Crypto's Quantum Risk Is Coming Faster Than Expected

Transcript

Once Q day comes, one Bitcoin is hackable. They're all hackable. You know, there's the risk of a lot of these bitcoins being dumped on the market simultaneously. The worries about this accelerated when Google put out a report a few days ago saying that they've moved their Qday up to 2029. And previously, these large institutions and researchers would publish their methodology. They would brag, look at this new algorithm. Look how smart I am. But now Google's I mean Google's basically telling us that they think it's too dangerous to release >> because Bitcoin is so decentralized. It actually takes a long time to implement any sort of upgrade, especially this type of upgrade which would likely

require users to kind of opt in into a new signature scheme. We should not see this as an indication that quantum is happening tomorrow. there's still a series of very very important breakthroughs that need to happen but the timeline is being compressed a little bit. So it does feel like it is the time to to prepare Hey everyone, welcome back to Inflection

Point. Uh, as you can see, we're missing two of the four horsemen. Uh, one due to sickness and one due to some welldeserved uh, paid time off. Um, you know, it's it's conference season, so you know, catching a cold is always a risk with coming to these things. But, you know, speaking of the conference season, uh, David and I actually met up in person. If you if you were there at Das, you would have seen us at the live podcast. Uh David, how was how was Das? >> Yeah, Mark, great to see you. Um Das was great. Uh first of all, it was great meeting you and Mike and seeing Matt again in person. Um I I've been saying to people that it's

probably the best crypto conference that definitely the best institutional crypto conference I've ever been to. I think it was a good balance of the institutional audience but also retaining some sort of crypto authenticity. You know a lot of these institutional crypto conferences they start they they become not very true to what I think crypto actually is and I think Daz strikes a really good balance. U I think it was great. It feels like a lot of folks were in New York. I got a lot of meetings. I got a lot out of the content. What what was your view? Yeah, I mean it from our side it was definitely the most successful DS ever that we've ever had. So that that was great. Um I felt like the energy was up there. Like if you didn't check

prices you wouldn't have wouldn't think that we're not in a bull market. Like everybody was very optimistic about the future. Obviously stable coins, tokenization, real world assets, those were the premier topics, but like you said, you know, there was still the crypto element. We still had the Bitcoin track, you know, still touched on Hyperlquid, ME, all of these other like more cryptonative aspects and and and the audience by now is some is mature enough to like get involved in these discussions too, which is also a pleasant a pleasant thing to see. >> Yeah. And New York nowadays is such a good spot to hold institutional crypto events because a lot of folks are already there. It's relatively easy for a lot of folks to go to. So, even like the side events, um I went to just a

couple because I had some other things going on, but the side events I've been to were really awesome. Like full of people from beginning to end. Could bump into a bunch of interesting folks. It was really really good. Well done. >> Yeah. Yeah. Thanks. And if you if you if you missed that, don't worry. It's going to come again around this late this year, later this year in October in London. And we'll all be there probably doing another live part again, David. So, looking forward to that as well. That would be great. I was just saying we missed the opportunity to take a picture of the group. So, let's try to do it in London. We're not going to miss it that time.

>> Yeah, 100%. We need that um proof of meeting as they say. Um >> Okay. Well, let's kick it off. There was some some topics you wanted to cover today. Um I think I think one of the bigger ones that's probably largely under discussed is the new um proposed rules around allowing not only cryptos but cryptos into the 401ks in in the US into people's retirement portfolios. Um you know David maybe you could give us some background on on the news there. >> Yeah 100%. Uh maybe we can take the chance that Matt and Mike are not around so we can do a catchall episode on a lot of things that are going on and they're going to be um here next week and then we're we're back to our normal schedule.

Um but the kind of crypto in 41ks theme is one that I've been actually following now for maybe a month and a half or or a couple of months and I think it's kind of under reportported in crypto. Um, I actually wrote an article for CoinDesk for those who want to to look into it. Um, talking a little bit about the past, the present, and the future for crypto uh, assets in 401ks. At the time, everybody already knew or everybody who's paying attention to this theme already knew that these new uh, rules or new proposed rules would be dropping.

