Bitcoin’s Shift to Quantum Resistance: Why Is Falcon-1024 Emerging as a Leading Contender?

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A Warning Sign for Blockchain Security: Quantum Computers Are Targeting Bitcoin’s Dormant Coins

Can we guarantee that Bitcoin, which seems safe today, will still be safe in the future? Bitcoin’s security is not simply a matter of passwords or wallet apps. It rests on the assumption that digital signatures, which prove ownership of transactions, cannot be broken.

Bitcoin currently uses mainly ECDSA and Schnorr signatures. Both are based on elliptic-curve cryptography and rely on the assumption that deriving a private key from a public key is impossible within a practical timeframe. This difficult problem is known as the elliptic-curve discrete logarithm problem (ECDLP).

But the picture changes if a sufficiently powerful quantum computer emerges.

How Shor’s Algorithm Threatens Blockchain Signatures

Mathematical problems that would take classical computers an enormous amount of time to solve could be solved much faster by quantum computers under certain conditions. One prominent example is Shor’s algorithm.

In theory, Shor’s algorithm can efficiently solve integer factorization and discrete logarithm problems. So if quantum computers of practical scale are developed, the assumptions underpinning Bitcoin’s ECDSA and Schnorr signatures could be undermined.

The attack would unfold in relatively straightforward steps:

1. The attacker identifies a public key revealed on the blockchain.
2. Using a quantum computer and Shor’s algorithm, the attacker derives the private key from the public key.
3. With the stolen private key, the attacker generates a valid transaction signature.
4. As a result, the attacker can move the UTXO to their own wallet.

The key point is not the simplistic fear that “all of Bitcoin will disappear in an instant.” The risk is likely to be concentrated in coins whose public keys have already been exposed.

‘Dormant Coins’ Are Especially at Risk

Bitcoin addresses generally use a hash of the public key—not the public key itself—when first receiving coins. This structure delays the moment when the public key is revealed. But whenever coins are spent, the public key and signature are made public on the Blockchain for transaction verification.

From the perspective of the quantum threat, the following assets are therefore more exposed:

• Balances remaining at addresses that have already been used
• Old UTXOs whose public keys have been exposed on-chain
• Early bitcoins that have not moved for a long time
• Coins held in lost or abandoned wallets

So-called “dormant coins” may be particularly vulnerable because their owners might not be able to move them to a new address right away—or may have lost their private keys. If a quantum attacker can reverse-engineer a private key from a public key, assets that have not moved for years could become prime targets.

The Problem Isn’t Quantum Computers—It’s the Time Needed to Transition

This does not mean quantum computers can already break Bitcoin signatures. For now, the threat is better understood as a long-term cryptographic risk that requires preparation for the future.

But Bitcoin and its Blockchain infrastructure are vast, and reaching consensus takes time. Adopting a new signature algorithm would require protocol changes, wallet updates, support from exchanges and custodians, and firmware upgrades for hardware wallets.

So the important question is not, “Can a quantum attack happen today?”

Can the Bitcoin ecosystem transition to a sufficiently secure signature scheme before quantum attacks become a reality?

That is precisely why quantum-resistant signature schemes such as Falcon-1024 are attracting attention. To address future threats, Bitcoin needs to assess the limits of its existing cryptographic structure now and prepare for the next generation of security.

Blockchain’s Quantum Shield: Why Falcon-1024 Is Drawing Attention

What if there were a signature algorithm that could withstand quantum attacks without adding an excessive data burden to a blockchain? Falcon-1024 is emerging as a strong answer to that question: a lattice-based, quantum-resistant signature scheme.

Bitcoin currently relies on ECDSA and Schnorr signatures. These methods are highly secure in today’s computing environment, but the picture could change if a sufficiently powerful quantum computer emerges. That’s because the quantum Shor algorithm could potentially solve the discrete logarithm problem—the key assumption underlying elliptic-curve cryptography—at high speed.

Bitcoin UTXOs whose public keys have already been exposed are considered especially vulnerable in future quantum-attack scenarios. If an attacker can calculate a private key from its public key, they could move the funds before their rightful owner does.

What Is Lattice-Based Cryptography?

Falcon-1024 relies not on elliptic-curve problems, but on hard mathematical problems based on lattices. A lattice is a structure of regularly arranged points in high-dimensional space. Finding a particular short vector within that structure, or working backward from values mixed with errors, is known to be extremely difficult.

