Why Saylor Is Wrong About the Quantum Threat | Alex Pruden

Transcript

All right, guys. Alex, welcome to the tower, man. It's the tokenization tower. I'm I'm not sure you've seen the view quite yet. It's a nice view. It's not bad. Welcome to New York. Are you a Are you a a resident of New York? Are you Are you visiting? Are you I'm a I'm visiting, yeah. I live in Montana. So, that is unlike New York as you can get. Like cabin and acreage. I do have a cabin, but I yeah, I live in a small town called Bozeman. So, outside of Yellowstone. Nice. Nice. So, no animals or No, I don't have horses or anything like that. I I had a dog, but yeah, no.

I see a lot of animals like elk and bears and stuff, but yeah, don't have any. Good. Good. Well, obviously this quantum stuff has been very, very hot topic. Project 11, your company, that you're the CEO of is kind of addressing this head-on, right? And I think for the longest time this ecosystem in in blockchain and digital assets has feared this, kind of pushed it under the rug. Now, big names, Brian Armstrong's he's coming out. He's leading an initiative in this. CZ's he's been pretty publicly vocal about it as of late. This has been kind of going around after that Google paper. Maybe we just start with like where we at today.

A bit of a a foundation as to what the state of Project 11 is and what you guys are doing to address this quantum problem. Cool. So, yeah, and maybe I'll just say maybe before I'll say what's the state of quantum today. So, first thing that is important to acknowledge is there's no quantum computer today that can break Bitcoin or any other digital assets. So, this is a fear about what what may come and how quickly it may come. So, you know, Project 11, we founded the company to future-proof digital assets against a quantum threat potentially. And this quantum threat has become more and more real over the last couple years. There's been repeated experimental demonstrations and reductions in the resources that, you know, the scientists at Google among others have shown that you that you need to break the cryptography underlying Bitcoin, right? So, you know, there's

there's one aspect of it is the quantum's moving faster than it used to. The second aspect of it is that blockchains and digital assets rely so much on public key cryptography. And like the risk is really existential compared to many other systems. And the fix is potentially more difficult because these are decentralized, right? You know, not your keys, not your crypto. There's no like management company for Ethereum or Bitcoin or whatever. You know, so the So, the fix is going to be a little bit more involved. And so, that was really kind of the modus, you know, that that's the the you know, the reason why we founded Project 11 ultimately. Yeah. And so, on the on the state of the of how critical this kind of is, people have different opinions and prescriptions as to how they think this

is going to play out and the time frame and the level of seriousness. Where do you personally stand on that? I think it's critical and I think it's critical I think you can say it's critical and and you can say it's urgent without having to put a timeline on quantum computing because I think frankly, you know, any number of people can come up and tell you what their opinion is about quantum computing and I and I have an opinion, but I think what is you know, I I think it's it's just uncertain how quickly scientists at Google, at Caltech, at IBM, at all of any of these places or China will actually realize this technology. I mean, look at AI. AI went from kind of this thing that it didn't seem like much was changing for years and years and then it exploded.

You know, maybe it'll be like that or fusion power where it's still dragging and what I mean, we just don't know, but the I think the the reason why I think it's critical is because of the critical impact it has on blockchains. And blockchains we use public key cryptography for effectively identity and authentication, right? Your Bitcoin address is where I send money to and then I send you money by signing a message using my private key. Only the owner of the private key is able to send money. So, I as the owner, right? But if a quantum computer is able to reverse engineer the private key from the public key, in a very real sense, they own everything. And so, like kind of breaks the entire philosophical model of ownership in crypto and that's unique to crypto. Like no other area of the world or the internet that uses public key

cryptography has that deep of a dependency. So, because the threat is critical, we need to prioritize it urgently, I think over everything else. Yeah. And on I think on the Bankless podcast a couple days ago, Saylor said that he's not worried about it. That that on the Bitcoin front, they would just do a community hard fork if they needed to and you know, problem's going to be solved. You know, we don't even need your company. Why you know, why are we even here, Alex? I think that that that the ossification of Bitcoin is going to prevent that. And I was arguing with Rob today about it. I was like, what I don't think Saylor can just come in and dictate what the core devs are going to do.

