Opinion
How Should Bitcoiners View Quantum Computing?
In the early 2020s, quantum computing hit the public spotlight as a potential threat to Bitcoin. Relying on SHA-256 cryptographic hash function for its proof-of-work network consensus, Bitcoin’s value is predicated on computational power.
If there is a technology that can circumvent the traditional binary system of 0s and 1s for units of information, there is potential to upend cryptography as we know it. But is that danger over exaggerated?
Could quantum computing one day turn Bitcoin into a valueless piece of code? Let’s start by understanding why Bitcoin relies on cryptography.
Bitcoin’s Bits and Hashing
When we say that an image is 1 MB in size, we say that it contains 1,000,000 Bytes. As each Byte contains 8 bits, this means that an image contains 8,388,608 bits. As the binary digit (bit), this is the tiniest unit of information, either 0 or 1, that builds up the entire edifice of our digital age.
In the case of an image, bits in a 1MB file would assign a color to each pixel, making it readable to the human eye. In the case of a cryptographic function like SHA-256 (Secure Hash Algorithm 256-bit), developed by the NSA, it would produce 256 bits (32 Bytes) as the fixed length of a hash from an input of arbitrary size.
The primary purpose of a hash function is to convert any string of letters or numbers into an output of fixed length. This obfuscation blending makes it ideal for compact storage and anonymized signatures. And because the hashing process is a one-way street, hashed data is effectively irreversible.
Therefore, when we say that SHA-256 provides a 256-bit security, we mean to say that there are 2256 possible hashes to consider for reversal. When Bitcoin payments are conducted, each Bitcoin block has its own unique transaction hash generated by SHA-256. Each transaction within the block contributes to this unique hash as they form the Merkle root, plus the timestamp, nonce value and other metadata.
A would-be blockchain attacker would have to recalculate hashes and extract the necessary data not only for that block containing the transactions, but for all subsequent blocks chained to it. Suffice to say, the 2256 possibility load poses a virtually impractical computational endeavor, requiring immense expenditure of energy and time, both of which are exceedingly costly.
But could this no longer be the case with quantum computing?
New Quantum Paradigm for Computing
Moving away from bits as 0s and 1s, quantum computing introduces qubits. Leveraging the observed property of superposition, these units of information can not only be either 0 or 1 but both simultaneously. In other words, we are moving away from deterministic computing to indeterministic computing.
Because qubits can exist in an entangled and superimposed state, until observed, computations become probabilistic. And because there are more states than always 0 or 1, a quantum computer has the ability for parallel computing as it can simultaneously process 2n states.
A classic binary computer would have to run a function for each possible 2n state, which the quantum computer could assess simultaneously. In 1994, mathematician Peter Shor developed an algorithm with this in mind.
Shor’s algorithm combines Quantum Fourier Transform (QFT) and Quantum Phase Estimation (QPE) techniques to speedup pattern-finding and theoretically break all cryptography systems, not just Bitcoin.
However, there is one huge problem. If quantum computing is probabilistic, how reliable is it?
Stabilizing Coherence in Quantum Computing
When it is said that qubits are superimposed, this is akin to visualizing a coin flip. While in the air, one can imagine the coin having both states – heads or tails. But once it lands, the state is resolved into one outcome.
Equally so, when qubits are resolved, their state collapses into the classical state. The problem is that a ground-breaking algorithm like Shor’s needs many qubits to maintain their superposition for a long period of time to interact with each other. Otherwise, the necessary, useful calculations fail to actually complete.
In quantum computing, this refers to quantum decoherence (QD) and quantum error correction (QEC). Moreover, these problems need to be solved across many qubits for complex calculations.
According to the Millisecond Coherence in a Superconducting Qubit paper published in June 2023, the longest coherence time of a qubit is 1.48 ms at average gate fidelity of 99.991%. The latter percentage refers to the overall reliability of a QPU (quantum processing unit).
At present, the most usable and powerful quantum computer appears to be from IBM, dubbed Quantum System Two. A modular system ready for scaling, Quantum System Two should perform 5,000 operations with three Heron QPUs in a single circuit by the end of 2024. By the end of 2033, this should increase to 100 million operations.
The question is, would this be enough to materialize Shar’s algorithm and break Bitcoin?
QC Threat Viability
Due to decoherence problems and fault-tolerance, quantum computers have yet to pose a serious risk to cryptography. It is unclear if it is even possible to achieve a fault-tolerant quantum system at scale when such a high level of environmental purity is needed.
