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

El Salvador has announced plans to move its Bitcoin from a single wallet to 14 new wallets. According to the government, this decision is part of a strategic initiative to improve the long term security and custody of the national Bitcoin reserves.

The news was revealed by the official Bitcoin Office of El Salvador on platform X. The country noted that this redistribution will serve as a precaution against potential threats from quantum computing. “When funds are spent from an address, their public keys become exposed and vulnerable. By splitting the funds into smaller amounts, the impact of a potential quantum attack is minimized,” explained the Bitcoin Office.

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 communications. “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 uncover private keys and redirect funds before the transaction is confirmed,” added the Office.

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

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

Crypto 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 acquiring the capability to hack Bitcoin. A Bitcoin private key contains 256 bits, and currently no quantum computer running Shor's algorithm has achieved the capacity to decipher even a 3-bit key.

Michael Saylor, the architect behind the Strategy movement towards Bitcoin, also dismissed the threat, pointing out in June that the threat of quantum computing to the main digital asset is pure exaggeration. He added that if it ever became a problem worthy of attention, the core developers of the protocol and hardware creators would implement solutions.

Meanwhile, El Salvador remains embroiled in its drama with the International Monetary Fund (IMF) after the organization 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 the IMF last December in exchange for reducing its Bitcoin initiatives. While the country accepted the main terms proposed by the organization, some other conditions were reportedly disputed between the parties. One of the willingly accepted conditions 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.