Weekly Roundup 04/03/26 (Two big quantum papers, Drift protocol hack, Maritime Salvage law) (EP.711)

Matt Walsh and Nick Carter discuss two significant papers in quantum computing that pose potential threats to Bitcoin. The first, from Google Quantum AI, suggests that a superconducting qubit quantum computer could break elliptic curve cryptography (ECC) with 1200 logical qubits, indicating a "short range attack" risk for Bitcoin. The authors chose a ZK proof approach, reflecting caution. The second paper from Caltech, featuring John Preskill, explores a neutral atom modality that could feasibly break ECC256 with 10,000 physical qubits, albeit over a longer computation time. Reactions from Bitcoin core developers vary, with some acknowledging risks while others dismiss concerns, highlighting a communication gap regarding upgrade plans.

The conversation shifts to funding updates, noting significant capital raises by companies like Valinor and OpenFX. The importance of addressing quantum risks is emphasized, with a recommendation for a Google paper outlining implications for Ethereum and Bitcoin. Ethereum's proactive upgrade plans by 2029 contrast with Bitcoin's slower response, raising concerns about vulnerabilities during the migration period for necessary upgrades.

The discussion also touches on Bitcoin's current landscape, comparing it to the 2017 block size wars. Large institutions managing client capital face existential risks if Bitcoin's value drops, potentially leading to delisting or protocol changes that may not be welcomed by the community. Influential figures advocate for necessary upgrades, particularly regarding Satoshi's coins and the transition to post-quantum cryptography. There is a consensus that Satoshi's coins should be zeroed out or legacy signatures disallowed, which could reduce the total number of coins.

The application of maritime salvage law to recover Satoshi's coins is proposed, referencing historical cases like the SS Central America. Speculation arises about the U.S. government possibly authorizing a salvage mission for these coins.

An update on the Drift Protocol reveals a hack of approximately $280 million, raising concerns about the rise in conventional hacks and the role of AI in these exploits. Legal developments involving the CFTC and DOJ regarding prediction markets are discussed, with Gary Gensler's skepticism highlighted.

Coinbase has received conditional approval for a national trust charter, and Morgan Stanley's announcement of a Bitcoin ETF with a low expense ratio is noted. Senators Lummis and Cassidy's introduction of the Mind in America Act aims to on-shore Bitcoin mining, though its political feasibility is uncertain.

The Linux Foundation's launch of the X402 Foundation, governing a new payment protocol, is mentioned, with support from major companies. The potential for large language models to incorporate payment functionalities is speculated upon. Square's enabling of Bitcoin payments for U.S. merchants with no processing fees is highlighted, along with Paradigm's backing of Cal-She in developing a prediction market aggregation trading terminal.

The conversation emphasizes inconsistencies in defining markets across platforms like Cal-She and Polymarket, complicating market aggregation. Options markets are noted to be complex due to variables like strike prices, leading to fragmentation and low liquidity. Prediction markets face challenges due to a lack of large designated clearing organizations, complicating trades and market viability.

The discussion concludes with ongoing conversations about quantum topics and a positive sentiment towards engaging with the Bitcoin community.