And that's exactly what we had this week. So the Department of Labor, they dropped this new rule sets that will eventually allow for alternative investments. So it's not only for crypto. This includes private equity. This includes private credit. This this includes real estate and crypto. It's actually very nice to see crypto highlighted as an alternative asset class alongside these other uh these other much bigger asset classes. So, that's basically what we saw. The Department of Labor uh dropped these new rules. Uh it's open for a 60-day public comment period and then after that, we're going to have a roll out. It's not

something that we should expect to hit or to impact the market or flows very soon, but it's a massive trend. I think it's a very important one to discuss. >> Yeah, 100%. I mean, it's not going to be immediate, but again, these things take time. I mean this kind of all started I remember when um President Trump you know he made the executive order I think it was last year summer somewhere in August and he directed the you know these federal agencies to expand into these alternative assets and like from August to now is now we're getting this you know this period of commentary um the 60-day period and then they'll probably get enacted and then the wealth managers have to start to look into

these um adding these to their to their portfolios probably changing their investment mandates. So, it's a it's it's not a quick process, but I mean the market opportunity is huge. If I'm if I remember correctly, I think 41ks alone are something like 10 trillion plus of assets um in the US. So like and I hate to be this guy who does oh if you only get a tiny percent of this then but the fact is even a tiny percent if these wealth managers start to allocate sub 1% to these that's that's we're looking at tens of billions if not more of inflows into probably these probably the ETFs to be honest.

>> Strong agree there. Um your number is right. I think the last assessment and that's probably as of end of 2025 uh 401ks were 10 point something trillion dollars in size. Uh the other interesting thing about 401ks is that they have a very different um I would say profile compared to other uh flows. uh not only the sheer size is important but also the the their flow kind of re acts as a volatility dampener as I would say because it depends on where you are and we can get into a little bit more details here if we can want to spend like five minutes or so on this topic but retirement plan participants are usually pricing elastic they're usually

just every paycheck so here in the US that would be usually bi-weekly it's a nondiscretionary payroll contribution so it's kind of a stabilizing bit that persists regardless of what's happening in the market. So in that sense, of course, we've been going through this market structure evolution and I would argue that the ETF flows are probably stickier than maybe the cryptonative retail flows in some regards, but 401ks are kind of the uh pinnacle of that. Uh we we see this in traditional markets today. 401ks are basically equity and fixed income instruments, but you do have this recurring bi-weekly bid that is coming from uh all these kind of

managed accounts and target date funds. So, it kind of institutionalizes the buy the dip strategy. Uh that's how I like to put it. >> You know, it's interesting because I think some of us thought that the ETFs would do that. The ETFs would allow for people to start to buy and probably dampen volatility. Granted, this cycle, even this draw down has been shallower than previous cycles. And even volatility was reduced for most of the cycle until probably recently since October last year for the 1010 crash. And so, you know, I do think that having these passive flows coming into retirement accounts that are not going to touch for decades probably is going to help, like you say, dampen the actual

volatility. And then but then I wonder you know there's there's always since I've been in TRDFI there's always this debate about passive versus active management and people criticize that you know passive makes you know analysts less useful and but I'm I'm wondering if this passive flows will further um what will further solidify the market cap waitings for bit for like different crypto ETFs because it's, you know, you buy the S&P 500 and you're going to buy it and the exact waiting that is there.

And if you're going to buy ETFs, if if it's for 401k, maybe it's a multiasset ETF that's market cap weighted or maybe the the managers of the fund market cap weighted. And do you think this will just continue to keep that bias between Bitcoin on top, Ethereum second, Salana third etc.? >> I think you touched on a lot of very important points. So maybe let let me unpack a few things here before I get to the actual answer if you don't mind. >> The first thing to keep in mind is that the 41k market is very different from the traditional financial investment kind of marketing and here in the US it has a few idiosyncrasies and the way I characterize it is it has probably three