Crucially, these lattice problems are considered difficult to solve efficiently even with currently known quantum algorithms. That’s why lattice-based cryptography is classified as a leading form of PQC (Post-Quantum Cryptography).

Falcon uses an NTRU lattice-based structure along with sophisticated signature-sampling techniques. Its defining feature is not simply the claim that it is “resistant to quantum computers,” but its design goal of keeping public keys and signature data relatively compact.

Falcon-1024’s Edge: Smaller Signatures, a More Practical Blockchain Transition

In a blockchain network like Bitcoin, security alone isn’t enough to determine which signature algorithm to use. Larger signatures mean larger transaction data, which in turn affects fees, block space, and node storage costs.

One reason Falcon-1024 is drawing attention is that it offers highly efficient signature sizes compared with other quantum-resistant signature candidates.

• Falcon-1024 signature size: generally around 1 KB
• Current Schnorr signature size: about 64 bytes
• Some other PQC signatures: may require several kilobytes or more

Of course, Falcon-1024 signatures are much larger than today’s Bitcoin signatures. So this cannot be considered an upgrade “with no increase in cost.” Still, compared with quantum-resistant signature schemes as a whole, Falcon-1024 is significant as an option that can relatively limit the growth of on-chain data.

In Bitcoin, where transactions accumulate in vast numbers, differences in signature size can translate into substantial cost differences over time. Falcon-1024 is regarded as a candidate that could strengthen security while also taking blockchain scalability and the burden on node operators into account.

Balancing Verification Speed and Network Operations

Blockchain nodes must independently verify the signatures on every transaction. That makes verification performance just as important as security in any new signature scheme.

Falcon is designed with relatively fast verification in mind, which could be an advantage for networks handling high volumes of transactions. If verification is too demanding, it becomes harder for ordinary users to run full nodes, increasing the risk that the network will become concentrated in the hands of large operators.

Falcon does, however, present important challenges. Its mathematical structure and implementation are relatively complex, and secure signature generation in particular requires precise handling of randomness and protection against side-channel attacks. Implementation errors can lead to private-key leaks, regardless of the algorithm’s underlying strengths.

For Falcon-1024 to be introduced into Bitcoin, the following conditions would need to be met:

• Cryptographic libraries proven across a range of environments
• Reliable support for hardware wallets and mobile wallets
• Secure implementations designed to withstand side-channel attacks
• Thorough benchmarks of full-node performance and transaction fees
• Long-term public review and community consensus

A Strong Candidate—but Not Automatically the Answer

Thanks to its compact signatures and quantum resistance, Falcon-1024 has compelling strengths as a potential next-generation signature scheme for Bitcoin. But being a “strong candidate” does not mean it will be adopted immediately or that it has become a finalized standard.

Changes to the Bitcoin protocol cannot be decided on technical merit alone. It is also necessary to consider how to protect existing addresses and UTXOs, how to introduce new address formats, and how smoothly users and wallet providers can make the transition.

Ultimately, Falcon-1024’s significance lies in more than simply being a new cryptographic algorithm. It is a practical and important starting point for designing blockchain infrastructure that can preserve trust in the quantum era.

A Blockchain Upgrade That Changes All of Bitcoin, Not Just One Algorithm

Adopting Falcon-1024 would not automatically make existing Bitcoin addresses quantum-resistant. A new signature algorithm is only the starting point. To protect actual assets from the risk of quantum attacks, address formats, script verification rules, wallet software, and the process for moving existing UTXOs would all need to change.

In other words, this would be more than a simple cryptographic algorithm swap. It would be an upgrade that gradually redesigns the security foundations of the Bitcoin Blockchain.

New Addresses and Script Verification Paths Are Needed

Bitcoin currently operates with address and transaction verification structures built around ECDSA and Schnorr signatures. To use Falcon-1024 signatures, the network would therefore need a new path that can understand and verify them.

A practical approach could involve:

• Introducing a new address or witness version
  As with existing SegWit and Taproot formats, a separate address format could be created to accommodate Falcon public keys and signatures.

• Adding new script verification rules
  Bitcoin nodes would need to be able to determine whether a Falcon signature included in a transaction is valid. A dedicated opcode or a new script path could be considered for this purpose.

• Gradual implementation through a soft fork
  Rather than immediately invalidating existing transactions and wallets, a soft fork that preserves the old rules while adding new quantum-resistant rules is often discussed as the more practical option.

The key point is that “Bitcoin with Falcon support” and “Bitcoin using only existing signatures” could coexist for some time.

