WEBVTT - Will Quantum Computing Ruin The Future of Bitcoin? (This is the answer)

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<v Speaker 1>I get it.

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<v Speaker 2>It's scary hearing about what quantum computers could do to

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<v Speaker 2>bitcoin one day, if or when they actually arrive.

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<v Speaker 1>But here's the thing.

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<v Speaker 2>Understanding how Bitcoin's encryption actually works is the key to

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<v Speaker 2>understanding how quantum can or more importantly, can't, disrupt it.

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<v Speaker 2>And what I'm about to show you will completely flip

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<v Speaker 2>the script on your perspective because while everybody else is

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<v Speaker 2>panic selling based on fear on headlines, you'll have the

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<v Speaker 2>technical knowledge to stay calm and potentially profit from their fear.

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<v Speaker 1>Now.

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<v Speaker 2>I've been building tech companies for decades. I'm a partner

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<v Speaker 2>to leading bitcoin venture fund, I'm an officer of a

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<v Speaker 2>publicly traded bitcoin company, and this is the same analysis

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<v Speaker 2>that we use internally, and now you can profit from it.

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<v Speaker 1>Two. So let's go. All right, we're going to jump

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<v Speaker 1>right in.

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<v Speaker 2>We got to talk about quantum computing and bitcoin. Now,

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<v Speaker 2>first of all, this is technical discussion, but I'm going

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<v Speaker 2>to make it as simple and easy to understand some

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<v Speaker 2>no matter where you're at with your age, your technical ability,

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<v Speaker 2>We're going to make it clear for you. I'm also

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<v Speaker 2>going to tell you, just right up front, spoiler alert,

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<v Speaker 2>there is some bitcoin that is at risk and some

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<v Speaker 2>that's not as at risk.

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<v Speaker 1>And if the stuff is at risk, there's things that

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<v Speaker 1>we can do about it.

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<v Speaker 2>Okay, I'm gonna give you all that, but the first

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<v Speaker 2>thing we have to understand is that quantum computing is

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<v Speaker 2>not here. So in the world, everything is possible, but

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<v Speaker 2>not everything is probable. So we don't want to worry

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<v Speaker 2>about everything that's possible to happen in the world.

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<v Speaker 1>Aliens could come destroy the world tomorrow. It's possible, it's

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<v Speaker 1>not very probable. So quantum computing. Google put out an

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<v Speaker 1>alert an update.

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<v Speaker 2>They said, quantum computing could it could break Bitcoin like

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<v Speaker 2>encryption to could because it's hypothetical. We don't have it now.

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<v Speaker 2>Potentially we don't know. It could be eight to ten

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<v Speaker 2>years away, so we don't evenly have to worry.

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<v Speaker 1>About this right now.

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<v Speaker 2>However, we're gonna address this front on So Google update

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<v Speaker 2>it's coming eventually.

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<v Speaker 1>They said that it could come faster than we think

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<v Speaker 1>it could.

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<v Speaker 2>Use twenty times less resources, and finding didn't definding, didn't

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<v Speaker 2>mention bitcoin.

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<v Speaker 1>They said Bitcoin like encryption.

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<v Speaker 2>Okay, so let's just dispel some of that fud right

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<v Speaker 2>off the bat. But let's get right into this and

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<v Speaker 2>see what part of bitcoin is at risk and what's

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<v Speaker 2>it not. So you have to understand first of all

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<v Speaker 2>that bitcoin is encrypted, obviously, right, that's the crypto part

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<v Speaker 2>of the cryptocurrency, the cryptography.

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<v Speaker 1>Okay.

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<v Speaker 2>Now, within that, you have what's called a public key

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<v Speaker 2>and a private key.

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<v Speaker 1>Let me explain this for you real simply.

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<v Speaker 2>So if I had a locker at my school, and

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<v Speaker 2>I would say that locker is let's say C nineteen,

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<v Speaker 2>so that's my public address, and I could say, hey,

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<v Speaker 2>go put this letter in my public.

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<v Speaker 1>Address in my C nineteen.

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<v Speaker 2>You could walk over there slide it in, but only

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<v Speaker 2>I would have a private key to actually open it up.

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<v Speaker 1>And move the contents.

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<v Speaker 2>So that's how bitcoin and cryptocurrency works in general. There's

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<v Speaker 2>a public key that everybody could see, but then only

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<v Speaker 2>you would have a private.

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<v Speaker 1>Key that you could open up. That's the basics of it.