main categories of players. uh we could sub subdivide it more but I think you have kind of basically three categories. The f the first is are the plan sponsors right? So these are the folks from the firms right so like anchorage digital or maybe block works I mean if you guys have a 41k plan there's probably someone there kind of allowing uh or or or uh clearing what is allowed in in the menu. Uh but these guys are usually extremely riskaverse. So they rely on other folks in order that to go tell them what should be allowed and what should not be allowed. And here we we start to have

like some of these other players. The the the other kind of big group is uh what I would call the investment consultants. So the biggest players here would be firms like Mercer or AON or Willis Towers at Watson. So these are big consulting firms and usually it's very hard for you to see a plan sponsor to activate something that these consultants are not okaying. A lot of these guys they are very uh wary of like litigation risks if they if they open something that drops too much in value they want to make sure they have all the legal protections they have um against these sorts of liquidation. So probably

the first signal to watch here would would come from these consultants. Uh they are conservative, they are not fast moving, but if you look into most of their kind of year ahead reports, all of them are talking about this diversification into alternatives. Uh so that that would be interesting to see. That's definitely a a big uh potential early sign that uh allocation in crypto in 401ks is getting cleared. And then of course uh you have the the the kind of the plan administrators. Uh so these are firms like Fidelity. Fidelity has a huge chunk of this market. Um another one's called empower and charab like a lot of these firms are the ones who actually

operation operationalize these things. Um so it's it's a long chain even I mean we even once all the kind of legislation is cleared even after all the regulatory and rule making process is done you have all these big gatekeepers that need to clear before we start to see meaningful allocations coming from 401ks um there's different ways for you to allocate uh in 401k you have this self-directed brokerage accounts so it's basically you can literally have a brokerage account attached to your 401k. Uh that obviously has more friction in order to have these more like automatic flows coming from

these things they call the core menus or those target date funds. Uh that requires a a big chain of approval here. Uh so that's why it's the the the traction uh process here is probably going to be different from what we saw in ETFs. I think on ETFs we saw this massive launch and a lot of flows coming right out of the bat. On the 41k market I think it's going to be a much slower roll and much slower adoption. Uh but eventually it can gain a lot of power and become as big if not even bigger than the ETF trend. Um so I think that's one important thing to keep in mind. I think the the way that these flows will

roll out uh will be very different. And I don't know, it's just my personal observation here. Uh when I look into this side of the world, I think crypto education is still kind of lagging. Uh to to be very honest, uh actually I spoke this to Matt. Matt has been doing God's work with financial advisors and all of that community. Um I'm sure he has a lot of work cut out for him in the next few years as the 401k market also becomes an important one. Um the other thing I want to say also pertaining to these flaws is that um given that these guys are usually very riskaverse um and these rules uh that the do the department of labor is

putting out um it has like very uh kind of a framework that depends on a lot of things. Uh one of them is probably going to be liquidity. So, I would expect these first crypto products for 41ks to be very plain vanilla things like Bitcoin only, maybe Bitcoin and Ethereum or Salana at the most. I don't know. Let's see. Let's see what comes out. But I'm pretty sure it's going to be uh definitely tilting on the more conservative side. >> Yeah, it's it's what a time when we say when we put Bitcoin on the more conservative side of things. But I love to hear that and thanks for the clarity on on the different like layers to go with this 401k. Um any other final

comments on on this on this news? >> Yeah. No, I think that's that's kind of it. Again, I think it's an underreported theme. I think it's going to gain a lot of importance uh not suddenly but probably gradually but pretty steadily over the next 6 to 18 months. Um, it also shows a little bit the the extent of regulatory opening that the industry has has seen over the past 18 months. to your point, just to recap a little bit of the story. Um, in 2022, uh the uh the Department of Labor issued a rule in which they were explicitly saying that crypto assets in retirement

accounts should be taken with extreme care. I think there was even a kind of vile threat of targeted investigations if any of these guys were working in crypto assets. So it was a de facto ban uh on crypto assets for retirement accounts and and then in in like in mid maybe 2025 now already under the new administration the department of labor first abandoned this extreme care standard but didn't provide any guidance or or any comfort. So it definitely um uh improved things a little bit but then when we had the executive order signed