And but but but he seems certain. He literally he kind of went in and basically went against all this Ethereum kind of like takes and just stood his ground and said, "No, we're we're going to be fine. You guys are over over-focusing on this, over-fixating on this. Stop. If we need to do a hard fork, we'll do a hard fork." Kind of like he's like the central command of Bitcoin. I mean, Saylor is among many things a great salesman. So, I you know, I I don't doubt that he delivered strong pitch. Look, I mean, if saying it made it true, then I don't know where where we would be in blockchains. We'd be on Mars already. We'd have tre you know, blockchains with trillions of transactions per second. Bitcoin would scale to infinity and be worth a trillion dollars. You know, like look, at the end of the day, you can say all

these things and and I and I I don't disagree that it's possible to solve. So, that's that's one important thing to know. Like we're not I'm not necessarily a doomsayer that like, "Oh, crypto's screwed." No, I I think I I believe you know, we can overcome this. And I even believe even more strongly. I I was at the MIT Bitcoin conference yesterday and people asked, "Hey, what's your 10 out of 10 or one out of 10, how do you rate the chances of Bitcoin surviving in the future?" And my answer is 10 out of 10. Some some version of Bitcoin and every digital asset will definitely survive this. It's just a question of how much chaos do we want to experience along the way. And I think we all want to experience a smooth transition because that means, you know, price stability and infrastructure stability, no one's losing money and

people have renewed faith, not less faith in these digital assets. So, if we But if we want that outcome, we have to prepare for the worst-case scenario. So, even though Saylor may be right, he's not worried about it, people will ultimately hard fork, like that doesn't take away from the enormous amount of work that has to be done and especially has to be done if he's wrong about quantum timelines. Yeah. Is the Is the common like understanding that proof of work is more susceptible to quantum than proof of stake? Is that accurate? It's inaccurate. Uh proof of work is actually more secure than proof of stake. And the reason is proof of work uses hash functions, which technically have a quantum vulnerability, but practically speaking, it's it's not really going to be feasible to do a quantum Yeah, do a

quantum attack against proof of work in the short term. Proof of stake uses, you know, what is proof of stake? A bunch of validators signing messages and sending them to each other. These signatures can be forged just like that's the same way you would steal assets. And so, that has to be addressed. So, if anything, I think it's the inverse. Proof of stake is actually a little bit more vulnerable than proof of work, but you know, it it's hard to say whether like Bitcoin is worse off than Ethereum or if Ethereum is worse off than Solana. Look, all of these chains face a unique set of challenges that are fundamentally existential. And I don't I wouldn't necessarily say that one chain has it better or worse.

So, that's a misconception then. In my opinion, that's a misconception, yeah. And okay, so then what would be the kind of logical process to build a quantum-resistant kind of blockchain, right? Like I think StarkWare just put out a a really interesting piece about their kind of quantum-resistant fix if they were to kind of make that run into changing the actual you know, the actual blockchain of Bitcoin. What does that progression look like to build towards a quantum-resistant network? Is it a one, you know, flip of a switch in terms of like a hard fork or is it multiple progressions? Like like what What is some of the work that you

guys are doing there? Yeah, I mean, I so I just use this opportunity to acknowledge that you know, I think I think there are some sentiment some people I think feel as though some people are saying that there's no work being done on Bitcoin you know, post-quantum cryptography. And I think that's not true. I mean, like you see the StarkWare stuff like they're like that's an example of some work. I mean, others have done work. There's been proposals over the years to do this or that post-quantum thing. And that's all great. So, I I want to acknowledge that and say it's good, but I also want to say that's insufficient. And I'll say the same thing about the StarkWare paper. The StarkWare paper described a using some very old and in some cases deprecated logic, a way to in an emergency use you know, like have this kind of

very complicated technique that by the way would require you know, a lot of money to run like a GPU hours to run to recover to prevent your coins from being stolen once. So, if you did a transaction, you would you would ensure that you would your coins would not be stolen. But then if you did if you did another transaction, you'd be vulnerable and you'd have to do that same thing again. And by the way, this does nothing for like Satoshi's coins or exchange wallets or anything like that with exposed public keys. So, look, and this is actually a good way to kind of showcase and because I think this is another common misconception is people like, "Okay, people are doing something about it. We're all fine." There's many levels of doing something about it. And then one thing that's unique about crypto compared to a lot of

other systems is you know, there are layers that have to be considered here. The protocols all have to change. The cryptography, the post-quantum cryptography that we're talking about has to get integrated in these protocols. And this post-quantum cryptography is very different than ECC. You can't just it's not just a trivial swap in, swap out. Then you have all the infrastructure providers or in the case of Ethereum or Solana, smart contracts. Those all have to then redeploy or basically rejigger how their systems plug into the underlying blockchains. And then when that's done, all of the users with assets and whatever wallets they're using have to move. Every single person.

There's not a world in which you can just stay with what you have and be post-quantum secure, right? And so, this is just like the term I like to use is a full lift and shift. Yeah. Everything. Every protocol is going to change. Every smart contract is going to redeploy. Every user's balance is going to move from one place to another. And you know, if you think about that in the context of prior crypto transitions, even big ones going from ETH 1 to ETH 2 or taproot for Bitcoin, I mean nothing has ever been done to this scale. And so this is sort of why it's like yes, people are doing stuff. Yes, there are cool ideas, but the gap between that and where we need to go is still enormous and I think we have to acknowledge that.