Existing UTXOs Would Not Be Protected Automatically

The most important issue is the Bitcoin that already exists. In particular, UTXOs at addresses with exposed public keys or addresses that have been used before could face greater risk if future quantum computers become sufficiently powerful.

Even if new Falcon-based addresses are introduced, existing assets would need to be moved directly to those addresses to receive quantum-resistant protection.

For example, a user would go through steps such as these:

1. Generate a new Falcon-based address.
2. Transfer Bitcoin from an existing ECDSA- or Schnorr-based address to the new address.
3. Once the transfer is confirmed, the assets are managed as UTXOs governed by the new signature scheme.

This process may seem technically straightforward, but carrying it out across the entire network would be a massive undertaking. Coins that have not moved for a long time, assets linked to lost keys, and funds held in old wallet formats may be difficult or impossible to migrate.

Wallets and Custody Infrastructure Must Change Too

On a Blockchain, signature schemes are not just a matter for nodes. They affect every step in which users generate keys, sign transactions, and store assets.

If a transition to Falcon-1024 becomes a reality, the following infrastructure would need to be updated:

• Key generation and signing features in personal and mobile wallets
• Firmware and secure-chip support in hardware wallets
• Hot-wallet and cold-wallet systems at exchanges
• Institutional custody services and HSM environments
• Multisig and MPC-based asset management solutions
• Bitcoin payment services and address verification systems

Hardware wallets and institutional custody infrastructure, in particular, require lengthy validation processes and must meet stringent security requirements. As a result, even after the protocol rules are established, it could take considerable time for the changes to reach users’ environments at scale.

Transaction Size, Fees, and Node Costs Must Also Be Considered

In Bitcoin, signature size translates directly into cost. Larger signatures mean more transaction data, which can increase block-space usage and fees.

One reason Falcon-1024 has drawn attention is that, compared with other post-quantum signature candidates, it may offer a relatively favorable balance in signature size for use on a Blockchain. But adoption in practice would not be determined by signature length alone.

Many factors would need to be evaluated:

• The increase in witness data per transaction
• Signature verification speed on nodes
• The burden on block propagation and storage
• The capabilities of mobile wallets and hardware devices
• The risk of implementation errors and the maturity of available libraries
• The potential for maliciously large transactions to consume network resources

Quantum resistance must provide strong security, but if it sharply increases the cost of running a full node, it could instead put pressure on decentralization. That is why extensive benchmarking across a range of implementations and hardware environments, along with security audits, would be essential before any real transition.

Ultimately, the Key Is Not “Adoption,” but “Migration”

Adding Falcon-1024 to Bitcoin would be an important technical first step. But the real transition would only be complete once users move their existing assets to new addresses, wallets and exchanges support those addresses by default, and network participants can reliably operate under the new verification rules.

The challenge of quantum-resistant Bitcoin, then, is not simply choosing an algorithm. It depends on how safely existing assets and infrastructure can be connected and migrated—and how the Blockchain’s security and decentralization can be preserved throughout the process.

Falcon vs. Dilithium for Blockchain: Which Is the Better Fit?

Both aim to deliver quantum resistance, but not all post-quantum cryptographic (PQC) signature schemes come at the same cost for Bitcoin. The choice between shorter signatures and a simpler-to-implement scheme can affect everything from block size and fees to node operating costs and wallet security architecture.

Falcon and Dilithium are both considered strong lattice-based signature candidates for blockchain networks such as Bitcoin. But each has distinct strengths.

| Comparison | Falcon-1024 | Dilithium family | |---|---|---| | Key strength | Small signature size | Simpler, more robust implementation | | On-chain data burden | Relatively low | Relatively high | | Implementation difficulty | High | Comparatively low | | Hardware wallet support | Requires sophisticated implementation | Relatively easier to deploy and audit | | From Bitcoin’s perspective | Better for saving block space | Better for a cautious adoption strategy |

Falcon: A Strong Contender for Block-Space-Constrained Blockchains

Falcon-1024’s biggest advantage is its signature size. On a public blockchain, every byte included in a transaction comes at a cost. Longer signatures increase transaction size, requiring users to pay higher fees and nodes to store and propagate more data.

Compared with other lattice-based signature schemes targeting a similar level of quantum resistance, Falcon signatures are relatively compact. This can offer several benefits:

• Help mitigate reductions in the number of transactions that fit in each block.
• Ease fee pressure caused by larger signature data.
• Reduce the long-term burden of growing UTXO and transaction data.
• Improve efficiency in signature-intensive structures such as multisig, custody, and Layer 2 settlement.

