Quantum Sunset Economics: a working paper analyzing PACT adoption

His research includes a Python reference implementation for the protocol’s commitment side that can be found here. One of the critical insights from his study is that about 25% of the circulating Bitcoin supply is exposed through key UTXO surfaces, notably including the Patoshi cluster. This exposure poses significant privacy costs, especially for larger dormant holders, making voluntary participation less likely without early standardization or pooling services to mitigate these costs.

Raza evaluates several policy options concerning Bitcoin Improvement Proposals and alternate mechanisms like Rubin’s proposal, using a five-criterion comparative framework. He also assesses regulatory implications under various frameworks, including VASP and OFAC, in response to different CRQC-arrival scenarios. Furthermore, Raza invites feedback on his use of the convexity assumption and the viability of the proposed pooling service, exploring whether similar models exist in custodial, non-custodial, or multisignature formats. He also probes the community for perspectives on the treatment of different transaction types within his analysis and seeks input on integrating features from both PACT and Rubin's proposals.

The security implications of different cryptocurrency transaction types are thoroughly explored, particularly the risks associated with reused addresses and potential quantum computing threats. Raza points out the vulnerabilities of multisig transactions which involve multiple keys and thereby present a unique risk profile. An anomaly noted in the handling of multi-address outputs in multisig configurations suggests an inflation in the count of unexposed UTXOs due to a software error, prompting a reevaluation of UTXO classifications.

Significantly, Raza discusses the security risks associated with extended public keys (xpubs), emphasizing their vulnerability to exposure through breaches, which could compromise the security of associated digital assets. The discussion underscores the potential consequences of such exposures, including susceptibility to cryptographic attacks and the challenges in quantifying the impact.

In response to feedback, Raza has updated his paper to refine classifications and address identified anomalies. The revised analysis now estimates that approximately 35.30% of the Bitcoin supply is exposed, reflecting adjustments in the classification of P2SH and P2WSH transactions. Additionally, he explores the implications of multisig defenses under different quantum attack regimes, arguing that while multisig provides a temporary defense, its long-term efficacy may diminish unless supported by robust institutional mechanisms like pooling services. These updates aim to enhance the understanding of exposure levels and refine policy discussions surrounding cryptocurrency security and regulatory compliance.