if I'm not mistaken in August 2025 then is when things really started. So now we have the um the rule making process happening and let's see how how things evolve from here. But I feel like this is a very typical blueprint of how things have been evolving in crypto on the regulatory side. Sometimes they don't take as long as we like them to take. Sometimes we want these things to move a lot faster, but that's kind of how the way it works. And I'm happy to see progress. >> Yeah, I'm I'm I'm just happy that it's it seems to be happening. And I was very surprised that real estate wasn't already allowed in in 401ks or like even private credit and private equity. I

thought these things were maybe I thought these things were a little bit more risk less risk averse than what it appeared to be but it's it seems to be moving in the right direction especially given the the diversification benefits and the sharp ratio benefits for portfolio. It's just surprising to me that these things haven't been included earlier including crypto. >> Yeah, it's kind of impressive that it took this long. Um there's other interesting kind of um um like intricacies here in that the 41k market I think technologically it's a lot more geared into m mutual funds and a lot less into ETFs. So there's also some kind of operational legacy challenges.

It's going to be interesting. There's this is a very unique and particular market I think in the US investment ecosystem. >> Okay. Mutual funds. Haven't heard that in a in a in a while. Um some working with some legacy and financial depth there >> for sure. >> Um okay awesome. Uh something else that this is probably maybe in my opinion being correctly discussed or maybe overd discussed I'm not really sure maybe over worried about and that's the quantum threat um coming to crypto and I mean I guess the internet as a large like every single credit card and and maybe nearly every database um I think the the

worries about this accelerated when Google put out a report a few days ago saying that they've moved their Qday up to 2029 and Qday is basically a shorthand terminology for the time in which we believe that quantum computers will be able to encrypt the algorithms the cryptography that we use in the for most daily uses in the internet and so I I I do think that maybe It's a bit of a they're trying to worry the market to do the correct thing earlier. They're trying to put a sense of urgency into

the market. Not that necessarily that we will have quantum breaking encryption by 2029. But then again, who knows? Because other people think that with the acceleration of AI and maybe AGI or artificial general intelligence or AG or ASI super intelligence that the timeline for this can be truncated even more. Um has this has this popped up on your radar at all these these um these risks and concerns around quantum?

>> Oh man 100%. Uh yeah let's let's talk about that. I've been avoiding this conversation. uh for a while it's time. Um this is probably the main discussion topic within Bitcoin circles and maybe we can talk and maybe you can uh tell our audience why perhaps this discussion is more prevalent in Bitcoin circles than in other ones. Um but it's definitely been picking up. Um it's not a new risk. Um I think there there were discussions in the Bitcoin mailing list from I I want to say 2010 if not 2011 uh talking about the risk to quantum actually even with Satoshi replying yeah

we're going to move to something better um definitely not something new um I remember when I used to be on the buy side and talking to financial advisors those were earlier days and we had all sorts of questions with crypto uh regarding Bitcoin and crypto and and the quantum one was was a very big one. I do think however we learned quite a bunch of things um in the past few years uh with regards to how Bitcoin's governance works and how hard it is to implement changes to the protocol. Um we can delve a little bit deeper into those. So so that's one thing and then the second thing is that to to your point uh I actually think there were two

papers published on the very same day, right? one from Google and the other from from callte or or callte associated and basically what seems to be happening here is that the Google paper talks about an improvement in the algorithm. So here it's 100% theoretical but basically what that paper says is that hey it turns out that if we want to apply this algorithm which is known since the mid9s it's just not being theoretically possible to implement now maybe with quantum comput it will be it's called the shore algorithm um it has actually an interesting origin uh the shore algorithm was developed by

this guy Peter Shore who was working in early digital money so It kind of has to do with uh it kind of ties back a little bit in an interesting way. But basically what the the Google paper is kind of an improvement as I understand on this algorithm and what they're basically saying is that hey if we want to implement this specifically to the signatures that things like Bitcoin and Ethereum use actually we can do this 20 times more efficiently than we thought before. So, so that's basically the message of the Google paper. At the same time, uh the call tech associated paper is basically saying that because you

have all these quantum computers, it's really hard to keep them kind of stable and and basically the the calltech paper says that there is a different kind of error correction mechanism that they have devised that they also think will make the hardware uh easier to build in the future. So basically these are the two factors that are kind of colliding. On one hand the hardware requirements um are getting lower because the algorithms are getting more efficient at least for this specific case and then on the other hand there is more and novel ways to make more powerful hardware. Um I'm not a specialist by any means here but what