Yeah. There's really two forces right now that are offsetting the previous Lindy of blockchains and of DeFi and smart contracts. It's this Claude mythos AI white hat, if you will, I can find any bug in any smart contract very, very quickly, better than any hacker, better than any human, and then quantum. And I think it's really shaking the boots of investors, specifically those on chain, thinking about the future of this kind of landscape. How how How do these two go together? Like AI and quantum Is there any kind of tie in there? I mean quite quite frankly well, I mean yes. I mean first off, people you in quantum use AI to do various things to

accelerate quantum. And then you can imagine a sufficiently advanced AI could leverage a quantum computer as a subroutine to do some kind of specialized attack. Um but look, I think the higher level easier way for people to conceptualize this is there are two flavors of the same thing. This this this thing is that we don't have There's like no mathematical proof that the cryptography that we're using is secure for all time. Why do we trust it? We trust it because no one has broken it up to this point, right? And you mentioned Lindy law. This is like there's a big Lindy law effect happening where you know, that has happened with cryptography over time.

But with the advent of quantum computing and the advent of advanced AI, you may just end up We may end up in a world where attackers are continually evolving and the lifespans of these various cryptographic algorithms or these smart contract systems starts to go down. That doesn't mean that blockchains or cryptocurrencies are dead, but what it does mean is that ossification becomes very dangerous because you're effectively betting against all of the innovation that's happening in all of these different areas that it's never going to go obsolete. And quantum is just the most obvious example of this, right? And it's most obvious because for 30 years people have known that these like quantum algorithm could break the cryptography underlying Bitcoin, but

people just rationalized by saying ah, it's always going to be 20 years away. And now we're facing a potential scenario where it may not be. And then people are realizing, wow, we really baked in all of these assumptions pretty deeply and now we're to fix this is going to be hard. And so what this implies and one of the philosophies that we have at Project 11 is this concept of of crypto agility. Like you have to have the ability to, you know, relatively quickly and seamlessly swap in or swap out different cryptographic assumptions in case one gets broken or, you know, for you know, for different use cases. I mean that's going to be the world that we move to, I think. Okay, so talk to me about like Okay, so as a user who's done tens of thousands of transactions on different blockchains, how how will my experience

change? Like like if public key cryptography, the exposing of the public key is causing a significant uh security issue within the private key, how will my experience of interacting on chain change in a post-quantum world? Like what does that mean for actual users of of of of these things? >> Well, first off, if you if your public key is exposed. And so let's just talk about that for a second. So Bitcoin, everyone uses most people use addresses, which addresses are hashed public keys. Hashes are used in proof of work. And like I said earlier, hash functions are more secure against the quantum computer. So the the public the UTXOs, they're basically under underneath, you know, these these hashed addresses um are more or less safe for now. Now it's the exposed public keys on Bitcoin,

like where people have sent from the same address twice uh or, you know, it's like older addresses that, you know, Satoshi's coins, for example. You know, those are at risk of potential near-term, you know, quantum attack for the first generation of quantum computers. The the story changes when you get to the smart contract blockchains, uh Ethereum, Solana, right? Because the way we use it as our accounts, right? Think about DeFi. Think about ENS. Like I pick a name and I associate with an ETH address. It doesn't really make sense to like always like constantly re-rotate the address underneath. It's meant to be static, right? So that means there's more public key exposure, right? So there's basically anywhere there's public key exposure across any of these networks, people are at risk of their funds being stolen. Now, assume that there is a migration, how does the experience

change? It changes in a couple ways. First of all, the cryptography that's looked at that's being looked at to deploy in these contexts is more expensive. Uh it's more expensive in terms of the sizes of these signatures are bigger. Uh in some cases the cost to verify the signatures or to sign goes up, right? So this has implications for hardware wallets and, you know, limited, you know, kind of, yeah, user devices that may not not have the same, you know, be older or something that don't have the same features as a modern device. Uh it and it has uh implications for cost on chain, gas, for example, right? Higher verification costs mean more gas.

And then the last thing I would say is, you know, this elliptic curve cryptography really enabled so many nice features around threshold signing and multi-sig stuff. And there's, you know, BIP 32 where you can derive many, many keys from a single seed uh or from a single public key. Yeah. Um you know, none of those things translate over necessarily to the post-quantum world. We have to rebuild all of them. So quite honestly, from a user experience standpoint, um if you did all this if you put all this post-quantum stuff in today, it would be kind of a UX downgrade on what exists. And you know, crypto is already not known for having the best UX. And so this is again one more reason why it's important to prepare and to start preparing early to ensure that we can transition safely and not have to

destroy the UX that we've taken a long time to build. >> Yeah. And to build up for. Yeah, exactly. You know what's interesting then is something like Zcash is interesting from the post-quantum angle because yes, there is a public key that is uh part of the Zcash algorithm, the way that that, you know, if I were to send you some ZEC, that's how it works. But the whole aspect of the private key and the shielded nature of it completely changes the dynamic versus the public key cryptography setting with something like Bitcoin.