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<v Speaker 2>Now there's different types of cryptography that we've had to

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<v Speaker 2>secure those keys, and it changes over time. I'm going

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<v Speaker 2>to take you through some of these changes because understanding

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<v Speaker 2>that is the key to understand if you're at risk.

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<v Speaker 2>So a couple of that we've had the first version

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<v Speaker 2>of the key was the public key was used instead

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<v Speaker 2>of a hash. So what this means is that everybody

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<v Speaker 2>could see the public key. All the types of signature

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<v Speaker 2>schemes that we've had since then do it differently. Instead

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<v Speaker 2>of showing the world the public key, they use a

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<v Speaker 2>hash in the blockchain. So they put a signal inside

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<v Speaker 2>the main blockchain to the public key, but the public

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<v Speaker 2>key is not available. That's a really key piece to

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<v Speaker 2>understanding what's going on. Why is that because of the

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<v Speaker 2>quantum risk? Okay, now what is at risk of quantum? Well,

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<v Speaker 2>the P two p K that was the first scheme,

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<v Speaker 2>it is immediately vulnerable to quantum. Watch out, Quantum could

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<v Speaker 2>attack this. How how does it attack it? That's because,

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<v Speaker 2>as I explained, before the public key was shown, it

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<v Speaker 2>wasn't a hash of a public key like it is

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<v Speaker 2>with later versions.

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<v Speaker 1>The entire key was shown.

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<v Speaker 2>Now in this instance, the hash hides the key, so

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<v Speaker 2>it's not readily available. That's why later versions of the

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<v Speaker 2>schemes are quantum resistant.

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<v Speaker 1>So how big of a problem is this?

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<v Speaker 2>Well, bitcoin that was mined before four March of twenty ten,

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<v Speaker 2>so from two thousand and nine to twenty ten, just

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<v Speaker 2>in that window are the only ones that uses that scheme.

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<v Speaker 2>So basically everything after that point is impossible to.

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<v Speaker 1>Break the hash.

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<v Speaker 2>Okay, so the bitcoin blockchain is secure. It can't break

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<v Speaker 2>the hash. It could only break and get the public

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<v Speaker 2>key if it's readily available, and that's only for keys

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<v Speaker 2>that were made before March of twenty ten. And assuming

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<v Speaker 2>that the bitcoin has never been moved, why is that, Well,

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<v Speaker 2>we have to understand what's at stake. So in that

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<v Speaker 2>period from two thousand and nine to twenty ten, one

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<v Speaker 2>point seven million bitcoin were mine.

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<v Speaker 1>During that period, it was the golden age. Anybody could

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<v Speaker 1>plug in a computer or get bitcoin. Was amazing. I

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<v Speaker 1>wasn't doing it.

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<v Speaker 2>Unfortunately, one point million bitcoin were mine up until that

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<v Speaker 2>date of March twenty ten, and again they used the

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<v Speaker 2>pay to public key where it was readily available. Now,

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<v Speaker 2>of that one point seven million, that's what's at risk

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<v Speaker 2>right now, ninety five percent of that bitcoin has never moved.

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<v Speaker 2>Most likely people lost their keys. Now Satoshi, whoever Satoshi is,

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<v Speaker 2>was whatever, has a certain amount of keys in their wallet.

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<v Speaker 2>We can see that there's about one point one million

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<v Speaker 2>bitcoin sitting in that wallet. It's about five percent of

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<v Speaker 2>the supply at today's current price, which we're making new

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<v Speaker 2>all the time. Eyes at the time we're recording this,

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<v Speaker 2>it's about one hundred and twenty four billion dollars that

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<v Speaker 2>would put Satoshi if they can claim this wallet, whoever

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<v Speaker 2>could claim this wallet in the twelfth richest person in

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<v Speaker 2>the world right now today. Okay, so what's that risk here?

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<v Speaker 2>What's that risk is these coins right here. So hypothetically

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<v Speaker 2>they could break in, they could steal those coins, and

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<v Speaker 2>then what they would own them maybe the twelfth which

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<v Speaker 2>person they could dump them in the market. They could

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<v Speaker 2>potentially short term, you know, crash the price and tell

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<v Speaker 2>the market absorb those and went back up.

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<v Speaker 1>But that's really the total potential risk that we have.

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<v Speaker 1>That's what's at stake.

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<v Speaker 2>However, there's solutions for this right problems, solutions things that

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<v Speaker 2>could be done. Number One, if you have coins, if

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<v Speaker 2>you're lucky enough to have gotten coins in that period

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<v Speaker 2>before March of twenty.

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<v Speaker 1>Ten, all you need to do is just move your

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<v Speaker 1>coins to a new wallet address. You're automatically secure.

