Speaker 1: I get it.
Speaker 2: It's scary hearing about what quantum computers could do to
Speaker 2: bitcoin one day, if or when they actually arrive.
Speaker 1: But here's the thing.
Speaker 2: Understanding how Bitcoin's encryption actually works is the key to
Speaker 2: understanding how quantum can or more importantly, can't, disrupt it.
Speaker 2: And what I'm about to show you will completely flip
Speaker 2: the script on your perspective because while everybody else is
Speaker 2: panic selling based on fear on headlines, you'll have the
Speaker 2: technical knowledge to stay calm and potentially profit from their fear.
Speaker 1: Now.
Speaker 2: I've been building tech companies for decades. I'm a partner
Speaker 2: to leading bitcoin venture fund, I'm an officer of a
Speaker 2: publicly traded bitcoin company, and this is the same analysis
Speaker 2: that we use internally, and now you can profit from it.
Speaker 1: Two. So let's go. All right, we're going to jump
Speaker 1: right in.
Speaker 2: We got to talk about quantum computing and bitcoin. Now,
Speaker 2: first of all, this is technical discussion, but I'm going
Speaker 2: to make it as simple and easy to understand some
Speaker 2: no matter where you're at with your age, your technical ability,
Speaker 2: We're going to make it clear for you. I'm also
Speaker 2: going to tell you, just right up front, spoiler alert,
Speaker 2: there is some bitcoin that is at risk and some
Speaker 2: that's not as at risk.
Speaker 1: And if the stuff is at risk, there's things that
Speaker 1: we can do about it.
Speaker 2: Okay, I'm gonna give you all that, but the first
Speaker 2: thing we have to understand is that quantum computing is
Speaker 2: not here. So in the world, everything is possible, but
Speaker 2: not everything is probable. So we don't want to worry
Speaker 2: about everything that's possible to happen in the world.
Speaker 1: Aliens could come destroy the world tomorrow. It's possible, it's
Speaker 1: not very probable. So quantum computing. Google put out an
Speaker 1: alert an update.
Speaker 2: They said, quantum computing could it could break Bitcoin like
Speaker 2: encryption to could because it's hypothetical. We don't have it now.
Speaker 2: Potentially we don't know. It could be eight to ten
Speaker 2: years away, so we don't evenly have to worry.
Speaker 1: About this right now.
Speaker 2: However, we're gonna address this front on So Google update
Speaker 2: it's coming eventually.
Speaker 1: They said that it could come faster than we think
Speaker 1: it could.
Speaker 2: Use twenty times less resources, and finding didn't definding, didn't
Speaker 2: mention bitcoin.
Speaker 1: They said Bitcoin like encryption.
Speaker 2: Okay, so let's just dispel some of that fud right
Speaker 2: off the bat. But let's get right into this and
Speaker 2: see what part of bitcoin is at risk and what's
Speaker 2: it not. So you have to understand first of all
Speaker 2: that bitcoin is encrypted, obviously, right, that's the crypto part
Speaker 2: of the cryptocurrency, the cryptography.
Speaker 1: Okay.
Speaker 2: Now, within that, you have what's called a public key
Speaker 2: and a private key.
Speaker 1: Let me explain this for you real simply.
Speaker 2: So if I had a locker at my school, and
Speaker 2: I would say that locker is let's say C nineteen,
Speaker 2: so that's my public address, and I could say, hey,
Speaker 2: go put this letter in my public.
Speaker 1: Address in my C nineteen.
Speaker 2: You could walk over there slide it in, but only
Speaker 2: I would have a private key to actually open it up.
Speaker 1: And move the contents.
Speaker 2: So that's how bitcoin and cryptocurrency works in general. There's
Speaker 2: a public key that everybody could see, but then only
Speaker 2: you would have a private.
Speaker 1: Key that you could open up. That's the basics of it.
Speaker 2: Now there's different types of cryptography that we've had to
Speaker 2: secure those keys, and it changes over time. I'm going
Speaker 2: to take you through some of these changes because understanding
Speaker 2: that is the key to understand if you're at risk.