Is it Is it fair to say that Zcash is far more quantum resistant than Bitcoin? Uh in my opinion, no. I and I you know, I think Zcash is a really cool system and I do think there are aspects of it where the problem is not as acute, but Zcash has a couple of problems of its own, one of which is that a lot of this ZEC in circulation is not in the shielded pool. It's just public. So in that case, you're kind of just like Bitcoin, you're no really no better off. The second is there's actually multiple shielded pools over, you know, as Zcash has gone through upgrades, um you know, again, this is like in blockchain, you can't migrate everyone's funds. Yeah.

>> People have to migrate their individual funds. So as every time Zcash has had an upgrade, there have been these like shielded pools that you just kind of like the V1 shielded pool is still there. But those older shielded pools, they rely heavily on these elliptic curve assumptions that, you know, enables you to break Bitcoin. And the problem there is taking advantage of those assumptions means not only can you steal coins potentially, but you can actually mint money. Mhm. >> And you can mint money in a way that's totally undetectable, right? So So it's kind of, you know, so I mean that theoretically you could address this by deprecating some of these older shielded pools, but my point is again, like, you know, no there's no one chain that's really better or worse.

Everyone has effectively the same, you know, or just a different set of the same flavor of problems from the dependency that we all have had on elliptic curve cryptography. Well, actually well, that question stems from this paper because there's the, you know, Zcash bulls quantum resistant, you know, swap your Bitcoin to Zcash because we're going to be the quantum resistant version. But then Google comes out with this paper and Algorand is the blockchain mentioned as the leader of quantum resistance in blockchains. Do you buy that? I Again, I mean my my take is that everyone is kind of vulnerable in their own way. Algorand has, I believe, an implementation of a post-quantum of of a post-quantum transaction type based on an algorithm

called Falcon, which is one of the ones that NIST is considering standardizes standardizing for the broader internet for their post-quantum cryptography of the internet's post-quantum cryptography. So I I guess maybe it's fair to say Algorand is ahead in terms of something exists that users could theoretically move to. But how many people use it today? I mean very, very few and very, very few very, very little funds are actually secured in there. So, you know, yeah, I I don't think it's fair to say even in Algorand's case, this is an open and shut case, we're done, right? By the way, Falcon, like all these other post-quantum signature schemes are is bigger and slower and worse in a lot of ways. So it's like, you know, like again, I don't think we're done and

even Algorand is not, I don't think it's fair to call that post-quantum truly. Yeah, and I I think if you recall as well, there was other There was like three or four other um small companies listed in this paper. Um some of which had like sub $100 market caps and went on like a crazy run for a day there, which I thought was absolutely silly. Um any comments on on those specific companies that were mentioned? Is there any Is there anything that we should be looking at from the uh kind of uh research perspective from the investors' perspective as to like companies that are doing real work in this field? I know Google mentioned a couple, I can't bring them up off the top of my head, but where we at on that

front? >> Yeah, there's a there's a whole bevy, some of which that Google mentioned, of these of like, you know, quantum resistant layer ones. And the idea is basically you're you're saying, hey look, you know, all this elliptic curve cryptography is broken, let's just make a new layer one and make it quantum resistant from from the get-go, right? Like the reality is You know, You know, if you don't believe that existing blockchains can actually affect a migration, then I think you and and you but you still believe in blockchains, then I think you have to be bullish some of these much, much smaller chains. I think the challenge there though is, you know, it's a it's a cold start problem, right? Everyone believes in Bitcoin. You have Michael Saylor

talking about how Bitcoin, you know, he's he's they've launched their stretch product and you know, there's so much buy-in and adoption of these existing digital assets that if you're one of these new layer one quantum resistant networks, you're starting from zero and you've got to convince everyone to sell something they've already basically decided that they want and, you know, on this on this basis that they they won't be able to actually migrate, right? And so, you know, like I said, I I it's all a set of trade-offs. The the the network that I would highlight here is a you know, I think doing a reasonably good job of at least having a plan to solve this is Ethereum.

I think so that Google paper was co-authored by Justin Drake of the Ethereum Foundation and I think they have acknowledged that this could be not only a threat, but an opportunity, right? Because they realized that if other blockchains don't move past this point, then there's an opportunity potentially grow market share. And I by the way, I think this applies to any blockchain. It's it's a competitive opportunity for, you know, these blockchains to maybe grow market share versus chains that don't migrate or migrate slower. So, you know, Ethereum has done a good job of like, you know, basically prioritizing it internally.

