Bitcoin quantum defenses advance on-chain
StarkWare’s Avihu Levy demonstrated a quantum-resistant transaction on Bitcoin’s mainnet on August 27, providing the first on-chain use of a one-time hash-based signature that conceals the public key while the transaction sits in the mempool. The test moved a 10,000-satoshi output protected by the Quantum Safe Bitcoin (QSB) scheme, a hybrid of hash-based signatures and computational binding to a specific transaction. The proof-of-concept succeeded, but each transaction currently costs $150-$200 and requires several hours to confirm, making it a last-resort tool rather than a daily solution.
Blockstream researchers released a Bitcoin Improvement Proposal that adapts the SHRINCS post-quantum signature scheme for Bitcoin. By compressing the original hash-based signature 13.23-fold, the new design still produces signatures roughly nine times larger than today’s ECDSA keys. Blockstream’s Jonas Nick called the proposal "the first concrete proposal for a post-quantum signature scheme designed specifically for Bitcoin," acknowledging trade-offs while praising the balance of security and size. The industry now watches whether future soft-forks will adopt SHRINCS or await more efficient alternatives.
For background on Bitcoin’s price drivers, see our earlier analysis Bitcoin price drivers and explore the broader topic hub at /tags/bitcoin.
Solana’s aggressive disinflation plan
Solana validators approved proposal SGP-0002, dubbed Double Disinflation, with 67% support and 60.7% stake participation. The measure doubles the annual disinflation rate from 15% to 30%, cutting issuance by 18.9 million SOL over the next six years. At that pace, Solana’s inflation will fall to a 1.5% terminal rate in roughly 2.8 years, half the time projected under the prior schedule.
On-chain metrics from The Kobeissi Letter show Solana processed a record 4.2 billion transactions in July, a 13.5% month-over-month rise and a 91% increase since December. The surge reflects growing DeFi activity and the network’s push to attract high-throughput applications. By curbing token supply, validators aim to improve price perception and reduce dilution for existing holders.
Market reaction and broader implications
Bitcoin rallied 23% over the past week, outpacing most AI-linked infrastructure stocks. Mining firms Canaan, American Bitcoin, and Cango posted gains between 41% and 67%, while AI compute providers such as CoreWeave rose only 21%. Bitcoin ETFs attracted $3.3 billion in August, the strongest inflow since October 2025, though outflows on Friday ended a nine-day net-inflow streak.
Bernstein analysts predict a new four-year bull cycle, forecasting Bitcoin to retest $125 k in the near term and potentially peak at $300 k by 2029 under a base case, or $500 k in a bullish scenario. The bullish outlook aligns with CryptoQuant CEO Ki Young Ju’s recent Bull/Bear Market Cycle Indicator turning positive for the first time since October 2023, suggesting on-chain profitability metrics have shifted into a bullish regime.
Regulatory and consumer-risk updates
A Public Citizen report alleges former President Donald Trump’s personal crypto ventures left investors $4.7 billion underwater, including $3.2 billion lost on the official TRUMP memecoin. The findings add pressure to the pending CLARITY Act, which seeks tighter disclosure and anti-conflict rules for elected officials issuing digital assets.
A separate survey by the National Institute on Retirement Security found 77% of Americans view crypto in workplace retirement plans as risky, with 46% deeming it "very risky." The sentiment underscores the need for clear fiduciary guidance as more employers explore crypto-linked benefits.
Actionable takeaways for traders and developers
- Security – Holders of Bitcoin should monitor the development of QSB and SHRINCS. Until the protocols become cost-effective, using multi-signature wallets and hardware devices remains the best defense against quantum-related threats.
- Liquidity monitoring – Solana’s supply contraction will likely affect on-chain liquidity pools. Traders should watch protocol liquidity stats on DeFi analytics platforms to anticipate slippage changes.
- Regulatory vigilance – Investors exposed to politically linked tokens should verify issuer credentials and consider the FTC Consumer Alerts for potential scams.
What to watch next
- Bitcoin BIP adoption – The next Bitcoin developer conference will reveal whether SHRINCS or an alternative post-quantum scheme moves toward activation.
- Solana inflation trajectory – Quarterly on-chain reports will show whether the accelerated burn translates into measurable price support.
- ETF inflows – Continued capital inflow into Bitcoin ETFs could signal institutional confidence, especially if the Bull/Bear indicator stays positive.
Related coverage
- The analysis of Bitcoin price drivers provides a deeper look at the forces behind the recent rally.
- A snapshot of DeFi market depth appears in the latest protocol liquidity stats.
How does the QSB scheme protect Bitcoin transactions?
QSB uses a hash-based one-time signature that hides the public key until the transaction is confirmed, preventing a quantum adversary from harvesting the key while it resides in the mempool.
What are the trade-offs of the SHRINCS proposal?
SHRINCS reduces signature size dramatically but remains nine times larger than current ECDSA signatures, increasing block weight and potentially raising fees.
When will Solana reach its 1.5% inflation target?
Under the new double-disinflation schedule, Solana is projected to hit a 1.5% terminal inflation rate in about 2.8 years, compared with roughly 5.7 years under the previous plan.
Why did CryptoQuant’s Bull/Bear indicator turn positive?
The indicator crossed zero as on-chain profitability metrics—MVRV, NUPL, and SOPR—improved above their 365-day moving averages, signaling a shift from bear to bull conditions.
What risks remain for investors in Trump-linked crypto projects?
Public Citizen’s report highlights potential loss exposure exceeding $4 billion, prompting calls for stricter disclosure rules under the CLARITY Act.