Quantum Computing and Bitcoin (Uncut) 02-25-2025

Quantum Computing and Bitcoin

Hey guys, so I’m going to try my best to talk about quantum computing, Microsoft’s latest announcement with their Majorana 1 topological qubit processor, how it relates to Bitcoin, and I guess what I think the community should be thinking about and doing, and I’m going to also throw out some ideas around the BIP360 proposal, the Bitcoin improvement proposal that’s there for quantum computing. So to kind of frame this, and I’m going to provide some examples, these are not like perfect examples, but I guess it’s my way of trying to make quantum computing accessible or to help people to think through kind of like what’s happening, because a lot of this stuff is super esoteric and difficult to kind of wrap your head around. So this is my attempt, and if you’re a quantum expert, I apologize, this is my attempt to make this accessible to everyday person that’s kind of looking at this and just trying to understand it.

So let’s start with what we know, we understand classical computing, picture a library of a thousand books and you’re hunting for one specific phrase in that entire library, let’s just say the phrase that we’re searching for is, what is a topological qubit? So a classical processor, think of it like a librarian, it’s very methodical, they grab one book, they flip through every single page, there’s no match, so then they move on to the second book as they’re looking for this phrase, and one by one they check a thousand, let’s just say there’s a thousand books in this library, maybe it’s book 10, maybe it’s book 999, but this is a serial step-by-step process that’s at work, and this is like your classical processors where there’s one or there’s zero, on or off, no shortcuts, it’s just how your laptop works. Now let’s talk about quantum computing, same library, same thousand books, same phrase that we’re searching for, but this librarian’s not flipping through the pages, they’re able to scan the whole library in one shot, not by opening every book, but by somehow knowing every book’s contents all at once, and what they do is they find this phrase, what is topological qubit, what is a topological qubit, in a fraction of the step, so like maybe 32 steps instead of a thousand steps of checking a thousand books. So I know this sounds nuts, but this is effectively what quantum computing can do, it has massive parallelism, it’s not brute force, and so how does it pull that off, and there’s basically three tricks that allow it to pull this off, there’s superposition, there’s entanglement, and there’s interference, so what I’m going to do is I’m just going to kind of break down those three different ideas for you, so you can hopefully understand this a little bit better.

So superposition, the first trick is this, we’re going to just take like classical bits, it’s either zero one, you got to pick one, but quantum bits are zero, it’s one, and it’s both as they’re spinning, but I think and the kind of the best way you hear a lot of quantum people say to think of like a coin that’s spinning in mid air, it’s kind of both of these states simultaneously, and so when we’re talking about qubits, and you have four states, you have zero zero, you have zero one, you have one zero, you have one one, and for a qubit, it’s all of those all at once, and so when you have three qubits, it’s basically these eight different states, when you have 10 qubits, you have 1024 states, it’s two to the power of whatever that number of qubits is, and so you can see how this scales like really quickly once you start getting the number of qubits higher. So back to this library analogy, so we had a thousand books in the library, so if you’ve got 10 qubits, you have 1024 states, different states that it can be in, and each of those states is like a tag for the books, it’d be like book one, book two, up to a thousand, so this superposition lets the quantum computer hold all of those tags all simultaneously, it’s not flipping through every one of them, it’s got the whole library encoded in one system, and so that’s how it’s able to do these kind of things, so that would be the superposition that we’re talking about. The next thing is entanglement, so let’s talk about that, so this is where I guess it gets a little bit spooky, so you take two qubits, you put them in a superposition, they’re both spinning, they’re now entangled, and it’s like tying them with an invisible thread, if you flip one of the coins and it lands heads, you automatically know that the other one is tails, so going back to this library example where we have the entanglement of all thousand books together, let’s say that book 500 is the one with the phrase that we’re looking for, the entanglement links all the qubits, so when one points to 500, the other qubits all align to match, and it’s just not random guessing, and it’s like this coordinated dance between all of them, since they’re entangled, and so why does this matter? The superposition just isn’t a mess of possibilities, the entanglement makes them work as a team, when one shifts, the rest follow, kind of narrowing the search, and it’s almost like the librarian is whispering to every book, hey we’re looking for this, and then all the books nodding back in unison saying I’m not it, I’m not it, I’m not it, and book 500 is saying I’m the book, so that’s the entanglement piece, and then the last piece that allows all this to be possible is the interference, so the superposition’s got all thousand books in play, the entanglement’s got them all synced, now you have this interference which helps pick the winner, that’s like the whisper that I was telling you earlier, so think of like waves in a pool, when you like drop a stone into some water, it ripples and it spreads, and if you drop two where they meet, you have these, the wave is amplified, and so this idea is, you know, constructive and destructive waves, and so think of all of these synchronized cupids, and how like almost like they’re dropping like a pebble into the water, and where you see that constructive wave that’s really high, and all the destructive waves which are low, that’s what’s helping signal that that’s exactly what we’re looking for, when all of these cupids are entangled and working together as like they’re all on the same team.