Bitcoin, in particular, is a network with limited block space. Falcon’s data efficiency is therefore more than a simple performance metric—it is a characteristic tied to network economics and decentralization.

Dilithium: Strengths in Implementation Simplicity and Verifiability

Dilithium is an important lattice-based signature scheme in the current NIST standardization landscape, and its standardized name, the ML-DSA family, is widely discussed. Its signatures and public keys are larger than Falcon’s, but from an implementation standpoint, it is regarded as a more conservative and practical choice.

Dilithium’s strengths include:

• A structure centered on integer arithmetic, making implementation relatively straightforward.
• Less reliance on floating-point operations or complex sampling procedures.
• Relatively easier code audits and security verification.
• Potential advantages for deployment across a range of environments, including hardware wallets, secure chips, and HSMs.

Even when a cryptographic algorithm is mathematically secure, a complex implementation can expand the real-world attack surface. Falcon, for example, requires sophisticated Gaussian sampling and advanced implementation techniques to produce short signatures. If randomness handling, side-channel defenses, and constant-time implementation are not thoroughly validated, its theoretical security may not translate into real-world security.

The Core Trade-Off: On-Chain Efficiency vs. Implementation Risk

Bitcoin needs more than just “an algorithm that is secure against quantum computers.” It needs a signature scheme that nodes, exchanges, wallets, and custodians around the world can operate reliably for decades.

Falcon is well suited to answering this question:

“After the transition to quantum resistance, can we keep block-space and fee costs manageable?”

Dilithium, meanwhile, is well suited to answering this one:

“Can countless wallets and security devices implement and verify it without mistakes?”

Choosing between the two is therefore less a performance contest than a strategic decision about which risks a blockchain protocol should prioritize.

Bitcoin May Not Have to Choose Just One

In an actual protocol design, it may be possible to support multiple post-quantum signature schemes in stages rather than immediately making a final choice between Falcon and Dilithium. For example, PQC signatures could be added through a new witness version or script path, allowing users to choose an address type based on their preferred balance of security and cost.

Possible approaches include:

• Falcon-based addresses: suited to users and services where reducing on-chain data is a priority
• Dilithium-based addresses: suited to institutions that prioritize simpler implementation and standards compatibility
• Hybrid signature structures: combine existing Schnorr or ECDSA signatures with PQC signatures to reduce transition-period risks

Ultimately, Falcon is an attractive candidate for preserving Bitcoin’s block space, while Dilithium is a strong candidate for helping large-scale infrastructure transition reliably. The outcome of the shift to quantum resistance will depend not on which algorithm is better known, but on how well security, implementability, and on-chain costs can be balanced.

Blockchain’s Next Challenge: After Bitcoin, All of Web3 Moves to Quantum-Resistant Infrastructure

The moment Bitcoin supports quantum-resistant addresses and signature schemes, the change won’t stop at the Bitcoin protocol. This could be more than a swap of one blockchain’s security algorithm—it could mark the beginning of a rebuild of the cryptographic stack across the entire Blockchain ecosystem.

If lattice-based signatures such as Falcon-1024 move toward real-world adoption, wallets, exchanges, custodians, MPC services, and smart contract account systems will all have to respond in turn. Ultimately, the shift to quantum resistance isn’t a matter of “adding one new address type.” It means redesigning how digital assets are created, stored, transferred, and recovered.

Wallets Will Evolve from “Key Vaults” into Quantum-Resistant Security Modules

Most cryptocurrency wallets today are designed around ECDSA or Schnorr signatures. The entire process—from generating private keys and managing recovery phrases to signing transactions—is built for conventional elliptic-curve cryptography.

With the introduction of quantum-resistant signatures, wallets may need to undergo the following changes:

• Support for new public-key and signature formats

  • Algorithms such as Falcon-1024 use different signature schemes and key structures from existing ones.
  • Wallets will need to handle new address formats, signature data, and transaction serialization rules.

• Overhaul of hardware wallet firmware

  • Hardware wallets must sign securely within the limits of their memory and processing power.
  • Quantum-resistant algorithms can be more difficult to implement, requiring a redesign of security chips, firmware, and validation procedures.

• Migration tools for existing assets

  • Users may need to move assets held at legacy addresses to quantum-resistant addresses.
  • In the process, wallets will go beyond simply sending funds: they may also need to serve as security interfaces that assess risk and guide users through migration.

