From theblock by James Hunt
Quick Take
- Amid reignited discussions on the threat to Bitcoin following Google’s Willow quantum computing chip release, the community shared Satoshi’s prior guidance in case the blockchain’s encryption is ultimately broken.
- The cryptocurrency market witnessed a major deleveraging event over the past 24 hours, with $1.6 billion in liquidations led by altcoins like ETH, SOL and ADA, which saw price drops of 5%, 6% and 11%, respectively.
- Max Resnick, a former Ethereum researcher, has left MetaMask developer Consensys to join the Solana-focused development firm Anza.
- The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.
What Satoshi said to do if quantum computing cracks Bitcoin
Amid reignited discussions on the threat to Bitcoin following Google's Willow quantum computing chip release, the community shared Satoshi's prior guidance in case the blockchain's encryption is ultimately broken.
- While Willow is a significant advancement in quantum technology, its 105 qubits are far fewer than required to break Bitcoin's encryption algorithms: the Elliptic Curve Digital Signature Algorithm (ECDSA) with secp256k1 and the secure hash algorithm SHA-256.
- ECDSA secures private keys and authenticates transactions in Bitcoin. SHA-256 ensures data integrity and is critical to the cryptocurrency's proof-of-work mechanism.
- Bitcoin entrepreneur Ben Sigman pointed out that ECDSA, which is vulnerable to Shor's algorithm, would require several million physical qubits to break.
- SHA-256 is even more demanding, needing hundreds of millions of qubits via Grover's algorithm to pose a significant threat. "Bitcoin's cryptography remains SAFU... for now," Sigman said.
- Another community member brought up a BitcoinTalk post from Satoshi in June 2010.
- "If SHA-256 became completely broken, I think we could come to some agreement about what the honest blockchain was before the trouble started, lock that in and continue from there with a new hash function," Satoshi wrote at the time.
- "If the hash breakdown came gradually, we could transition to a new hash in an orderly way," Satoshi added. "The software would be programmed to start using a new hash after a certain block number. Everyone would have to upgrade by that time. The software could save the new hash of all the old blocks to make sure a different block with the same old hash can't be used."
- Meanwhile, analysts at Bernstein said any practical threat to Bitcoin still seems "decades away. " They urged clients to buy the current price dip amid strong ETF demand and acquisitions from corporate treasury participants like MicroStrategy, MARA and Riot.
- Ultimately, quantum computing poses a potential threat to all systems that rely on cryptographic standards, including cryptocurrencies, bank accounts and secure file storage.
Largest altcoin liquidations since 2021
The cryptocurrency market witnessed a major deleveraging event over the past 24 hours, with $1.6 billion in liquidations led by altcoins like ETH, SOL and ADA, which saw price drops of 5%, 6% and 11%, respectively.
- Altcoin leverage unraveled sharply after a buildup that saw open interest relative to market cap and funding rates surge, resulting in the largest daily long liquidation event since May 2021, according to analysts at K33.
- Subsequently, some funding rates fell to multi-week lows, reflecting a significant removal of leverage that analysts believe could lead to healthier and more sustainable price action.
- "If funding rates begin to decline further, it would signal that excessive long leverage is starting to unwind, potentially leading to a more balanced market as price forms a base," Bitfinex analysts told The Block.
Max Resnick, a former Ethereum researcher, has left MetaMask developer Consensys to join the Solana-focused development firm Anza.
- Previously critical of Ethereum's technical roadmap, urging the blockchain to "dream bigger," Resnick spent two years at Consensys as Head of Research at a subsidiary called Special Mechanisms Group.
- "In my first 100 days, I plan on writing a spec for as much of the Solana protocol as I can get to, prioritizing fee markets and consensus implementations where I believe I can have the highest impact," Resnick said.
- Solana has emerged as a serious challenger to Ethereum, surpassing it in monthly chain and protocol fees as well as onchain DEX volume in November.
Bitcoin app Relai raises $12 million
Bitcoin self-custodial investment app Relai has raised $12 million in a Series A round led by Ego Death Capital, bringing its total funding to $20 million and boosting its post-money valuation to $72 million.
- The funding round was structured as "plain vanilla equity," consistent with Relai's previous fundraises, and closed earlier this month, CEO Julian Liniger told The Block.
- The app has facilitated $650 million in bitcoin investments since its launch in 2020, with $450 million occurring this year alone, according to Liniger. It aims to reach $1 billion in 2025.
- Currently employing 40 people, Relai plans to double its headcount next year, hiring across product, development, marketing, growth, legal and compliance functions, Liniger said.
Magic Eden airdrops ME token to NFT users across Bitcoin, Ethereum, Solana and Polygon
Multi-chain NFT marketplace Magic Eden has launched its ecosystem token, allowing users to claim and stake ME -68.47%
to participate in cross-chain challenges and future airdrop opportunities.
- Users must claim their ME by Feb. 1, with any unclaimed tokens redistributed to stakers, the project stated.
- "The thesis behind ME is that onchain apps are going to win in the long run. It's the purest, most seamless way to use the blockchain," Tiff Huang, director of the ME Foundation, told The Block.
- Ethereum rollup Fuel also unveiled its native token on Tuesday.
In the next 24 hours
- The latest U.S. CPI inflation data are released at 8:30 a.m. ET on Wednesday. Est. MoM 0.3%; Core 0.3%. Est. YoY 2.7%; Core 3.3%.
- Taipei Blockchain Week continues in Taiwan.
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