Now look, again, like I said before, saying it doesn't make it true. So, we got to see what happens. Yeah. Yeah, I mean, do you do you really envision Q-Day to happen? Like is that a certainty in your mind that this could because I just could see a Oh, like just a world where it just never happens. We just never get there. Yeah, so look, I mean, there is no, you know, guarantee that a quantum computer ever exists. To be clear, there's also no proof anywhere that a quantum computer will never exist or won't exist in the near term, right? So, I think, you know, you could even physicists argue about this, right? So, I mean, the reality is I don't think anyone knows.

You know, my personal belief is there's a better chance than not that a quantum computer arrives within a decade. That's like so 50/50 I I in my view. And there's a possibility that it arrives even before this decade is out. You know, I believe that for a couple reasons. One, you know, the tremendous progress that quantum computing has made in just the last 2 years. Two, the opinions of many experts. There's a there's a global kind of risk survey that's released every year that they survey cryptographers and physicists and they say, "Hey, how likely is Q-Day going to be in this time, this time, this time?" So, you know, those that that those those estimates have come down.

Quantum company roadmaps. You know, you obviously these are bullish, but still like, you know, they've they've kind of crossed the threshold of this initial, you know, systems and now they're thinking about scaling and their roadmaps have you at the number of qubits you would need to break cryptography by 2030, right? And then and then the last way is like we have our own assessment based on some research we'll be releasing soon where look, if you just kind of do some napkin math and say, "Hey, I have this many qubits, I have this kind of high error rate, I have I have, you know, these constraints and I just assume they're going to grow by a few percent every year." You basically within 10 years you get to the scale that you need to get to, right? So, you know, look, there could it could very well turn out that

some fundamental physics prevents it from ever reaching that point. But again, I I think betting against that is a bad idea because if it's wrong, if that bet is wrong, well then, you know, trillions of dollars of value goes up in smoke. Well, I think a lot of people use Q-Day as this bear case for crypto, for digital assets, right? And you clearly have strong reasoning to believe it is going to come based on, you know, past evidence plus your extended experience plus your entire life's work. Might be a little bit of bias in there, but we'll just keep rocking with it.

Yeah, I like to I like to say I'm the most bullish person in crypto, right? Because I acknowledge that quantum is an existential risk threatening everything, basically. But I also believe fundamentally that blockchains have a role to play in finance and it's an ever increasing and ever more important one. And so, I'm very bullish on the existence of blockchains after Q-Day. In fact, that's what Project 11 is all about building. So, if anything, like my time horizons are way longer than most people. That's sort of why I like to joke that I'm like the most bullish person even though like, you know, I I sometimes I'm obviously raising awareness about this critical threat, but I do that because I believe in the importance of this asset class. And I believe that in order to save it, people have to get out of their seats and do

something. And this is actually something when I advocate, you know, for people a lot or, you know, at various conferences, people are like, "Hey, what should people do?" I mean, you know, obviously you guys secure your own assets. But what the other thing is like, look, one of the power, you know, powerful thing about decentralized blockchains is it's not just one central authority, it's a community. But but just because, you know, the power is diffused among the community does not mean that we don't all have a responsibility to advocate for and try and contribute to, you know, maintaining what makes these systems work, right? We can't just basically like the worst case scenario is of some kind of reverse bystander effect where it's like you're like, "Well, you're doing something, right? No, you're doing something, right? I'll just sit over here and wait for something to happen." Because then

nothing will happen and it'll all fall down, right? And so, I think, you know, we can't get comfortable with the success that crypto's had. We can't take as a guarantee that it will continue to succeed. We have to work hard to make that make it succeed and we have to work hard to make sure that it survives Q-Day. Yeah. And but I think like with, you know, I agree with that sentiment and I think that that's the right way to be framing this, but isn't there going to be a lot bigger problems if Q-Day comes than just like a couple trillion dollars of assets on blockchains? Like there's got to be This has got to be a minuscule problem compared to the relative scale of what could happen from databases to ledgers to governments to banks to world information flow to telecom. Like are we

not talking about small peanuts here? I mean, look, I think this is a myth and I'm always I always like to take the opportunity to bust it. I mean, okay, many systems around the world use public public key cryptography today and are exposed to a quantum attack. The difference though is with blockchains is most of these systems are some under some kind of centralized authority. Let's take a good example. I think arguably the best example is Swift, right? Swift is, you know, is basically the inter you know, inter you know, international payment system and it's run actually by a group of international financial institutions. Look, if a quantum attacker were somehow to use a quantum computer to break Swift, which by the way, like it's not even clear exactly how that attack would work. Whereas with Bitcoin it's very clear. I get your key, I get your