Speaker 2: So a couple of that we've had the first version
Speaker 2: of the key was the public key was used instead
Speaker 2: of a hash. So what this means is that everybody
Speaker 2: could see the public key. All the types of signature
Speaker 2: schemes that we've had since then do it differently. Instead
Speaker 2: of showing the world the public key, they use a
Speaker 2: hash in the blockchain. So they put a signal inside
Speaker 2: the main blockchain to the public key, but the public
Speaker 2: key is not available. That's a really key piece to
Speaker 2: understanding what's going on. Why is that because of the
Speaker 2: quantum risk? Okay, now what is at risk of quantum? Well,
Speaker 2: the P two p K that was the first scheme,
Speaker 2: it is immediately vulnerable to quantum. Watch out, Quantum could
Speaker 2: attack this. How how does it attack it? That's because,
Speaker 2: as I explained, before the public key was shown, it
Speaker 2: wasn't a hash of a public key like it is
Speaker 2: with later versions.
Speaker 1: The entire key was shown.
Speaker 2: Now in this instance, the hash hides the key, so
Speaker 2: it's not readily available. That's why later versions of the
Speaker 2: schemes are quantum resistant.
Speaker 1: So how big of a problem is this?
Speaker 2: Well, bitcoin that was mined before four March of twenty ten,
Speaker 2: so from two thousand and nine to twenty ten, just
Speaker 2: in that window are the only ones that uses that scheme.
Speaker 2: So basically everything after that point is impossible to.
Speaker 1: Break the hash.
Speaker 2: Okay, so the bitcoin blockchain is secure. It can't break
Speaker 2: the hash. It could only break and get the public
Speaker 2: key if it's readily available, and that's only for keys
Speaker 2: that were made before March of twenty ten. And assuming
Speaker 2: that the bitcoin has never been moved, why is that, Well,
Speaker 2: we have to understand what's at stake. So in that
Speaker 2: period from two thousand and nine to twenty ten, one
Speaker 2: point seven million bitcoin were mine.
Speaker 1: During that period, it was the golden age. Anybody could
Speaker 1: plug in a computer or get bitcoin. Was amazing. I
Speaker 1: wasn't doing it.
Speaker 2: Unfortunately, one point million bitcoin were mine up until that
Speaker 2: date of March twenty ten, and again they used the
Speaker 2: pay to public key where it was readily available. Now,
Speaker 2: of that one point seven million, that's what's at risk
Speaker 2: right now, ninety five percent of that bitcoin has never moved.
Speaker 2: Most likely people lost their keys. Now Satoshi, whoever Satoshi is,
Speaker 2: was whatever, has a certain amount of keys in their wallet.
Speaker 2: We can see that there's about one point one million
Speaker 2: bitcoin sitting in that wallet. It's about five percent of
Speaker 2: the supply at today's current price, which we're making new
Speaker 2: all the time. Eyes at the time we're recording this,
Speaker 2: it's about one hundred and twenty four billion dollars that
Speaker 2: would put Satoshi if they can claim this wallet, whoever
Speaker 2: could claim this wallet in the twelfth richest person in
Speaker 2: the world right now today. Okay, so what's that risk here?
Speaker 2: What's that risk is these coins right here. So hypothetically
Speaker 2: they could break in, they could steal those coins, and
Speaker 2: then what they would own them maybe the twelfth which
Speaker 2: person they could dump them in the market. They could
Speaker 2: potentially short term, you know, crash the price and tell
Speaker 2: the market absorb those and went back up.
Speaker 1: But that's really the total potential risk that we have.
Speaker 1: That's what's at stake.
Speaker 2: However, there's solutions for this right problems, solutions things that
Speaker 2: could be done. Number One, if you have coins, if
Speaker 2: you're lucky enough to have gotten coins in that period
Speaker 2: before March of twenty.
Speaker 1: Ten, all you need to do is just move your
Speaker 1: coins to a new wallet address. You're automatically secure.
Speaker 2: If so Toshi could come to light, he could move
Speaker 2: his coins as well. However, the ecosystem doesn't want a
Speaker 2: hacker using some quantum computing to get those coins, so even.
Speaker 1: Those have potential security.
Speaker 2: So a solution would be an hourglass, and basically an
Speaker 2: hourglass would be to put those wallets into this frame
Speaker 2: that would limit the movement.
Speaker 1: Of those all right, So what we could do is
Speaker 1: you could put some sort of constraints around it.
Speaker 2: So for example, no more than one bitcoin could be
Speaker 2: moved per block, So that way they just couldn't take
Speaker 2: the one point one million.
