El Salvador has completely restructured its national Bitcoin treasury, moving from a single-wallet system to a new, diversified model. The change, announced by the National Bitcoin Office on August 30, is designed to enhance security and align the country’s practices with global standards for managing digital assets.
Under the new system, the country’s Bitcoin reserves are now spread across multiple addresses, with each address holding no more than 500 BTC. This new strategy addresses two key security concerns: the long-term threat of quantum computing and the risks associated with continuously reusing the same public key.
Previously, El Salvador stored its Bitcoin in a single, reused address. This practice made the public key permanently visible on the blockchain, theoretically giving a potential attacker unlimited time to attempt a breach. By distributing the funds across many addresses, the new system prevents these keys from being exposed until a transaction occurs, significantly reducing their vulnerability.
Stacy Herbert, who leads the National Bitcoin Office, stated the move is both a strategic and precautionary measure. “El Salvador was the first to establish a Strategic Bitcoin Reserve and we continue to lead the way on establishing best practices for this era of true sovereignty and freedom money,” she said.
The government also noted that the distribution of funds minimizes the potential impact of a quantum attack. An unused Bitcoin address with a hashed public key remains protected, while a used address becomes more vulnerable. By limiting the amount in each wallet, the new system minimizes the potential damage if any single address is compromised.
The move has been praised by industry figures, including Nick Neuman, co-founder of Bitcoin custody firm CasaHODL. Neuman described the change as a positive step for large-scale holders and a good model for other nations to follow.
This development follows a recent report from the International Monetary Fund (IMF) that claimed El Salvador had not significantly increased its Bitcoin holdings. However, El Salvador’s government has continued to announce new purchases, bringing its total holdings to 6,284 BTC, valued at over $681 million. President Nayib Bukele recently hinted that the country’s Bitcoin stash could reach $1 billion by the end of the year.