private key, I sign for you. That's very It's not It's like you kind of have to like hand wave a bunch of how the actual Swift attack works. But even if you do that, guess what? Swift is run by a bunch of international financial institutions. If they see something they didn't approve, whether or not it was a quantum computer, they're just going to take their erasers and be like, "And then it's going to go back to what it was, right?" So, and this is true of most systems. Like two things are true that are true of most systems. Is A, the central authorities have the ability to roll back whatever they didn't intend to happen. And and two, they have the ability to coordinate a response more effectively. And three, I mean, there's the third thing is that the cryptography is one of many layers of security,

right? Against potential hack or something like that. You know, again, think about if I use a quantum computer to get your bank credentials and man-in-the-middle your your your connection and then I try and log into your bank account and wire all the money out. Well, your bank is probably going to like call you or something or maybe there's some two-factor going on. Like it's not it's just versus with blockchain none of that's true, right? It's hard to coordinate a response. If something bad happens, bad. Rolling it back is possible, but very damaging. Like think about ETH and ETH Classic, right? That how controversial that was. You know, and and again, like if if an attack happens, there is no second factor. Like there's no follow back.

There's no extra approval. If there was, it would be no different than a bank, right? And by the way, that maybe the last thing why blockchains are vulnerable is like you don't really because of all the complexity like I mentioned around these real world attacks, you don't really know what the payoff of that is going to be. But I can tell you right now what the payoff would be for one of Satoshi's wallets, right? I mean, he's just it's right there on the blockchain. Bitcoin, I can put a price on that Bitcoin. I know exactly what I'm going to get. And so, look, again, does this mean that the first quantum computer, you know, the first entity with a quantum computer is going to attack Bitcoin? Not necessarily. But I think if if you look at Bitcoin and you are economically or, you know, digital

assets and you're economically rational, it's probably hard to rule out. But then if that happened, wouldn't that just send the whole thing to to like if the network was able to be altered with and exploited with because of quantum computing, wouldn't thus then the value of the network just end up not being valuable? Right? Like if if if I took my quantum computer and hacked Satoshi's coins, then it would be over. I mean, there's a debate about this. I think it's In my opinion, it's certainly true that if someone was able to sign transactions and it wasn't the original owner, many

people would view that as a violation of one of the fundamental principles of blockchain. That said, there's a bunch of things, you know, in markets and markets aren't always rational. It may not go to zero. And and furthermore, I think in the Bitcoin community specifically like this concept, you know, there's a debate around whether or not to burn Satoshi's coins or to just leave them. And and the argument for leaving them and by the way, leaving them means letting a quantum computer steal them. The argument for letting a quantum computer steal them is that like, look, we as the community don't have a right to take those coins from whoever owns them, Satoshi, right? And you know, so even though a quantum computer might

steal them, A, maybe maybe Satoshi intended that all along, that's some people's view. Or B, you know, but B, like two wrongs don't make a right. Like so just cuz a quantum computer can steal them, us stealing it first doesn't mean stealing is right. And so I think there's there's there's a deep philosophical conflict here, right? Because I mean, self-sovereignty is a key feature that differentiates blockchains from other financial systems. So it's hard. And again, what's the upshot here? The upshot is these issues are deep. It's going to take time to come to consensus and then ultimately fix them. And we got to start now if we don't want to rush because the rushing is where you're going to you'll see lots of money lost. The rushing is where you'll see, you know, cryptography fail just either because, you know, the classical cryptography was kind of

rushed in implementation or a quantum computer showed up before we're ready. I mean, waiting and being wrong is the worst-case outcome. So but starting early and potentially being wrong, you'd say you'd say you're right and quantum computer never shows up. Okay, whatever. Well, now we know that like it's safe for all time, right? So like what's the real downside there? And that's sort of my view. Well, we might never know if it takes a long time. It might just always be maybe coming. And we most important words that everyone should take away from the show is we might never know. And we don't really know. And because of that, we should just be conservative and be proactive in protecting these networks that I think we've all come to value. Yeah. Yeah.

All right. So switching gears off of quantum, I wanted to talk to you about the stretch product. I'm sure you have some insight into that from your conversations with friends, whether it be Nick Carter, other Bitcoin maxis friends, etc. There This guy is absolutely cooking right now. Saylor is absolutely firing the ATM I think a billion yesterday in volume on the stretch product today or I woke up this morning and it was already at a couple hundred million firing. He bought another billion dollars of Bitcoin using this this preferred credit product. It's just there's just just just absolutely financial engineering going on.