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<v Speaker 2>If so Toshi could come to light, he could move

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<v Speaker 2>his coins as well. However, the ecosystem doesn't want a

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<v Speaker 2>hacker using some quantum computing to get those coins, so even.

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<v Speaker 1>Those have potential security.

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<v Speaker 2>So a solution would be an hourglass, and basically an

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<v Speaker 2>hourglass would be to put those wallets into this frame

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<v Speaker 2>that would limit the movement.

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<v Speaker 1>Of those all right, So what we could do is

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<v Speaker 1>you could put some sort of constraints around it.

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<v Speaker 2>So for example, no more than one bitcoin could be

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<v Speaker 2>moved per block, So that way they just couldn't take

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<v Speaker 2>the one point one million.

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<v Speaker 1>It would drip very slowly over a.

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<v Speaker 2>Long period of time, and so they would set the

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<v Speaker 2>rate at which they'd move and the time the date

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<v Speaker 2>of when they'd move. So for example, you'd say approximately

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<v Speaker 2>one hundred and twenty years.

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<v Speaker 1>You could move all those coins.

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<v Speaker 2>So drip very slowly would barely mean anything to the ecosystem.

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<v Speaker 2>And that would be no matter how hard or how

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<v Speaker 2>strong quantum computing gets, they would be limited by the

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<v Speaker 2>rates of that network of that hourglass that get puts in.

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<v Speaker 2>What about the other signatures, So, as I said, there's

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<v Speaker 2>been lots of different variations of these signatures that have happened.

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<v Speaker 1>We've had segue, We've had tap root, we've had.

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<v Speaker 2>P two ppkh, all these different things, lots of different schemes.

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<v Speaker 1>Well, again, all of those obscure.

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<v Speaker 2>All of them hide the public key by putting a

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<v Speaker 2>hash into the blockchain. So what does that really mean. Well,

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<v Speaker 2>what that means is that the public key is going

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<v Speaker 2>to be hidden until until you spend from that wallet.

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<v Speaker 1>So what happens is it's safe. They can't get into

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<v Speaker 1>it because they can't see the public key. It's hidden.

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<v Speaker 2>But if you spend from that wallet, then all of

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<v Speaker 2>a sudden, the public key is displayed. So now quantum

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<v Speaker 2>could get it. So what does that mean, Well, what

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<v Speaker 2>that means is that if you spend from that wallet

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<v Speaker 2>and leave money in there, leave bitcoin in there, that

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<v Speaker 2>bitcoin could be susceptible if.

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<v Speaker 1>You leave a balance in there. So what do you do?

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<v Speaker 2>Well, solution, you create a new wallt So if you're

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<v Speaker 2>going to spend from that wallet, which would expose the

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<v Speaker 2>public key, you're going to spend whatever you need, transfer

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<v Speaker 2>to the bitcoin whoever, and then whatever the balance is left,

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<v Speaker 2>you move that into a new wallet and then to

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<v Speaker 2>be safe. All right, that's the solution. Now Sotoshi actually

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<v Speaker 2>recommended this. The recommendation for a good security is to

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<v Speaker 2>always use a new wallet.

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<v Speaker 1>You can create as many of them as you want.

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<v Speaker 1>You can go and do.

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<v Speaker 2>Usually most hardware wallets will support this and you can

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<v Speaker 2>just create as many wallet addresses if you want. Now,

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<v Speaker 2>one thing that I didn't say at the beginning is

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<v Speaker 2>this is all about you managing your own private key.

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<v Speaker 2>One of the most revolutionary things about bitcoin is for

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<v Speaker 2>the first time in humanity, we can own property that

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<v Speaker 2>cannot be seized. It might be the oldest problem that

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<v Speaker 2>humanity's ever had. How do I protect my chickens or

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<v Speaker 2>my goats from being stolen. So we have friends, we

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<v Speaker 2>have a village, we have a kingdom, we have a

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<v Speaker 2>country to protect our assets, and now we can protect

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<v Speaker 2>our assets with.

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<v Speaker 1>Just a cryptographic key.

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<v Speaker 2>It might be the most revolutionary thing ever, and so

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<v Speaker 2>I think we should take advantage of that. I advocate

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<v Speaker 2>for securing on bitcoin with your key. However, if you

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<v Speaker 2>have your bitcoin on exchange like at coinbase, they have

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<v Speaker 2>your key.

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<v Speaker 1>If you have it on a river, they have your key.

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<v Speaker 2>If you have it through an ETF they hold the key,

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<v Speaker 2>so you don't need to worry about any of this.