I read around is we should not see this as um an indication that quantum is happening tomorrow. There's still a series of very very important breakthroughs that need to happen. But my opinion is that u and this is from someone who who has been looking at this as a kind of market factor as a price formation factor as something that uh clients ask and how they should be concerned. It does feel like the timeline is being compressed a little bit like when we were talking to investors back in I don't know 2020 or 2019 quantum computing was this very very far off thing. today. I mean, it would be

irresponsible to give a a deadline, any sort of deadline. I don't think anyone can. But now folks are talking about 5 to 10 years. And the interesting thing is that the Bitcoin governance process, because Bitcoin is so decentralized, it actually takes a long time to implement any sort of upgrade, especially this type of upgrade, which would likely require users to kind of opt in into a new signature scheme. Um, it it's also new cryptography, right? So, you always have to be careful not to I mean, you want to use kind of battle tested algorithms. So it does feel like uh it is the time to to prepare. Uh it is the

time to start taking this uh I would say seriously. I don't want to suggest that the Bitcoin community has not been taking this seriously. Uh there is a BIP in the works, a Bitcoin improvement proposal in the works. BIP 360. Uh there was a major uh Bitcoin community event in San Francisco mid last year as well. Uh there's folks like Project 11. So there's a lot of folks working and putting efforts into this. Blockstream research put out a new uh digital signature scheme called Shrims. So there's a lot going on and and I think we need to keep the beat going, prepare but not despair. Uh maybe that's that's the right way to think about it. There's

a lot of tension within the community though. Some folks who thinks who think we should be moving way faster, other folks a little bit more conservative. you have to be careful not to implement the wrong thing. So there is a risk of being too early and and implementing something that is faulty or that it's not optional. So yeah, there's a lot going on the quantum side. I mean uh I'm I'm curious to hear your view. >> I that that was very informative. I like that that slogan prepare don't despair.

We should put that up. Um well I'm no expert either but I mean as somebody who has been fascinated by quantum computing quantum physics since since I learned since I studied physics in high school um I've been hearing quantum computing is 10 years away and I kept hearing that and I kept hearing that now is the first time that I'm actually hearing it's less than 10 years away like you said five years away and Google has their Q day for three years from now. And another thing that I thought was noteworthy is that Google didn't actually publish the methodology of the new algorithm to to to break to complete Shaw's algorithm faster. So you know previously these large institutions and researchers would

researchers would publish their methodology. They would brag look at this new algorithm look how smart I am. But now Google's I mean Google's basically telling us that they think it's too dangerous to release. So I I think that's something that's noteworthy. Um some something I'm not particularly too worried about it for most chains. I mean if we look at um Ethereum for example like they've been talking about quantum for years now I I think you know not as early as Bitcoin hasn't been as round as early as Bitcoin but I think early as like 2016 17. Um it's being discussed more obviously. I think Justin Drake, he's on he's uh on the Ethereum Foundation. He recently co-authored a paper um to do with

quantum computing and and the threats there. And so I I think the Ethereum community also has this especially now um renewed culture of upgrading. They're looking for their cadence is twice a year and you know they've changed their algorithms before um you know both on the consensus side and and and execution. So I'm not too worried about them and they'll probably set the way because they tend to be the more researchoriented chain in the industry and you know other chains will pro maybe just adopt whatever standards they seem they seem to choose on the Bitcoin side it starts to get a little tricky because the the thing with quantum computing

risk is there's there you know there's two types of risks there's the actual breaking the Bitcoin algorithm and then there's the this the basically the the public um public address threat which is even you you won't know when a quantum computing has taken control of your coins and you know right now every public address is linked to your private key um because you know your private key is derived from the algorithm from your public address and so uh a quantum computer in theory could reverse engineer that and get your private key. Um, you know, there are ways to protect yourself now from that that that attack is called harvesting because people will