Speaker 1: It would drip very slowly over a.
Speaker 2: Long period of time, and so they would set the
Speaker 2: rate at which they'd move and the time the date
Speaker 2: of when they'd move. So for example, you'd say approximately
Speaker 2: one hundred and twenty years.
Speaker 1: You could move all those coins.
Speaker 2: So drip very slowly would barely mean anything to the ecosystem.
Speaker 2: And that would be no matter how hard or how
Speaker 2: strong quantum computing gets, they would be limited by the
Speaker 2: rates of that network of that hourglass that get puts in.
Speaker 2: What about the other signatures, So, as I said, there's
Speaker 2: been lots of different variations of these signatures that have happened.
Speaker 1: We've had segue, We've had tap root, we've had.
Speaker 2: P two ppkh, all these different things, lots of different schemes.
Speaker 1: Well, again, all of those obscure.
Speaker 2: All of them hide the public key by putting a
Speaker 2: hash into the blockchain. So what does that really mean. Well,
Speaker 2: what that means is that the public key is going
Speaker 2: to be hidden until until you spend from that wallet.
Speaker 1: So what happens is it's safe. They can't get into
Speaker 1: it because they can't see the public key. It's hidden.
Speaker 2: But if you spend from that wallet, then all of
Speaker 2: a sudden, the public key is displayed. So now quantum
Speaker 2: could get it. So what does that mean, Well, what
Speaker 2: that means is that if you spend from that wallet
Speaker 2: and leave money in there, leave bitcoin in there, that
Speaker 2: bitcoin could be susceptible if.
Speaker 1: You leave a balance in there. So what do you do?
Speaker 2: Well, solution, you create a new wallt So if you're
Speaker 2: going to spend from that wallet, which would expose the
Speaker 2: public key, you're going to spend whatever you need, transfer
Speaker 2: to the bitcoin whoever, and then whatever the balance is left,
Speaker 2: you move that into a new wallet and then to
Speaker 2: be safe. All right, that's the solution. Now Sotoshi actually
Speaker 2: recommended this. The recommendation for a good security is to
Speaker 2: always use a new wallet.
Speaker 1: You can create as many of them as you want.
Speaker 1: You can go and do.
Speaker 2: Usually most hardware wallets will support this and you can
Speaker 2: just create as many wallet addresses if you want. Now,
Speaker 2: one thing that I didn't say at the beginning is
Speaker 2: this is all about you managing your own private key.
Speaker 2: One of the most revolutionary things about bitcoin is for
Speaker 2: the first time in humanity, we can own property that
Speaker 2: cannot be seized. It might be the oldest problem that
Speaker 2: humanity's ever had. How do I protect my chickens or
Speaker 2: my goats from being stolen. So we have friends, we
Speaker 2: have a village, we have a kingdom, we have a
Speaker 2: country to protect our assets, and now we can protect
Speaker 2: our assets with.
Speaker 1: Just a cryptographic key.
Speaker 2: It might be the most revolutionary thing ever, and so
Speaker 2: I think we should take advantage of that. I advocate
Speaker 2: for securing on bitcoin with your key. However, if you
Speaker 2: have your bitcoin on exchange like at coinbase, they have
Speaker 2: your key.
Speaker 1: If you have it on a river, they have your key.
Speaker 2: If you have it through an ETF they hold the key,
Speaker 2: so you don't need to worry about any of this.
Speaker 2: It's for those that are taking their own custody. But again,
Speaker 2: so Toshi recommended that.
Speaker 1: Always use new address wallets. That's the key default if
Speaker 1: you're going to do this, Now, what about lightning?
Speaker 2: Because lightning is like layer two and it's how we
Speaker 2: can move bitcoin way faster, cheaper, more privately than we
Speaker 2: can on the main change.
Speaker 1: So what about that? Could that be broken?
Speaker 2: Well not really, because the public key it gets revealed
Speaker 2: when the channel closes. So the channel opens up, we
Speaker 2: put some money in there, it gets exchange, and the
Speaker 2: channel closes. Now by default, they're actually pretty okay. Now,
Speaker 2: of course there's some medication that could be done, but
Speaker 2: of course.
Speaker 1: We don't have quantum, so.
