El Salvador divides its Bitcoin holdings into 14 new wallets for security reasons.

El Salvador has announced plans to transfer its Bitcoin from a single wallet to 14 new ones. According to the country, this measure was taken as part of a strategic initiative to enhance the long term security and custody of the strategic national reserves of Bitcoin.

The news was revealed by El Salvador's official Bitcoin Office on the X blogging platform. The country pointed out in the post that the redistribution will serve as a precaution against potential threats from quantum computing. “Once funds are spent from an address, their public keys are exposed and vulnerable. By splitting the funds into smaller amounts, the impact of a potential quantum attack is minimized,” stated the Bitcoin Office 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. This cryptography serves many other systems, including banking, email, and communication. “When a Bitcoin transaction is signed and transmitted, 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 is confirmed,” the Bitcoin Office added.

The reserve is now being redistributed in multiple directions, each with approximately 500 BTC. In this way, El Salvador limits the funds in each address that could potentially be exposed to quantum threats. Previously, the country had used a single address for transparency, continuously exposing the public keys of its wallet, which meant giving any quantum attacker the time needed to discover its private keys. However, the country is expected to use a public panel managed by the Office of Bitcoin to monitor multiple addresses, allowing the reserve to maintain transparency without reusing addresses and increasing security.

According to records, more than 6 million BTC, worth around $650 billion in the current market, could be at risk if quantum computers become powerful enough to decrypt elliptic curve cryptography keys (ECC), according to the quantum research firm Project Eleven. El Salvador has always maintained its 6,274 BTC ( currently valued at approximately $678 million) in a single wallet, but has diversified them into 14 new addresses.

Cryptocurrency experts dismiss threats from quantum computing

Although industry experts have praised the recent measures taken by El Salvador, Project Eleven mentioned in its April report that quantum computing is still a long way from having the capability to hack Bitcoin. A Bitcoin private key contains 256 bits, and currently, no quantum computer running Shor's algorithm has achieved the ability to decrypt a 3-bit key.

Michael Saylor, the architect behind the Strategy movement towards Bitcoin, also dismissed the threat, stating in June that the threat of quantum computing to the main digital asset is mere exaggeration. He added that if it ever became a problem worthy of attention, the main developers of the protocol and hardware creators would implement solutions. “The answer is: upgrade of the Bitcoin network hardware, upgrade of the Bitcoin network software, just like Microsoft, Google, the U.S. government upgrade,” he said.

Meanwhile, El Salvador continues to be embroiled in its drama with the International Monetary Fund (IMF) after the agency published a report in July stating that the country has not purchased any new Bitcoin since February. The report raised suspicions, with commentators in the crypto space questioning El Salvador's reports on Bitcoin purchases since February. El Salvador's Bitcoin office has yet to directly address the IMF report, limiting itself to posting on X about the Bitcoin purchases made by the country.

El Salvador secured a $1.4 billion financing agreement from Gate last December in exchange for reducing its Bitcoin initiatives. While the country accepted the main terms proposed by the entity, some other terms were apparently disputed between the parties. One of the conditions that was gladly accepted is the use of Bitcoin as legal tender, allowing people to accept it voluntarily instead of imposing the use of the asset through its Chivo wallet.