Is this is this sustainable? What is happening with stretch? Maybe just kind of like educate us a bit on like what this is if you can and kind of your take on it. Yeah, so I think I mean So by the way, bread and butter for me is quantum and post-quantum blockchains and you know, and and and kind of the traditional stuff. But I'll give you my quick take. You know, my understanding of this product is effectively like, you know, these are these are these are you know, coupons where you get like earn 11% interest basically by buying them and basically this is funded by, you know, you give you give Saylor cash, he buys Bitcoin and theoretically the Bitcoin goes up and then dividends, you know, are used to basically pay you the interest and you know, buy more Bitcoin potentially. So it's kind of a

self-fulfilling prophecy. Um, you know, there's there have been the treasury companies, you know, including MicroStrategy, are all variants of this, right? I mean, this one has is kind of differentiated by this interest payment, right? This coupon. Um, but they're all variants of the same theme. So one on the one hand, I think it's really I mean, it's honestly surprised me that you haven't seen companies do this before. Like for example, let's think about two companies that have been in the blockchain space for a long time, Blockstream for Bitcoin and uh ConsenSys for Ethereum. Right? Like, you know, I think even even though both Adam Back and Joe Lubin have their own dapps now, I think it's it kind of like if you if you go back in time when those companies were founded, they probably should have been doing this at

the beginning, right? And there is I think something smart about financially engineering uh you know, these products in order to kind of insulate uh insulate, you know, whatever company that you fund or whatever network you fundamentally believe in from this price volatility and basically taking advantage of structurally buying the dip. Uh that seems very smart. And it seems like it makes sense for someone like MicroStrategy to do or, you know, for others, you know, companies like ConsenSys and Blockstream, like I said. You know, the challenge is ultimately in these infinite money machines it works when everything's only going up, it works. And then the question is when it starts going down, what happens, right? And you know, obviously there are answers that people will give like, "Oh, buy more Bitcoin."

And I think Saylor's been on record being like, "Oh, we can pay this for X number of years." You know, look, you never really know until it happens, right? Like how many times have we seen crypto where it's like like Terra Luna, right? It was like This is the infinite money machine. Yeah, I don't think that's fair, but they're comparing the same concept. Deposit your capital, get this UST token, put it into this pool, get the 20%. We're going to use this to just keep funding this Luna buyback. And and they're comparing it to the largest crypto asset in the world and MicroStrategy. You know, look, it works it works until it doesn't, you know? And so I I think, you know, this time could be different to be clear. And I you know, far be it for me to be a markets expert.

But you know, I think there there is that risk. And you know, that said, Bitcoin is a huge asset, very liquid. And there's a lot of reasons, you know, like I said, I'm very long digital assets and Bitcoin and I think there's a lot of reasons to believe that Bitcoin's value will go up independent of this, you know, over time, especially if we fix the quantum issue. So look, it may be it may be the right move and it may be different. But but yeah, it it it's you know, leverage is leverage. So it can always always financially go the other way. Yeah. And on this note, you expressed your idea that Ethereum was actually broadly better positioned likely across all the smart contract blockchains in the quantum race even compared to Bitcoin. Has that um has that changed your portfolio

allocation or the way that you think about allocating to Ethereum versus Bitcoin? Uh I think a lot of people are like putting the flag in the sand here and saying ETH-Bitcoin ratio has bottomed, like quantum threat is here. You know, like how much credence do you kind of give to this view and to this idea that Ethereum could sustainably outperform Bitcoin just because of quantum fears? This is great. This question, you know, I'm speaking at a Bitcoin conference up next on Thursday and whatever I say to this question is definitely teeing up some some very angry commenters or questioners. So that's good. But um No look I like I said, fundamentally I believe every blockchain structurally has a different set of risks, no different than any other. I do believe personally

that the Ethereum Foundation has been proactive at acknowledging this risk that I'm obviously close to and believe in. And so, you know, for me personally, it definitely made me longer on Ethereum than I was. You know, another protocol that deserves highlighting is Solana. You know, I mentioned we maybe I can't remember if I mentioned, but you know, we did some work with them and we implemented some post-quantum cryptography on their testnet. Um you know, and and that yeah, and and so that that I think shows that they are also interested in solving this problem. And so I want to give them some credit, too. So look, I'm long any blockchain that ultimately I think, you know, has some product market fit today and has a credible path to reaching beyond to to existing beyond Q-day. And even Bitcoin

