Is Google's Willow Processor A Threat To Bitcoin?
Just a couple of days ago I wrote a piece reminding readers that, despite looking at bitcoin more favorably the last year or so
Submitted by QTR's Fringe Finance
Just a couple of days ago I wrote a piece reminding readers that, despite looking at bitcoin more favorably the last year or so, it still remains an unprecedented and opaque area of markets where risk could rear its head quickly, unexpectedly, and before chaos in broader equity and bond markets.
Collectively worth about $3 trillion now, cryptocurrency is like catnip for risk takers right now, I wrote. Then, I looked at the question of quantum computing:
I’ve also often raised the question of what comes next after SHA-256 hash functions and whether or not Bitcoin will be safe amidst the jump to quantum computing.
The prevailing sentiment has always been that to protect the Bitcoin network, miners and those invested in developing the network will have to stay on the forefront of technological change and encryption capabilities to ensure the network doesn’t lose a beat as the world of microprocessing advances. The ‘bull case’ thoughts about this risk, at least according to Michael Saylor the last time I talked to him, was that if you had the power to crack SHA-256 encryption right now, there would be much bigger potential targets to go after than the Bitcoin network, seeing as how the very same encryption ensures the integrity of almost all major, consequential defense, military, and government computer networks worldwide.
Saylor makes a valid point, but as Bitcoin's market cap grows, so does the incentive to hack or compromise its network. With a $1.8 trillion bounty effectively on the line, the temptation for bad actors increases. Fortunately, Bitcoin’s network is built with significant redundancy and safeguards, but the true risks, especially from quantum computing, will only become clear as technology advances.
And in my original case for being less skeptical on bitcoin, out in Spring of this year, I made note of the quantum computing risk I have always mentioned when discussing bitcoin. I wrote:
It’s like the potential impact of quantum computing—I’ve heard both sides of that case and have pretty much acquiesced to the position that it’s a bridge we will have to cross when we get to it.
Finally, back in 2021, in a debate between Peter Schiff and (now indicted) Celsius CEO Alex Mashinsky, quantum computing was asked and answered in the same fashion, with the prevailing sentiment being ‘we’ll get to it when we get to it’:
When talking about quantum computing, Mashinsky admits that bitcoin is going to have to be modified over the next decade as quantum computing advances. No one knows what those advancements or changes will look like and who is to say whether the bitcoin you buy today will adhere to the same rules and same mathematical certainties it will after such a modification is made.
Well, to make a long story short, we’re going to have to ‘get to it’ a hell of a lot faster than most people may have thought. That’s because this week, Google introduced its new quantum processor, Willow.
Even for not being a semiconductor nerd, I know the chip marks a groundbreaking leap in quantum computing. It is capable of solving problems in under five minutes that would take traditional supercomputers trillions of years, Willow addresses one of quantum computing's major hurdles—reducing errors as systems scale.
This advancement positions Google as a leader in the quantum field, even as some experts believe commercial uses are still years away, likely around 2030. But needless to say, the announcement has perked up the ears of many, including the cryptocurrency community.
Protos wrote about two ways Google’s new chip and Bitcoin this week. They write the new chip has sparked fears it could pose a serious threat to Bitcoin’s security in two key ways: overtaking Bitcoin's mining network and targeting Satoshi Nakamoto’s dormant coins.
The piece argues that Willow’s breakthrough capabilities allow it to solve problems in minutes that would take supercomputers trillions of years — and that such power could hypothetically outpace Bitcoin’s global mining network, which secures transactions by solving complex cryptographic puzzles.
If Willow could perform this work faster and cheaper than the network, it might seize control of Bitcoin’s blockchain, enabling it to reorder, censor, or even double-spend transactions.
The second potential threat involves Bitcoin’s creator, Satoshi Nakamoto, who owns over 1 million BTC stored using an older cryptographic format (P2PK) that exposes public keys on the blockchain. A quantum computer could exploit this vulnerability by brute-forcing private keys, potentially unlocking Nakamoto’s holdings. Modern Bitcoin addresses are more quantum-resistant, as they hide public keys until transactions are initiated, reducing the risk of exposure.
It’s now officially a race, with Coinspeaker noting that the Bitcoin community is actively researching quantum-resistant solutions to safeguard against future advancements in quantum technology.
And while Bitcoin may ultimately come out on top when all is said and done this time, it’s these types of unprecedented risks and uncertainties that, to me, continue to make gold the granddaddy of all stores of value and safety.
Bitcoin trades like a risk asset because it will face countless new tests like this that gold has already endured over the past 5,000 years. One by one, Bitcoin will need to 'pass' each of these tests if it aims to maintain value over anywhere near the time horizon gold has achieved.
If nothing else, the announcement of Willow and the ensuing discussion should serve as a wake-up call to the dormant nervous systems of Bitcoin holders and maximalists. They must remember that while Bitcoin has passed every test over the past 15 years, there will undoubtedly be more bumps in the road along its adoption curve.
I continue to own some Bitcoin but still firmly believe that gold remains the ultimate store of value and the best way to preserve wealth when opting out of the fiat money system.
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It's not impressive on the face of it, so that is why this is likely such a sleeper.
I’m not impressed 🤷♀️