Okay, so quantum’s got this superpower, it’s able to entangle and use the constructive and destructive waves to point out the answer, but here’s the thing, it’s really fragile, one bump, a whisper of heat, they fall out of sync, because when you’re thinking about this and you’re scaling it to call it over a thousand cupids that are logical cubits, the any type of small amount of noise is going to knock the whole system out of whack, and so like that’s really been the major challenge to date, is how do you scale this so that you actually have a lot of cupids in the processor without incurring a lot of noise that knocks them all out of whack. So most quantum computers today like IBM’s or Google’s, they use stuff like superconducting circuits or trapped ions to create their cupids, they’re really powerful but super sensitive, and this is where Microsoft is taking a detour where theirs are not as sensitive to noise, and so what they’re using is what’s called a topological qubit, and it’s built on something called a Majorana zero model, or a tiny quasi particle that pops up out of this exotic material, and I could go on and on, it’s way over my head, I’ve done some research on it but good lord it gets really technical really fast, but you know you don’t really have to worry about that too much for just kind of understanding intuitively like why this is important, the real thing that’s important is this topological qubit makes the noise factor way less, so just to kind of put this in to quantify this, so quantum computers to date are around like a hundred to one to a thousand to one as far as the noise factor, so if you have a hundred qubits you’re basically able to create one logical qubit, one qubit that actually works, the ratio is a hundred to one to a thousand to one to date so far, this Microsoft version where it’s using this topological qubit, they’re saying that the noise factor could get down to ten to one, meaning they only need ten qubits to get one logical qubit, and the terminology here is physical qubits to logical qubits, so in the logical qubits are the ones to really pay attention to because when you start using Grover’s algorithm or whatever to conduct these calculations to crack different things, the logical qubit is the one that is actually the one that you that the calculation is based on, so Microsoft has this announcement they said we’re going to try to get to a million qubits by 2027, what they’re talking about is physical qubits, if we’re using noise ratios of a thousand to one or a hundred to one, you take that million and you dial it down to call it a hundred thousand or ten thousand, but I think this is why this announcement with Microsoft got so much attention, again it’s ten to one is what they’re saying they can do, and if true a million qubit, even though they’re physical qubits, you’d be at a hundred thousand logical qubits potentially by 2027 if what they’re saying is valid, so that’s why I think that this new announcement with Microsoft is such a big deal and something that we have to really kind of pay attention to because if true, if they’re able to scale that, then I mean this is a really big deal, I think this is also important, to date like they’ve got an eight qubit processor with this Majorana one processor, that’s physical qubit, so they don’t even have a one logical qubit right now, and they’re saying they’re going to a million physical by 2027, so is this a big deal, yes, is there something like right now that needs to be concerned with, no, but the fact that they’re doing this on a topological process, the process is topological, is very different, something that I think has taken a lot of people by surprise, and so that’s why it’s super noteworthy. Okay, so let’s talk about how this relates to Bitcoin in the real world, and there’s really kind of two pieces to this, there’s the addresses, like the Bitcoin addresses, and then there’s also the impact of Bitcoin mining, if a quantum computer really kind of starts to take off here in the coming five years.

So first let’s talk about Bitcoin addresses, you’ve got a wallet and it’s tied to a public key and a private key, that pair, and so cryptology 101, the public key is your address that anybody can send the Bitcoin to, and there’s a private key that signs any Bitcoin that leaves that address, and so this security is something called ECDSA, elliptical curve digital signature algorithm, sounds fancy, but it’s just math, and it’s how all your Bitcoin are secured if you have Bitcoin in your own private key address. I think for people when they’re looking at this and they’re saying, well how long would it take to crack a key with a computer like this, assuming you got to a hundred thousand logical qubits, which would be, you know, basically Microsoft hitting their million physical qubit by 2027, something like this could maybe be, you know, a couple days for a processor, a quantum processor to be able to crack. So that’s a big deal, that’s something that should catch somebody’s attention and something that needs to be taken serious.