harvest every public key available to them right now and then when that day comes around, try to steal those coins. Um, you can protect yourself now by if you've never sent um if you're using one of the more new uh Bitcoin addresses, probably something like, you know, maybe a SegWit, maybe something newer like Tap Routt, and you've never sent anything, then your public address wouldn't be revealed online. But if your public address has been revealed, then something safe to do is probably send it to a Taproot address. Um, one of the BIPs, they begin with a three. For those who who don't know, the address will begin with a three. So those those don't those are are secure right now once you don't spend from them I I think the VIP

that you mentioned 360 that kind of aims to address this harvest attack further because it it instead of when you spend your bitcoin on chain your public address gets revealed this was basically you're spending via script and that script will keep your information private and then never gets revealed on chain but so this is like the steps that could happen now. Um, I think for the Bitcoin community, I mean, because of how slowmoving they are, their last upgrade was Tap Routt in 2021. So, we're talking about 5 years ago nearly because I think it was like late 2021 and before that was SegWit in 2017 and I was around for SegWit and that was a mess. That's when it forked into two chains. And um

it just this kind of shows you the oification of the Bitcoin protocol and how difficult it is to move. And one thing that they're going to have to eventually deal with is what when they I'm assuming that they do upgrade to a quantum resistance architecture. One thing they're going to have to deal with is what are they going to do with the lost coins with Satoshi's coins. these people who can't move their funds to a new protected wallet or you know a new signature scheme and in there there's two options right you can either freeze them and essentially burning them or you can leave leave them on the market to be stolen I don't know if you I I do you

lean any one way with this option >> yeah you you you touched on a lot of very important points here um I think the main one, especially if you're like from an institutional crowd, uh the first thing to understand is whether your Bitcoin addresses are exposed or not. Um I I saw some estimates that about a third uh of the addresses are exposed. To your point, there are certain address types that are more ex that are directly exposed, right? So P uh pay uh pay to public key pay to tap routt and uh another one uh all these are directly storing the public key on the blockchain. Uh the other ones uh the

other addresses that can be um exposed are the ones that have especially the ones that has uh that have been reusing addresses because when you spend you actually expose your public key as well. So it's about a third um uh of the uh of the the total amount here that that is exposed. So if you're an institutional crowd, the first thing you got to understand is uh whether you're in the exposed category, you're in the notexposed category. If you have a reliable and high-profile custodian, you're probably in the you're very likely in the non-exposed category. But that's the probably the first thing to understand.

Um the second thing is um talk to your custodian and ask them if they have a plan for uh what what's going to happen in the case that uh quantum becomes a threat. Um I can tell you like from from Anchorage standpoint, we're one of the companies with the deepest tech stack. Um I would say in the industry um what started as this kind of research uh project within Anchorage um now is is I would say an institutional risk factor and and and and and we have a bunch of interesting uh initiatives going on internally actually uh proprietary research uh running uh these quantum algorithms

on quantum uh on custom hardware um explore mechanisms to do this translation to a new format uh real world benchmarking of these postquantum algorithms. So, Encorage has been spending a lot of time on that. Uh we're going to be talking more about it this in the future. And by the way, not affiliated at all, but there's a conference called OP next happening in New York in the middle of April where I think quantum is going to be a very very big topic of discussion. It's a great like more technical oriented conference uh but it's also brings the Wall Street and investment uh public. I think it's an interesting one for for those who are in the area uh could be uh checking it

out. Having all that said even we figure out a solution even if the custodians and the industry is already even after we do the migration there's still some coins that are probably not going to move right. So there's the lost coins, there's the Satoshi coins, and this is probably the hardest uh question to answer uh honestly and that's what makes this problem I would say specifically hard um between the two approaches like just letting these coins linger and treat them as a buried treasure, right?