Speaker 2: We're not exactly sure how to prepare for it because
Speaker 2: we don't even have it yet. All right, so you
Speaker 2: have to understand a lot of this is hypothetical. We
Speaker 2: don't know what we're preparing for yet, but we know
Speaker 2: that we're pretty safe.
Speaker 1: Okay, one more thing. There's the midpool.
Speaker 2: So what happens is there's all these transactions happening. I'm
Speaker 2: transferring to you, you're transferring to them, and these traction
Speaker 2: transactions go into what's called the mid pool, and then
Speaker 2: the miners, the bitcoin miners will process those transactions. Okay,
Speaker 2: now the transactions they get broadcasts. We have to show
Speaker 2: them to all the miners, so they can get the
Speaker 2: transaction process. Okay, transfer this money to that person, transfer
Speaker 2: to this person.
Speaker 1: Right, So that's the problem.
Speaker 2: The public key is, it's public in there, so it's vulnerable. Now,
Speaker 2: it's not just that easy. It would require a massive
Speaker 2: amount of computer power. It would have to be brute
Speaker 2: force attacks, so it's not trivial by any means, but
Speaker 2: it's possible that could be a potential attack vector. However,
Speaker 2: again there are solutions to this. So for example, we
Speaker 2: could do delays where things couldn't move right away. We
Speaker 2: could use quantum proof addresses. So again we can change
Speaker 2: those address schemes and we can move them into quantum
Speaker 2: proof addresses.
Speaker 1: So none of this is catastrophic. There is some danger.
Speaker 2: If you don't do anything or you don't do things right,
Speaker 2: but none of this catastrophic.
Speaker 1: It can all be fixed.
Speaker 2: Now, what about post quantum So in two thousand and
Speaker 2: nine we had a scheme two thousand nine, we had
Speaker 2: another one, twenty twelve, twenty fifteen, twenty seventeen, twenty twenty one.
Speaker 2: What is next again, we can come up with a
Speaker 2: new key scheme.
Speaker 1: I don't know. Twenty thirty, twenty twenty eight, we don't know.
Speaker 1: We can come up with a new scheme that everyone
Speaker 1: could move their wallets into this.
Speaker 2: One to be post quantum resistant. So it's not the
Speaker 2: big risk like everybody thinks it is. Now some will
Speaker 2: be at risk, some might So moving forward, what are
Speaker 2: we going to do? Number one, don't panic and certainly
Speaker 2: don't go by like these quantum resistant tokens that these
Speaker 2: scam artist are trying to sell you. Okay, bitcoin is
Speaker 2: going to be perfectly fine as long as you use
Speaker 2: a little bit of reasonable common sense. Number two, use wallets,
Speaker 2: new wallets, don't reuse old ones, all right. So again
Speaker 2: you can create as many wallets as you want, spend
Speaker 2: what you want to spend, and move the rest to
Speaker 2: a new wallet.
Speaker 1: Simple.
Speaker 2: Also move utxos so utxl are unspent transactions, move them
Speaker 2: into new addresses. The new addresses are going to be safe. Also,
Speaker 2: think of it like a checking versus savings. All right,
Speaker 2: So my savings is something that sits in like cold storage.
Speaker 2: It's deep and dark cold storage. The checking is like
Speaker 2: something I'm spending from. Maybe you think about like your wallet.
Speaker 2: You wouldn't walk around town with all the money in
Speaker 2: the world and the wallet. You just kind of take
Speaker 2: what you need for the day, and if you lost.
Speaker 1: It, it's not the end of the world.
Speaker 2: So think about your bitcoin in custody sort of like that.
Speaker 2: So your stuff is in deep cold storage, I don't
Speaker 2: have to worry about that. I put a little bit
Speaker 2: if I want to go spend some of it, keep
Speaker 2: it in a new walllet to keep it safe and
Speaker 2: ignore the fud. Bitcoin's not gonna be crashed by quantum.
Speaker 2: It's perfectly safe. So now that you know that your
Speaker 2: bitcoin is perfectly safe, the next thing you probably want
Speaker 2: to know is like, what could the price be in
Speaker 2: twenty thirty, twenty forty, and twenty fifty. If you want
Speaker 2: to know that and want to see the math to
Speaker 2: break down what those price points and predictions are, you
Speaker 2: probably want to go watch this video right here. Otherwise
Speaker 2: I'll see you over there. And that's what I got
Speaker 2: to your success.
Speaker 1: I'm out