Now the other part of this that people need to think about just beyond the addresses, what would be the impact for Bitcoin mining, and there’s something called Grover’s algorithm, which that would, so think of the, for the key relationship, that is Shor’s algorithm that would be used by the quantum processor to try to crack the keys, and then Grover’s algorithm is the algorithm that would be used to be able to figure out the, to basically guess at the hashes way more effectively than the existing processors, the ASICs that are being used today. So what would happen is the protocol would still detect that there’s a lot more compute in the speed at which they’re able to figure out the hashes way faster, so the network would automatically adjust to that, but what I think that the talking point and maybe the concern is, is let’s say Microsoft in this topological method is way more profound and is what the whole quantum space moves to because it’s the most effective, you might have some type of a competitive moat that Microsoft has with this technology, and so anybody making these topological processors, they’re only Microsoft hardware, and so what you could see is a centralization of the mining process that would move to one of these companies that kind of dominate the space, that have kind of figured it out. So I think the concern there is much more the centralization of mining, more so than it basically cracking the network or exposing anything, the private keys or anything like that.

It’s much more the speed at which the network that you’re going to have to be able to compete from a mining standpoint. Okay, so let’s talk about the plan moving forward from the Bitcoiners lens. So there’s an individual, his name is Hunter Beast, or at least that’s what he goes by, is Hunter Beast.

He has a Bitcoin improvement proposal, the number is 360, you can find this on GitHub, and what he’s proposing is how can we upgrade Bitcoin to quantum proof, and it’s not some like vague, we’ll figure it out plan, it’s actually a pretty concrete pitch, and so the name of this is Pay to Quantum Resistant Hash, or P2QRH, and so here’s the gist. Right now, as I mentioned earlier, Bitcoin leans on these ECDSA for signatures, for the public and private key pairs that we talked about, and so BIP360 proposes shifting to a hash-based system, so think super secure locks that don’t rely on elliptical curves. So what this does is it hides your public key behind a beefy hash function that’s quantum resistant.

You send your coins by proving you know the hash is secret, but not by flashing your pub key, and that’s what really kind of makes a difference so that people aren’t able to see what the public key is, and then deriving the private key from that. And so even if somebody’s got a million qubit monster running shores algorithm, they’re still stuck because they’re not able to find that, and so this process would be if a person, let’s say you have a Bitcoin address, you would move your coins to an address that’s using this Pay to Quantum Resistant Hash, or P2QRH, and so you’ve basically got to port your existing addresses over to these new quantum proof addresses. The nice thing about this is this is a soft fork.

This proposal is a soft fork, which means if you want to continue to hold the existing addresses that aren’t quantum proof, you can continue to do that. You don’t have to upgrade to this unless you want to want to have quantum protection. Concerns.

Yes, there’s definitely some frictions with the proposal right now. Hash-based signatures are much bigger in size, and so you immediately get into this would clog the mempool or increase fees, which I know the community can argue both sides of that one really well. Some folks worry that it’s overkill and that quantum’s not here yet, and so why bloat the blockchain like right now by upgrading to something like this? Some people are going to want a hybrid approach where they’re taking their time.

Other people are going to say, no, we need to get it out right now and get it battle-tested and make sure that it’s working appropriately, and so what you really get into is an activation fight, and since Bitcoin is based on consensus, you’re going to have a lot of different takes. The nice thing is this is a soft fork as of right now. At least that’s my understanding is BIP360 is a soft fork.

So here’s my take. We need to take this seriously. You can’t just keep pushing it off and saying, oh yeah, quantum’s not going to happen for another two decades or whatever it might be, and maybe it does.

Maybe it takes another two decades. I don’t know, but I’m just looking at it from a risk mitigation standpoint. This new Microsoft announcement where the noise isn’t 100 to 1 or 1,000 to 1, but it’s 10 to 1, I think needs to be taken very seriously, and so why not work on this proposal, refine this proposal, have working groups within the community, get something that is somewhat agreeable across the community, and then as we continue to watch the number of logical qubits, not just physical qubits, but logical qubits that continue to improve, and I’m going to throw a chart up that you can see where we’re at right now just to give you an idea of the most that we’re expecting from logical qubits this year is 30.

So are we anywhere close to this right now today? No, but do we need to sit on our laurels and not do anything? No, we need to be busy, we need to be working on this, we need to have something in place, and then as we’re looking at the number of logical qubits, and I think once they start getting over 1,000 to 10,000, we need to seriously start considering rolling out some type of Bitcoin improvement proposal that addresses this. Can it be done? Absolutely. Will there be contentions here and there? You bet, but I think if quantum actually poses a real threat to Bitcoin that I think the community can rally behind some soft forks that will solve for this.

So I’m going to put up a slide here that just shows you where you can find this, and Hunter Beast is the person to follow. He’s on Twitter, he’s also on Noster. I’m putting up the links to where you guys can find him and his proposal.

And at the end of the day, I just want to have a conversation around this. I think we need to take it serious, and I think that it’s not something to just kind of continue to brush off.