Whoever figures out quantum can just take these coins. Um and and and the other one which would be some sort of migration mechanism and then after that migration mechanism if you don't migrate you somehow block the coins or burn the coins. I don't know man. Um I still have to think uh and my thought process here is definitely evolving. I tend to lean a little bit more towards the second category to to be honest. I I just feel like just getting all these coins again today they they would be a third of the total Bitcoin. Of course, once everything is sorted out, we're going to be down only to the lost coins. And I

think if we talk only about the uh pay to public key addresses, maybe we're talking about something like seven or eight% of the total Bitcoin um outstanding, but that's still a fair amount. So, I don't know. I I lean a little bit more towards the latter category, but honestly my my thinking here is evolving and I don't have a definite position. Do do you have a view already? >> Yeah, I I'm firmly in the burn slashf freeze the coins. I I think yeah okay it's it's decentralized and it's your keys your coins but I mean like if if we extend that I don't think it should be open to criminals or hackers or governments with well resourced research

and quantum computers to go and steal those bitcoins and then also you know there's the risk of a lot of these bitcoins being dumped on the market simultaneously um because you know once once QA comes one bitcoin is hackable they're all hackable of the lost coins that is. Um, so there there's a huge risk for that as well. So I I I lean towards freezing them. I think there's work being done on even if they're frozen, if you still have your seed phrase. And quick note here, seed phrases aren't the risk here. It's the show algorithms on and SH 256 like seed phrases are a lot more difficult to use a quantum computer to reverse engineer.

Um, so even if the first Q day happens, seat freezes are still surprisingly uh relatively secure. So they're they're working on after it if it were to take the freezing path using ZK proofs with your seed phrase to prove that you own the coins to unfreeze your funds. And so, you know, this type of moon math starts to go over my head in terms of feasibility. But if we can if we can have that option, I feel like that's the best of all worlds. >> Yeah. Well, actually, our firm is working Anchorage is working on something um kind of to that tune. Um I I I I agree with you. Perhaps the one thing I would add is that

if we make let's say if we go to the freeze action uh this is definitely going to generate a lot of discussion within the community potentially a fork. Um I don't know how that would pan out. Definitely very interesting. The one thing that would be very important is that if if the freeze commitment is the proposal, I think there should be some sort of mechanism and I don't know how to to to structure it that this is it. It's like the only time because one of the things about Bitcoin is this immutability and these very strong um very strong property rights and the protocol kind of interfering on on

something like that. uh I understand as a oneoff emergency uh existential threat kind of way out but it's definitely something that needs to be extremely circumscribed because I I the bit one of the things that make Bitcoin different from all the other crypto networks is that it has this immutability of rules that none of the others have right uh so that that'll be that'll be interesting to see That's probably the toughest debate to have. It goes well beyond the technicalities of quantum computing and digital signatures and all of that.

>> Yeah. Well said. This is not so much a techn technology issue. It's more of a governance issue when it comes to Bitcoin in particular. Um >> Oh, can I say one more thing? >> Yeah, go ahead. >> Okay. Now the other thing I would highlight is uh to your point as you alluded to earlier um Ethereum is the blockchain that is trying to position themselves as like the leader in this postquantum world right I think they announced an initiative in February 2026 if I understand correctly Justin Drake participated uh in the Google paper so like Justin Justin Drake who is one of the uh lead Ethereum researchers and probably the guy who's kind of taking the helm on on this postquantum stuff in the Ethereum ecosystem. So, uh, very

interesting to see. Um, Ethereum can probably move in a more nimble way than than Bitcoin can. Uh, so that's interesting to see Ethereum trying to position themselves. Uh, it's probably the one strong narrative point that Ethereum has uh, beyond uh, being the home of tokenization and DeFi. So that's interesting to see from a pure markets perspective because the narrative slightly shifted towards ETH. Um I I haven't seen investors getting extremely bullish on ETH because of that yet. It's probably too early. Ethereum already has a valuation premium across maybe their more competitor networks like Solana and

others. Um it's not like a low market cap network on on a relative basis. Uh but still interesting to see how Ethereum is kind of rising to the occasion and trying to position themselves as the postquantum kind of uh network. >> Yeah, 100%. And I think it coincidentally unfortunately leans into their lean Ethereum road map um especially when they want to use zero um zero knowledge proofs and everything and you know zero knowledge proofs aren't quantum resistant by default like snarks for instance aren't quantum resistant but starks are we I won't get into the difference between those two but things

like hashes like certain hashes and latises those can be quantum resistant depending on it and so I'm not I'm definitely not worried about Ethereum And I'm probably not worried about many of the other chains too because you know they might just start to copy and especially as Qday starts to become a little bit more front of mind. And to touch back on what we were saying before, you mentioned you know you know the governance issue with Bitcoin and it might fork. That's also why I'm kind of not worried about Bitcoin because if the threat isn't taken seriously enough by let's just say I'm not calling it out in particular but the core developers of Bitcoin then somebody can rewrite Bitcoin it's open source somebody can rewrite it to make it quantum resistant

and you know anybody can fork the chain and then the market will decide which one they think has more value and even if it's between the freezing the funds and letting the coins get stolen if there's a fork between that two then the market again is going to decide and I think uh you know wall you know Wall Street and I don't know how that's going to work for ETFs it's going to be a very interesting um dynamic are you entire do you have to give ETF holders both of the coins or do you have to make a new ETF or they ascribed into one that's that's that might be a fun debate when it happens but it it you know but there's also prediction markets and uh futures markets that you can spin up for the what what you think the soft fork will

be and that in of itself could inform Bitcoin core developers so the fork doesn't even happen in the first place. So very interesting times ahead. >> Yeah, definitely interesting times. Um, final thing from you on quantum. Um, and I think what you just said speaks a little bit to one push back that I hear against quantum that I don't think is entirely correct. Um I see and I used this argument in the past and when I think the understanding of both Bitcoin's governance and the nearness of the quantum thread everybody used to say that hey if quantum becomes a reality bitcoin is the last thing you should worry about you should worry about your bank accounts you should worry about

your u messaging apps because all these things use some sort of cryptography or digital signature scheme and that's basically what these are much bigger threats. And I think in some sense um that that kind of makes sense in that uh Bitcoin doesn't have like these long range attacks in that people can can can kind of uh de uh decrypt things that are on the blockchain today that will be attacked later on. I I understand that. But I think it's important to take into account that a lot of these entities are centralized.

there's one person who can make this migration from the pre-quantum to the postquantum scheme. Bitcoin, as we were talking about, has a much more complex and much more decentralized governance system, which means it takes a lot longer to implement these changes. So on one end, I totally understand, but on the other end, I think it's important to have this discussion and take this thing seriously as I believe it's kind of being taken. I I do think the this specific day where these two big papers dropped out. I think it was a wakeup call for the industry. Seeing a lot more conversations around that eventually we'll be fine. We'll work it out. Uh I'm

very confident that it's going to happen. The window is I wouldn't say the window is tight but we have a window that we need to act upon and I think now is uh the time to start to get serious and look into this at a deeper level. And that's what I would say is broadly happening in the industry and I hope it accelerates even further. >> Yeah, well said. Um I too am guilty of using that argument. Um you know if quantum computers come then you know don't you don't even need to worry about Bitcoin. You know everything else is you know for lack of a better word messed up. Um but like you said centralized I mean last year Visa already talked about how they've already converted I think it was low singledigit percentages of their

network to be postquantum um resistant and so I again I'm not worried about any of these other corporations as well probably less so so I this is why I started off this topic saying while this might be properly discussed or overd discussed it might be overw worried about but I also don't want the market to relax on It's it's a real threat. It always has been and the timeline is is becoming nearer. So, um it's good to see that at least the sense of urgency. You know, Ethereum's talking about it. Bitcoin has a Bitcoin, you know, BIP 360 proposal is out. It's on your timeline, my timeline. So, um I think it's getting its its its time in the spotlight just deserved.

Um >> yeah, >> so I think we'll uh we'll we'll call it there. Any other parting thoughts? What do you want to end with? Awesome. Yeah, we're going to uh be back next week and they definitely I'm sure they have some FOMO about them and we'll we'll we'll brag to them about what they missed out on. But yeah, thanks David.

Pleasure as always. Glad to have this oneonone with you this time. Um yeah, and as always, thanks for listening.