Fear that quantum computing is on the cusp of cracking cryptocurrency's encryption spurs a global investment firm to remove Bitcoin from recommendations
Senior financial strategist Christopher Wood said in the latest issue of the GREED & Fear newsletter that he’s removing the 10% Bitcoin allocation from his recommended portfolio. He justified this move by saying that advancements in quantum computing pose a threat to the cryptocurrency’s cryptographic protections, thus undermining its argument of durability through network security. According to Bloomberg, Wood recommends replacing Bitcoin with an investment with a 5% allocation to physical gold and another 5% set for gold mining stocks.
Wood, who is the Global Head of Equity Strategy at the global investment banking firm Jefferies, first included Bitcoin in his sample portfolio in December 2020. He then grew it to 10% in 2021, citing the fear of inflation because of the stimulus checks the government released during the height of the Covid-19 pandemic. However, advancements in quantum computing have long-term investors concerned about its implications, especially for cryptocurrencies.
Bitcoin currently uses the SHA-256 hashing algorithm, which is technically impossible to crack with current computing technology. However, there have been reports as far back as 2022 that quantum computers could crack Bitcoin by the 2030s. An event like this would cause chaos in the system, resulting in Bitcoin (and other cryptocurrencies) losing its value overnight, especially if the break comes as a surprise. Because of this, Wood recommended moving away from it, especially for long-term investors.
Despite this, many cryptocurrency developers aren’t as concerned as Wood and other financial experts. For one, current quantum computing capabilities are nowhere near powerful or stable enough to defeat current cryptography algorithms, so they remain safe for the time being. Besides that, progress in the field of quantum computing is slow and public, meaning developers would have ample warning that they need to upgrade their algorithms.
Another big reason that cryptocurrencies aren’t particularly concerned about quantum computing right now is that if quantum computers can break Bitcoin security, then they can break cryptography algorithms all across the world. So, if their security protocols were to be broken, then the security of everything else — including traditional banking systems, secured internet protocols, government encryption, and more — will also be affected. Besides, security developers are already looking into post-quantum cryptography, with cryptocurrency developers able to take advantage of their developments as well.
Despite this, Wood says that the debate between cryptocurrency developers and quantum computing will only be a “long-term positive for gold.” It has historically held its value, reaching an 11% annual return over the past 50 years. So, investors looking for a stable, long-term asset to park their funds would probably find the precious metal an attractive option.
Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.
If quantum computers were a thing that matters, AI data centers wouldn't waste classical hardware.
They solve mostly different problems.
Also, quantum computers aren't at a stage of development where they're quite ready to be scaled up to the same degree, if there were even enough demand to support something like that.
Besides, security developers are already looking into post-quantum cryptography, with cryptocurrency developers able to take advantage of their developments as well.
I'm not sure that works with blockchain. The problem is that historical records are protected by the historical encryption used. I think you can't just go back and update their checksums.
Wood says that the debate between cryptocurrency developers and quantum computing will only be a “long-term positive for gold.” It has historically held its value, reaching an 11% annual return over the past 50 years.
The higher the price of gold gets, the more "informal" mining there is. Such mining techniques have serious and long-lasting environmental impacts, including mercury pollution of soil and waterways.
This is a big reason I don't have any gold in my portfolio.
This exactly. Most people don't understand that we lack a general-purpose computing model for quantum computers ... the only problems we can use them to solve are those for which we've developed custom solutions (Shor's Algorithm for breaking public-key encryption, for instance)
waltc3 said:
... "The only thing we have to fear is fear itself"...;) To fear unproven theories is just wasted energy.
Except this theory is already proven. Quantum computers are already breaking RSA encryption with shorter key lengths. Even a conservative estimate is that Bitcoin's algorithms will be vulnerable within 20 years.
The "quantum kills Bitcoin" narrative feels wildly premature. If quantum computers can suddenly crack SHA-256, Bitcoin will be the least of our problems — global banking, government encryption, HTTPS, and military-grade security would all fall first. Markets won’t wake up one day to a surprise apocalypse; cryptography evolves, and post-quantum algorithms are already in development.
Ironically, this fear says more about investor psychology than technology. Gold thrives on uncertainty, Bitcoin thrives on adaptation. Betting against one because of a theoretical 2030s threat feels less like risk management and more like comfort-seeking. History favors systems that upgrade — not those that just sit shiny in a vault.
I'd say there's about a 5% chance there's always been a backdoor on Bitcoin blockchain, or at least that the big guys with supercomputers can bust it in a few hours (or a lot faster) at will.
I'd say there's about a 0.000000001% chance quantum computing will ever work at all much less crack anybody's encryption. But that's just me.
The "quantum kills Bitcoin" narrative feels wildly premature. If quantum computers can suddenly crack SHA-256, Bitcoin will be the least of our problems — global banking, government encryption, HTTPS, and military-grade security would all fall first.
Untrue. A quantum computer will break an asymmetric protocol like SHA-256 decades (perhaps centuries) before it can break a symmetric one like AES-256. While SHA is used for key exchange (browser TLS sessions, etc), internally governments, militaries, and major banks are using symmetric encryption. And while we upgrade the key exchange in browsers fairly quickly and efficiently, the quantum-resistant algorithms being considered for Bitcoin mean the network would run as much as 100X slower.
I'd say there's about a 5% chance there's always been a backdoor on Bitcoin blockchain, or at least that the big guys with supercomputers can bust it in a few hours (or a lot faster) at will.
Elliptic-curve cryptography is far more transparent than DES's old S-boxes. Despite what you see on Netflix, state-actor cryptographers may be exponentially ahead of the public on technical grounds, but not theoretical ones.
JRStern said:
I'd say there's about a 0.000000001% chance quantum computing will ever work at all much less crack anybody's encryption. But that's just me.
Admittedly this is only 50-bit RSA not 256-bit, but still:
