcoin community continues to debate the merits of mandatory migration versus voluntary protection.

Regulatory backdrop and industry response

The United States’ National Institute of Standards and Technology (NIST) finalized three post‑quantum cryptographic standards in August 2024, including the digital‑signature algorithm ML‑DSA. While these standards are not yet mandated for Bitcoin, they signal broader governmental encouragement for early integration of quantum‑resistant cryptography. Fireblocks’ Vice President of Research, Michael Gutkin, echoed the need for better custody practices, recommending that new deposits and change outputs be directed to fresh addresses to limit operational exposure.

What to watch next

The Bitcoin community will monitor progress on BIP 360 and BIP 361, especially any consensus on activation thresholds for post‑quantum output types. Exchanges may also adjust address‑reuse policies in response to heightened exposure metrics. Finally, developments in quantum‑computing hardware and NIST’s post‑quantum rollout could shape the urgency of migration efforts.