Coinbase is preparing its crypto custody infrastructure for the onset of quantum computing, with plans to support a broad array of post-quantum signature schemes. Yehuda Lindell, Head of Cryptography at Coinbase, detailed the company’s strategy during a recent appearance on MARA Foundation TV.
Preparing for a post-quantum future
According to Lindell, Coinbase is building safeguards to both anticipate threats posed by quantum computers and ensure its systems can adapt regardless of which signature standards major blockchains like Bitcoin eventually adopt. Lindell emphasized that the future of post-quantum signature standards remains uncertain, stating, “It’s unlikely that there will be a single signing scheme that everybody will use.”
Due to this uncertainty, Coinbase aims to maintain flexibility across blockchains. The exchange currently safeguards assets valued at roughly $250 billion for institutional clients, including BlackRock. Given such responsibility, the security measures supporting these assets must remain agile.
Multi-Party Computation (MPC) has served as a cornerstone of Coinbase’s custody system. In this approach, multiple parties control distinct portions of a private key, allowing transactions to require multiple approvals without ever assembling the full key in a single location.
On Bitcoin, multi-signature features are enforced directly through on-chain scripting, but MPC operates off-chain by using advanced cryptography, reducing the risk of a single point of compromise. This technique helps eliminate vulnerabilities that could otherwise endanger substantial client funds.
Challenges of post-quantum cryptography
With the emergence of quantum computers, some post-quantum signature schemes—particularly those based on hash functions—may not be compatible with current MPC setups. Unlike established signatures used today, many quantum-resistant designs do not offer the mathematical structure needed for traditional key-splitting methods.
Lindell highlighted that this incompatibility has driven Coinbase to pursue alternative solutions. Research from leading cryptographers, including Stanford professor Dan Boneh, is ongoing, with experiments such as the “PRAWNS” protocol seeking ways to achieve MPC functionality in a post-quantum context. However, the field remains experimental, and it remains unclear if a practical solution can be standardized soon.
MPC-friendliness or non-MPC-friendliness makes a very big difference. While executing MPC with hash-based signatures was presumed impossible up until recently, leading cryptographers are actively researching potential solutions.
Mini dictionary: Multi-Party Computation (MPC): An approach in cryptography where multiple parties collaboratively hold components of a private key, making it possible to sign transactions without any single party having access to the complete key, thereby reducing the risk of theft or compromise.
Concerns regarding hash-based signatures have also been raised by wallet developers including Ledger CTO Charles Guillemet, who has drawn attention to the limitations that may arise if Bitcoin or other networks opt for MPC-incompatible signature methods.
Alternative solutions with HSMs
In the event that leading blockchains move to post-quantum schemes unsuitable for MPC, Coinbase is developing a fallback custody architecture using programmable Hardware Security Modules (HSMs). HSMs are secure physical devices used to protect and manage cryptographic keys within data centers.
Under this planned system, full private keys would be encrypted using post-quantum cryptographic methods and only assembled inside an HSM, which offers protection against both physical and digital intrusions. Lindell believes that, despite its theoretical drawbacks relative to traditional MPC, this approach provides a high level of security through strict access controls and physical defenses inherent to HSMs.
Mini dictionary: Hardware Security Module (HSM): A tamper-resistant hardware device that securely stores cryptographic keys and can perform cryptographic operations within a physically protected boundary, often used by banks and exchanges to enhance digital asset security.
Once these post-quantum upgrades are complete, Lindell believes Coinbase will be equipped to support any cryptographic standard blockchains choose to adopt going forward.
The timeline for full implementation of Coinbase’s post-quantum safeguards has not been finalized, but Lindell is confident that the future architecture will provide broad compatibility and maximum resilience, regardless of the evolution of digital asset cryptography.
