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Note · No. 0060 · October 29, 2026

How Bitcoin is hardening itself in 2026.

AI bug hunting, faster patches and the quantum debate, and what it means for a company holding bitcoin.

Intro

The big losses in 2026 came from a wallet's firmware, a payment server and an exchange. Bitcoin's own rules and signatures held up. What I wanted to look at is what the people who maintain Bitcoin are doing about two things at once: AI making bugs cheap to find, and a quantum timeline that keeps getting pulled in.

§ 01

AI made bugs cheap to find

Bitcoin Core's maintainers say they're seeing more reports of bugs that are easy to find or rediscover, and they put that "largely" on LLMs.

A few of the year's incidents:

  • A Coldcard firmware bug weakened how some devices generated seeds, and attackers rebuilt those keys offline. Coinkite says the devices weren't hacked or remotely accessed. Fixed firmware is out for every model, but updating doesn't fix a seed that was already made. Bitcoin Magazine put losses above $100 million.
  • A BTCPay Server flaw was exploited on live merchant servers within days of being reported.
  • Boltz paused operations to catch up with AI-driven attempts.

All three sat in software people use to hold or move bitcoin.

§ 02

Who's working on it

The response has been to point the same AI tools at the code before attackers do.

  • Project Loupe. Spiral and Block launched a free, open-source AI scanner for Bitcoin projects in May. It only reports findings that come with a working test case. The trial run across Bitcoin Core, rust-bitcoin, LDK, BDK and others turned up 643 findings and more than 70 fixes.
  • The Bitcoin Red Team. Sixteen volunteer developers got together after the Coldcard losses, ran AI models across 390 open-source Bitcoin projects in about a day and logged 4,962 potential flaws (85 rated critical). Those are raw scan results. Nobody has published how many hold up.
  • OpenSats Red Team Fund. Pays the AI and infrastructure costs of finding and disclosing bugs in critical Bitcoin software. The first grants went out October 12 to work on Bitcoin Core, libsecp256k1, mempool.space, btcd and lnd, and BTCPay.
  • Brink. About $7.8 million in 2025 donations paid for eight engineers, Bitcoin Core's first public third-party audit (by Quarkslab) and Fuzzamoto, a framework that tests implementations against each other. A bug bounty is on their 2026 list.
  • Fuzzing. Bitcoin Core has run more than a century of CPU time feeding junk inputs to its own code.

One Brink-funded engineer says he's seen more than 1,000 LLM-generated reports against Bitcoin Core. Most were false positives or hypothetical internal issues, and none came in at high or critical. He says himself that he's biased.

§ 03

Patches go out faster now

On October 22 Bitcoin Core changed its security policy. A bug a simple LLM prompt could find no longer sits under an embargo of up to a year. It gets a patched release for every maintained version and a public advisory right away. The maintainers know these fixes may get less testing before release. An embargo only helps if attackers can't find the bug on their own, and with AI they can.

It got used within a week:

  • Oct 23: Project Loupe's scan found a bug that let a malicious peer run a node out of memory on Windows, macOS and BSD (CVE-2026-117350, medium severity). Linux nodes weren't affected.
  • Oct 26: fix merged and backported.
  • Oct 28: shipped in 29.5, 30.4, 31.2 and 32.1 and disclosed.

Worst case was a crashed node. There was no way to move anyone's coins with it.

§ 04

Quantum

Bitcoin's signatures use elliptic-curve cryptography, and a big enough quantum computer could break it. In March, Google Quantum AI estimated it could take fewer than 500,000 physical qubits to break a 256-bit elliptic-curve key, about 20 times fewer than earlier estimates. Google has set 2029 for its own migration, and NIST guidance points to phasing out ECDSA and RSA by 2030.

The hardware is a long way off. The biggest public quantum attack on an elliptic-curve key broke 15 bits in April (Bitcoin uses 256). Chaincode Labs sees it as roughly a two-year emergency track and a seven-year full transition.

Where it actually gets decided is the proposals, and they're being argued in the open:

  • BIP-360 (Pay-to-Merkle-Root) went into the BIP repository as a draft in February. It removes the quantum-exposed key-path spend from a Taproot-style output. It doesn't add post-quantum signatures on its own.
  • BIP-361 proposes phasing out legacy signatures, which would eventually freeze coins that never move. One of its authors calls it "a rough sketch" and critics call it confiscation. Adam Back wants optional upgrades now and fast coordination later.
  • SHRINCS. Blockstream Research's hash-based signature work only relies on assumptions Bitcoin already trusts. There's a draft spec. The standard NIST schemes would cut throughput a lot and SHRINCS narrows that gap, but a formal security proof is still to come.

There's no agreed post-quantum signature scheme yet and no migration date. About a third of supply sits in outputs whose public keys are already visible on-chain, including the very early coins and reused addresses. Coins in hashed addresses that have never been spent from haven't shown their keys.

§ 05

What we'd do as a treasury

  • Write down your custody setup, whether that's self, institutional or a mix: who holds the keys, how a loss gets covered and how fast funds can move.
  • Stop reusing addresses. It's free and it keeps public keys off-chain ahead of any quantum migration.
  • Ask your vendors how they hear about bugs and how fast they ship fixes. Wallet firmware, signing devices and payment servers are where the 2026 losses happened.
  • Be skeptical of anything sold as "quantum-safe Bitcoin." No post-quantum address type is live, so there's nothing to move to yet.
  • Keep an eye on BIP-360, BIP-361 and SHRINCS.

If you want to talk through how your company holds its bitcoin, grab a time with us.

Sources

This is not financial advice.

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