What actions did El Salvador take?
The government redistributed approximately 6,274 BTC (around $678 million at the time of publication) from one address into 14 new addresses, each limited to 500 BTC, as a precautionary measure for security.
Until late August 2025, El Salvador’s national Bitcoin reserve was held in a single address. While this setup is simple, it carries significant risks: if vulnerabilities are found, the entire stash is at risk.
The National Bitcoin Office (ONBTC) announced that these holdings have been divided among 14 addresses. Each wallet accommodates up to 500 BTC, employing a “shard and spread” strategy intended to minimize potential losses if any one address is breached. On-chain data confirmed that these transfers were executed in a single operation.
By subdividing the funds, El Salvador effectively established firebreaks: even if one wallet is infiltrated, the losses are limited.
Did you know? El Salvador was the first country globally to recognize Bitcoin as legal tender on September 7, 2021, granting it official status alongside the US dollar.
Why is quantum computing relevant?
Bitcoin’s current cryptography is robust, yet quantum computers could potentially breach the mathematics underlying private keys in the future.
Bitcoin’s security relies on the Elliptic Curve Digital Signature Algorithm (ECDSA). When coins are spent from an address, the public key of that address is revealed on-chain.
In a future world where quantum capabilities have advanced, powerful machines might be able to reverse-engineer these public keys to derive their associated private keys, facilitating theft from exposed addresses.
El Salvador’s ONBTC, the entity tasked with overseeing the country’s Bitcoin strategy, has emphasized this particular risk. In its communications, the ONBTC highlighted the danger posed by exposed public keys and elucidated the reasoning behind distributing funds across new, unused addresses.
– Percentage of BTC at risk. Source: Project Eleven (Jan. 17, 2025) and YCharts (June 18, 2025)
Related: Bitcoin must adapt or risk vulnerability to quantum computing within 5 years
Is this an immediate threat?
Unlikely. Experts concur that current quantum computers lack the power to compromise Bitcoin’s cryptography. Predictions place this risk decades into the future, if ever at all. Furthermore, if the risk materializes, the Bitcoin network can enhance its cryptographic protocols.
As of 2025, no public quantum computer has shown any capability to breach 256-bit ECDSA at the scale seen in Bitcoin.
A quantum research entity, Project Eleven, estimated that over 6 million BTC could be in jeopardy if elliptic-curve keys are compromised. However, it also observed that no machine employing Shor’s algorithm has yet cracked even a 3-bit test key. In other words, while advancements are being made, the gap to breaching Bitcoin remains substantial.
Industry experts have downplayed the urgency. Strategy’s Michael Saylor dismissed discussions surrounding quantum threats as largely “hype,” emphasizing that should the risk ever materialize, the Bitcoin network could address it with software and hardware updates, similar to what other critical systems routinely accomplish.
Did you know? The US National Institute of Standards and Technology (NIST) began standardizing post-quantum cryptography in 2022.
What is the benefit of splitting wallets?
Transferring funds to unused addresses keeps public keys concealed and distributing balances minimizes potential damage if one address is compromised.
Unused Bitcoin addresses do not reveal public keys. By reallocating the entire reserve into several new wallets, El Salvador guaranteed that none of its holdings currently expose sensitive data.
The 500-BTC limit per wallet provides an additional layer of security. In the event of a quantum exploit, no single breach could deplete the national treasury. Imagine this as securing treasure in multiple vaults rather than centralizing it in a single chest.
Transparency has not been compromised either: the ONBTC maintains a public dashboard that displays the wallets, balancing security with accountability.
Why undertake this now if quantum computers are not fully developed?
El Salvador’s decision to split its Bitcoin reserve isn’t a reaction to immediate quantum threats; rather, it reflects a commitment to demonstrate governance maturity on the global stage. This action illustrates foresight, reframes a potential risk into a narrative of responsibility, and alleviates doubts among critics regarding the country’s Bitcoin strategy.
President Nayib Bukele has shaped his political identity around Bitcoin since its recognition as legal tender in 2021. This bold move garnered praise from crypto advocates but faced criticism from major institutions like the International Monetary Fund (IMF).
By late 2024, El Salvador had reached a staff-level agreement with the IMF, finalized in February 2025 as a 40-month, $1.4-billion Extended Fund Facility. This documentation repeatedly flagged Bitcoin-related risks, and by mid-2025, the IMF had conducted its first program review and Article IV consultation.
In this context, El Salvador’s initiative to strengthen custody—especially against a quantum threat that may not manifest for decades—seems less like paranoia and more like shrewd statecraft.
By presenting the upgrade as a safeguard against the evolving landscape of cryptography, the government positions itself as an anticipatory player rather than a reactive one, all while contending with skeptics both domestically and internationally.
Did you know? Under IMF guidelines, Article IV consultations are mandatory annual evaluations of a country’s economy. El Salvador’s 2025 review explicitly cited Bitcoin as a key factor in assessing financial stability.
What are the critics saying?
Supporters view it as an innovative blueprint; skeptics label the quantum aspect as theatrics, but there’s consensus on the soundness of the underlying custody practices.
Proponents contend that El Salvador has established a sovereign Bitcoin custody model that is fragmented, transparent, and prepared for the future. For them, even if the quantum risk is far-off, there’s no disadvantage in being proactive.
Skeptics argue that this move prioritizes headlines over genuine security. Given the minimal quantum risk in the near-term, they believe that the restructuring does not significantly alter El Salvador’s stance.
Nonetheless, critics concede that the approach of dividing holdings and preventing key reuse is solid Bitcoin hygiene, even without considering the quantum angle.
Could this pave the way for other nations and institutions?
While wallet-splitting may appear unconventional, it establishes a clear framework for sovereign Bitcoin custody that is auditable and prepared for future cryptography. Regardless of how distant the quantum risks are, this shift reframes Bitcoin as a serious asset class deserving of institutional best practices.
Governments navigating Bitcoin custody is still relatively untested. El Salvador’s actions illustrate a balance of transparency and security, showcasing strategies that exchanges, custodians, or even corporations might adopt.
For institutional investors managing billions in Bitcoin, this situation underscores best practices: avoid address reuse, fragment reserves, and consider long-term threats.
The likelihood of others emulating El Salvador’s approach will depend on how seriously they perceive the quantum narrative. However, the optics alone—appearing proactive instead of reactive—may encourage similar measures in other nations.
Was this necessary?
Perhaps not essential, but certainly wise. Splitting the reserve incurs minimal cost, limits risk, and signals that El Salvador regards its Bitcoin as a strategic treasury rather than merely a publicity stunt.
El Salvador’s decision does not imply an imminent quantum threat; rather, it suggests that a sovereign holder is not postponing considerations of edge-case risks. By minimizing potential worst-case losses, maintaining transparency, and demonstrating readiness to adapt custody strategies, the country is treating its Bitcoin as a strategic asset, not a mere spectacle.
Whether the “quantum threat” emerges in decades or never materializes, the operational enhancements are prudent. The cost of being proactive is minor compared to the potential disaster of being reactive. In this light, dispersing $678 million across multiple vaults reflects responsible stewardship rather than sensationalism.