I think does. >> Yep. And I'm long Bitcoin on a long enough timeline, but I definitely think, you know, if we don't handle it right with Bitcoin, there's a there's a lot of choppy waters ahead. But yeah, I I do think I think Ethereum does deserve credit. You know, I personally have kind of been longer than as a result of that. You know, again, words are not deeds and so it could be it could be misplaced, but and generally speaking, maybe let me just comment on my I think the impact of quantum, the quantum narrative on markets. I don't necessarily think it's causing anyone to be short any of these things, but I think it may be, you know, you've got potentially people that would allocate to these asset class that maybe haven't because there's this uncertainty around is quantum going to be a thing and

what's that going to How's it going to affect blockchains? Is price going to go down? So I I again, I think like I think if we if we solve that root issue, then, you know, you'd see maybe prices go up more than they would have than they would. You think that's more on the institutional investor class that would have those fears? >> so. Yeah. But that's what moves the needle, right? Blockchain At this point, right? Blockchain has been adopted. I mean, we've won in many ways, right? Like I got in the space over 10 years ago at the time, Bitcoin's only use case was crime. They legitimately talked about banning it. Now you have BlackRock issuing ETFs. You have stablecoins in the tens of billions of dollars. I mean, we've won in in many ways, right? And so and then the institutional institutional adoption is is a indicator of that. But once

because we won and we're at the scale now, then we have to consider what the marginal next institution is doing. Are they waiting? Are they going in? And I think quantum is certainly a factor affecting at least some of those conversations. All right, Alex, last thing from me. What is the kind of primary focus for Project 11? I mean, it sounds silly. It's like, okay, solve quantum. But like, what are you guys doing, right? Week by week, month over month, what does Q2, Q3, Q4 look like for your company? Yeah, so you know, post future-proofing digital assets is is first and foremost our priority. So what does that look like?

We've released some products for Bitcoin, one called Yellow Pages where, you know, it's basically like a you can think of it as like a quasi migration tool where you can get ready to kind of migrate your Bitcoin. It doesn't let you migrate yet because there's got to be a lot of protocol work, but it's a first step. So we we launched that. It's the only post-quantum tool for Bitcoin in production. It's been audited using post-quantum cryptography that's sta- standardized by NIST. Uh we've got some other products that are building on that that are actually helping you secure digital assets against the quantum risk on other networks. So those are two products we've been building. And we've got some institutional stuff, too, that we're working on cuz I mean, you can imagine this has a huge impact on digital asset custodians, on you know, all kinds of

institutions, exchanges, right? That rely on, you know, these underlying blockchains that have to change ultimately to survive. Um so that's that's another big focus. You know, we also have some fun initiatives. One I'll talk about is is the Q-Day Prize. So Q-Day Prize was was an initiative we ran last year that's getting ready to wrap up. We're getting ready to announce the results, but basically it was a challenge for people around the world to use existing quantum computers to try and break the biggest keys that they could. And you know, and in the future iteration of this, I think what we're looking to do is not only let people use AI in addition to quantum computers to try and see how big of a key they could break to kind of, you know, inform what the state of progress is, but also use AI to build new and

potentially better post-quantum crypto systems that have some of the features that we that we already like uh in ECC that are little more performant in terms of size or scale cuz you know, we talked about AI earlier as being like this another one of these doomsday weapons, but you know, as everyone who probably watches this show who's used AI knows it's an it's amazing tool, right? And we can use it for good, too. And so I you know, that's something that we're we're we're very interested in doing. And then I guess maybe on the optimistic side, too, I I maybe I'll end by saying this, quantum is not just a tool to break cryptography. It can be the basis for new forms of cryptography, right?

There's ways to exchange keys in a in a completely secure manner without ever touching a classical channel that could never be broken based on the physics underlying the universe, right? Like that's what we kind of So we kind of say if you at Project 11, future-proofing and future-building. The quantum computer's going to get Q-Day's going to happen. We got to future-proof everything, but beyond that point, there's a whole world of opportunity uh to basically leverage quantum computing and quantum mechanics to build a whole new better blockchain uh or better blockchains. And so that's really ultimately the long-term vision of Project 11, and that's a little bit of what we got going on today. I still can't tell if I'm just absolutely smooth-brained. I just don't know if Q-Day's going to come. Like I just like I'm just I I I'm not a believer. I think everything's

going to be okay. Professional optimist over here. Hey, well, there's nothing wrong with optimism. So, you know, I I like to >> Misguided optimism can be dangerous. That's what I keep saying. >> I like to take my optimism with a dose of preparedness, but you know, there's nothing there's nothing wrong with being optimistic. You know, at the end of the day, it's it's just too miserable to live life otherwise. I think somebody asked if the submissions are still being reviewed for the prize. >> Yeah, so we're they the submissions have just been reviewed, and so we have actually some winners. So someone Maybe someone who's watching this is like, I submitted something. Yeah. We're going to We're going to announce in the next couple weeks I think either during or right before Bitcoin Vegas. Awesome.

Alex, thanks for joining us. Great conversation.