El Salvador splits Bitcoin holdings into 14 new wallets for security reasons

El Salvador has announced plans to move its Bitcoin from a single wallet into 14 fresh wallets. According to the country, the step was taken as part of a strategic initiative to enhance security and long-term custody of the National Strategic Bitcoin reserves.

The development was revealed by the official Bitcoin Office of El Salvador on the blogging platform X. The country noted in the post that the redistribution will serve as a precaution against potential quantum computing threats. “Once funds are spent from an address, its public keys are revealed and vulnerable. By splitting funds into smaller amounts, the impact of a potential quantum attack is minimized,” the Bitcoin Office said on X.

El Salvador announces plans to split its Bitcoin into new wallets

According to El Salvador, quantum computers, in theory, can break public-private key cryptography using Shor’s algorithm. The cryptography serves many other systems, including banking, email, and communication. “When a Bitcoin transaction is signed and broadcast, the public key becomes visible on the blockchain, potentially exposing the address to quantum attacks that could discover private keys and redirect funds before the transaction confirms,” the Bitcoin Office added.

The reserve is now being redistributed into multiple addresses, with each holding about 500 BTC. This way, El Salvador limits funds in each address that may potentially be exposed to quantum threats. The country had previously used a single address for transparency, exposing its wallet’s public keys continuously, which meant giving any quantum attacker the needed time to discover its private keys. However, the country is expected to use a public dashboard managed by The Bitcoin Office to monitor multiple addresses, allowing the reserve to maintain transparency without reusing addresses and increasing security.

According to records, more than 6 million BTC, which is worth around $650 billion in today’s market, could be at risk if quantum computers become powerful enough to crack elliptic curve cryptography (ECC) keys, according to quantum research firm Project Eleven. El Salvador has always held its 6,274 BTC (presently worth around $678 million) in a single wallet, but has diversified them into 14 new addresses.

Crypto experts dispel quantum computing threats

While industry experts have hailed the recent moves undertaken by El Salvador, Project Eleven mentioned in its April report that quantum computing is still very far from gaining the capability to hack Bitcoin. A Bitcoin private key contains 256-bits, and as presently no quantum computer running Shor’s algorithm has gained the capability to crack a 3-bit key yet.

Michael Saylor, the architect behind Strategy’s move towards Bitcoin, also dismissed the threat, noting in June that the quantum computing threat to the leading digital asset is mere hype. He added that if it ever became an issue worth devoting attention to, the protocol’s core developers and hardware creators will implement fixes for it. “The answer is: Bitcoin network hardware upgrade, Bitcoin network software upgrade, just like [how] Microsoft, Google, the US government upgrade,” he said.

Meanwhile, El Salvador remains embroiled in its drama with the International Monetary Fund (IMF) after the body released a report in July claiming the country has not purchased any new Bitcoin since February. The report raised eyebrows, with commentators in the crypto space questioning El Salvador’s reports of Bitcoin purchases since February. El Salvador’s Bitcoin office has yet to directly address the IMF report, only taking to X to post about the Bitcoin purchases made by the country.

El Salvador secured a $1.4 billion funding deal from the IMF last December in exchange for reducing its Bitcoin initiatives. While the country agreed to the major terms proposed by the body, some other terms were reportedly disputed between the parties. One of the conditions that was gladly accepted is the use of Bitcoin as legal tender, allowing people to voluntarily accept it instead of enforcing the use of the asset through its Chivo wallet.

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