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<v Speaker 2>It's for those that are taking their own custody. But again,

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<v Speaker 2>so Toshi recommended that.

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<v Speaker 1>Always use new address wallets. That's the key default if

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<v Speaker 1>you're going to do this, Now, what about lightning?

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<v Speaker 2>Because lightning is like layer two and it's how we

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<v Speaker 2>can move bitcoin way faster, cheaper, more privately than we

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<v Speaker 2>can on the main change.

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<v Speaker 1>So what about that? Could that be broken?

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<v Speaker 2>Well not really, because the public key it gets revealed

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<v Speaker 2>when the channel closes. So the channel opens up, we

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<v Speaker 2>put some money in there, it gets exchange, and the

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<v Speaker 2>channel closes. Now by default, they're actually pretty okay. Now,

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<v Speaker 2>of course there's some medication that could be done, but

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<v Speaker 2>of course.

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<v Speaker 1>We don't have quantum, so.

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<v Speaker 2>We're not exactly sure how to prepare for it because

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<v Speaker 2>we don't even have it yet. All right, so you

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<v Speaker 2>have to understand a lot of this is hypothetical. We

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<v Speaker 2>don't know what we're preparing for yet, but we know

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<v Speaker 2>that we're pretty safe.

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<v Speaker 1>Okay, one more thing. There's the midpool.

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<v Speaker 2>So what happens is there's all these transactions happening. I'm

0:10:04.360 --> 0:10:06.800
<v Speaker 2>transferring to you, you're transferring to them, and these traction

0:10:07.000 --> 0:10:10.000
<v Speaker 2>transactions go into what's called the mid pool, and then

0:10:10.040 --> 0:10:13.920
<v Speaker 2>the miners, the bitcoin miners will process those transactions. Okay,

0:10:13.920 --> 0:10:17.040
<v Speaker 2>now the transactions they get broadcasts. We have to show

0:10:17.080 --> 0:10:18.640
<v Speaker 2>them to all the miners, so they can get the

0:10:18.640 --> 0:10:21.440
<v Speaker 2>transaction process. Okay, transfer this money to that person, transfer

0:10:21.440 --> 0:10:21.880
<v Speaker 2>to this person.

0:10:21.960 --> 0:10:23.160
<v Speaker 1>Right, So that's the problem.

0:10:23.480 --> 0:10:28.079
<v Speaker 2>The public key is, it's public in there, so it's vulnerable. Now,

0:10:28.559 --> 0:10:31.560
<v Speaker 2>it's not just that easy. It would require a massive

0:10:31.559 --> 0:10:35.000
<v Speaker 2>amount of computer power. It would have to be brute

0:10:35.000 --> 0:10:37.680
<v Speaker 2>force attacks, so it's not trivial by any means, but

0:10:37.720 --> 0:10:40.880
<v Speaker 2>it's possible that could be a potential attack vector. However,

0:10:41.000 --> 0:10:44.080
<v Speaker 2>again there are solutions to this. So for example, we

0:10:44.080 --> 0:10:46.840
<v Speaker 2>could do delays where things couldn't move right away. We

0:10:46.880 --> 0:10:50.280
<v Speaker 2>could use quantum proof addresses. So again we can change

0:10:50.360 --> 0:10:53.120
<v Speaker 2>those address schemes and we can move them into quantum

0:10:53.200 --> 0:10:54.120
<v Speaker 2>proof addresses.

0:10:54.280 --> 0:10:57.599
<v Speaker 1>So none of this is catastrophic. There is some danger.

0:10:57.440 --> 0:10:59.520
<v Speaker 2>If you don't do anything or you don't do things right,

0:10:59.800 --> 0:11:00.959
<v Speaker 2>but none of this catastrophic.

0:11:00.960 --> 0:11:01.920
<v Speaker 1>It can all be fixed.

0:11:02.200 --> 0:11:04.640
<v Speaker 2>Now, what about post quantum So in two thousand and

0:11:04.679 --> 0:11:07.000
<v Speaker 2>nine we had a scheme two thousand nine, we had

0:11:07.000 --> 0:11:10.560
<v Speaker 2>another one, twenty twelve, twenty fifteen, twenty seventeen, twenty twenty one.

0:11:11.200 --> 0:11:13.080
<v Speaker 2>What is next again, we can come up with a

0:11:13.240 --> 0:11:15.120
<v Speaker 2>new key scheme.

0:11:15.559 --> 0:11:18.400
<v Speaker 1>I don't know. Twenty thirty, twenty twenty eight, we don't know.