For users holding funds at addresses whose public keys have already been exposed, or in older UTXOs, “when to move” becomes a practical asset-protection strategy. Moving to a new address to prepare for future threats could become a kind of digital asset security checkup.

Exchanges and Custodians Will Need to Redesign Their Cold Wallet Systems

Exchanges and institutional custody providers hold large amounts of assets over extended periods. They protect those assets by separating hot and cold wallets and applying multi-party approval processes and access controls. But if the signature algorithm itself changes, existing custody systems will have to change with it.

The key challenges fall into three areas:

1. Moving assets from existing addresses
   Institutions will need procedures for transferring assets from legacy custody addresses to quantum-resistant ones. The larger the assets involved, the more carefully they will need to manage migration timing, fees, and operational risks.

2. Dual support for deposit and withdrawal infrastructure
   During the initial transition, legacy ECDSA-based addresses and PQC-based addresses are likely to coexist. Exchanges will need to support both systems at once while managing address errors, withdrawal policies, and deposit confirmation rules.

3. Changes to audit, regulatory, and insurance standards
   Institutional custody is not just a technical issue—it is also a matter of internal controls and accountability. Whether a provider has transitioned to quantum resistance may become part of future security audits, insurance reviews, and regulatory compliance requirements.

In other words, quantum resistance is not just a challenge for security teams. It could become an organization-wide transition project requiring preparation across operations, compliance, legal, customer support, and risk management.

MPC and Multisig Are Entering a More Complex—but Crucial—Transition

MPC (Multi-Party Computation) and multisig are already core infrastructure for institutional digital asset management. Rather than keeping a single private key on one device, they distribute signing authority across multiple participants or servers.

The challenge is that many MPC solutions are optimized around conventional elliptic-curve signatures. Adopting quantum-resistant signatures such as Falcon-1024 may require more than simply swapping out the algorithm library.

• Distributed key generation methods will need to be adapted to the new algorithms.
• Protocols for multiple participants to sign together will need to be redesigned.
• The communication volume and latency involved in generating signatures will need to be measured.
• Operational procedures for recovery, key rotation, and revoking access will also need to be aligned with the new security model.

Especially in institutional settings, the key question is not simply whether a provider claims to “use a quantum-resistant algorithm,” but whether it can sign securely and reliably in a distributed environment. Trust in Blockchain infrastructure comes not from a single cryptographic algorithm, but from the entire system of key management and operational processes.

Ethereum and Other Public Chains Face the Same Questions

If Bitcoin begins seriously discussing a transition to quantum resistance, other public chains—including Ethereum and Solana—will find it difficult to avoid the same questions. Many chains rely on ECDSA, Schnorr-based, or similar public-key cryptographic structures.

The transition could be even more complex on other chains. While Bitcoin’s focus is primarily on changes to UTXOs and script verification rules, account-based chains have deep connections between user accounts and smart contracts.

For example, Ethereum-based environments may need changes such as:

• Introducing new account types that use quantum-resistant public keys
• Changing signature verification logic in smart contract wallets
• Expanding flexible authentication methods based on account abstraction
• Migrating assets and permissions from existing EOA accounts to new accounts
• Checking signature verification compatibility across applications such as DeFi, NFTs, and DAOs

Compatibility will be critical. Assets and applications built up over many years cannot all be replaced at once. A realistic transition is therefore likely to begin with a hybrid structure in which existing accounts and quantum-resistant accounts coexist.

The Decisive Factor in the Quantum-Resistance Transition Is “Operational Capability,” Not the Algorithm

The performance and security of candidate algorithms such as Falcon-1024 matter. But the success of a real-world transition won’t be determined by the choice of algorithm alone. The harder challenge is moving hundreds of millions of addresses, countless wallets, exchange infrastructure, and institutional custody systems without causing disruption.

The questions the Web3 industry needs to prepare for are clear:

• Which assets are currently most exposed to quantum risk?
• What standard procedures should be used to move assets from existing addresses to quantum-resistant ones?
• When will hardware wallets and MPC services be able to support the new signatures?
• How long will existing Blockchain networks and applications continue to allow legacy signatures?
• How can the transition reduce fees, user errors, and phishing risks?

Quantum computers may not be about to render all cryptography useless overnight. But blockchain is built around assets held for the long term and trust that must endure. That is why the transition to quantum resistance is not something to begin after the threat becomes real. It is a long-term challenge that calls for preparing standards and infrastructure starting now.