0:11:18.480 --> 0:11:20.040
<v Speaker 1>We can come up with a new scheme that everyone

0:11:20.040 --> 0:11:22.000
<v Speaker 1>could move their wallets into this.

0:11:21.880 --> 0:11:25.760
<v Speaker 2>One to be post quantum resistant. So it's not the

0:11:25.840 --> 0:11:28.760
<v Speaker 2>big risk like everybody thinks it is. Now some will

0:11:28.800 --> 0:11:31.200
<v Speaker 2>be at risk, some might So moving forward, what are

0:11:31.240 --> 0:11:34.080
<v Speaker 2>we going to do? Number one, don't panic and certainly

0:11:34.200 --> 0:11:37.600
<v Speaker 2>don't go by like these quantum resistant tokens that these

0:11:37.640 --> 0:11:39.760
<v Speaker 2>scam artist are trying to sell you. Okay, bitcoin is

0:11:39.760 --> 0:11:41.640
<v Speaker 2>going to be perfectly fine as long as you use

0:11:41.720 --> 0:11:45.800
<v Speaker 2>a little bit of reasonable common sense. Number two, use wallets,

0:11:46.880 --> 0:11:49.880
<v Speaker 2>new wallets, don't reuse old ones, all right. So again

0:11:49.920 --> 0:11:52.240
<v Speaker 2>you can create as many wallets as you want, spend

0:11:52.240 --> 0:11:53.800
<v Speaker 2>what you want to spend, and move the rest to

0:11:53.840 --> 0:11:54.480
<v Speaker 2>a new wallet.

0:11:54.679 --> 0:11:55.040
<v Speaker 1>Simple.

0:11:55.520 --> 0:11:59.959
<v Speaker 2>Also move utxos so utxl are unspent transactions, move them

0:12:00.280 --> 0:12:04.320
<v Speaker 2>into new addresses. The new addresses are going to be safe. Also,

0:12:04.800 --> 0:12:07.760
<v Speaker 2>think of it like a checking versus savings. All right,

0:12:07.880 --> 0:12:11.200
<v Speaker 2>So my savings is something that sits in like cold storage.

0:12:11.200 --> 0:12:13.680
<v Speaker 2>It's deep and dark cold storage. The checking is like

0:12:13.720 --> 0:12:16.600
<v Speaker 2>something I'm spending from. Maybe you think about like your wallet.

0:12:16.720 --> 0:12:18.600
<v Speaker 2>You wouldn't walk around town with all the money in

0:12:18.600 --> 0:12:20.640
<v Speaker 2>the world and the wallet. You just kind of take

0:12:20.640 --> 0:12:22.240
<v Speaker 2>what you need for the day, and if you lost.

0:12:22.040 --> 0:12:23.080
<v Speaker 1>It, it's not the end of the world.

0:12:23.240 --> 0:12:26.840
<v Speaker 2>So think about your bitcoin in custody sort of like that.

0:12:27.200 --> 0:12:29.480
<v Speaker 2>So your stuff is in deep cold storage, I don't

0:12:29.480 --> 0:12:31.000
<v Speaker 2>have to worry about that. I put a little bit

0:12:31.000 --> 0:12:32.679
<v Speaker 2>if I want to go spend some of it, keep

0:12:32.720 --> 0:12:34.640
<v Speaker 2>it in a new walllet to keep it safe and

0:12:34.679 --> 0:12:37.360
<v Speaker 2>ignore the fud. Bitcoin's not gonna be crashed by quantum.

0:12:37.480 --> 0:12:39.240
<v Speaker 2>It's perfectly safe. So now that you know that your

0:12:39.240 --> 0:12:41.640
<v Speaker 2>bitcoin is perfectly safe, the next thing you probably want

0:12:41.679 --> 0:12:43.440
<v Speaker 2>to know is like, what could the price be in

0:12:43.440 --> 0:12:46.160
<v Speaker 2>twenty thirty, twenty forty, and twenty fifty. If you want

0:12:46.160 --> 0:12:48.040
<v Speaker 2>to know that and want to see the math to

0:12:48.120 --> 0:12:50.599
<v Speaker 2>break down what those price points and predictions are, you

0:12:50.720 --> 0:12:53.480
<v Speaker 2>probably want to go watch this video right here. Otherwise

0:12:53.720 --> 0:12:55.360
<v Speaker 2>I'll see you over there. And that's what I got

0:12:55.400 --> 0:12:56.040
<v Speaker 2>to your success.

0:12:56.640 --> 0:12:57.000
<v Speaker 1>I'm out