This includes electron-phonon scattering, photon emissions and even electron to electron interactivity. Moreover, the greater the number of qubits, which are necessary for Shor’s algorithm, the greater the decoherence.
Yet, although these may appear to be intractable problems inherent with quantum computing, there has been great progress in QEC methods. Case in point, Riverlane’s Deltaflow 2 method performs real-time QEC on up to 250 qubits. By 2026, this method should result in the first viable quantum application with million real-time quantum operations (MegaQuOp).
To break SHA-256 within one day, 13 million qubits would be needed, according to the AVS Quantum Science article published in January 2022. Although this would threaten Bitcoin wallets, many more qubits, at around 1 billion, would be needed to actually execute a 51% attack on Bitcoin mainnet.
When it comes to implementing the Grover algorithm, designed to leverage QC to search unstructured databases (unique hashes), a research paper published in 2018 suggested that no quantum computer would be able to implement it until 2028.
Image credit: Ledger Journal
Of course, Bitcoin network’s hashrate has greatly increased since then, and QC has to tackle decoherence as a major obstacle. But if QEC roadmaps eventually materialize into reliable quantum systems, what can be done to counteract the QC threat to Bitcoin?
Quantum Computing Resistance
There are multiple proposals to safeguard Bitcoin holders from quantum computers. Because a 51% QC attack is extremely improbable, the focus is mainly on hardening wallets. After all, if people cannot rely on their BTC holdings to be secure, this would cause an exodus from Bitcoin.
In turn, BTC price would plummet and the network’s hashrate would drastically decrease, making it far more vulnerable to QC than previously estimated. One such hardening is implementing Lamport signatures.
With Lamport signatures, a private key would be generated into pairs, 512 bitstrings from a 256-bit output. A public key would be generated with a cryptographic function to each of the 512 bitstrings. Each BTC transaction would need a one-time Lamport signature.
Because Lamport signatures do not rely on elliptic curves over finite fields in Elliptic Curve Digital Signature Algorithm (ECDSA), which is used by Bitcoin and can be exploited by Shar’s algorithm, but on hash functions, this makes them a viable quantum-resistant alternative.
The downside of Lamport signatures is their increased size, upward of 16KB, and one-time use. Of course, just by shifting addresses and keeping BTC in cold storage, thus avoiding private key exposure, can also prevent QC from being effective.
Another approach to confound potential QC attacks would be to implement lattice-based cryptography (LBC). Unlike in ECDSA, LBC avoids finite patterns by relying on discrete points in n-dimensional lattice (grid) space that extends infinitely in all directions. Because of this feature, there has yet been developed a quantum algorithm that could break LBC.
However, to implement a new type of cryptography, Bitcoin would have to undergo a hard fork. In that scenario, there would likely need to be many signals indicating that major breakthroughs in quantum computing, particularly in qubit count and fault tolerance, are imminent.
Bottom Line
It is safe to say that the Bitcoin mainnet itself is not in danger from quantum computing, in either the near or distant future. Yet, if QC were to compromise Bitcoin’s encryption—rendering SHA-256 and ECDSA obsolete—it would deeply impact confidence in the cryptocurrency.
This confidence is crucial, as demonstrated by major companies like Microsoft and PayPal, which have adopted Bitcoin payments, drawn by up to 80% savings compared to card transactions, zero chargebacks, and complete control over funds. With over 300 million holders globally, Bitcoin’s appeal as both a secure asset and a cost-effective payment option remains strong.
Ultimately, Bitcoin’s value is sustained by the capital and confidence behind it. Its historical volatility shows how events—ranging from Elon Musk’s tweets and PayPal’s integration to ETF launches and the FTX collapse—have impacted market sentiment. A fundamental threat to Bitcoin’s encryption could lead to panicked sell-offs, miner withdrawals, and a reduced mining difficulty, potentially opening the door to a 51% QC attack with fewer qubits.
To prevent such a scenario, Bitcoin holders and developers would do well to keep up with QC developments.
This is a guest post by Shane Neagle. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.
Bitcoin (BTC) has always been the face of crypto, the first thing that comes to mind when you think of this market. But for years, its role has been largely static—held as a store of value, yet rarely used for anything else. Then BTCFi entered the scene: unlike traditional DeFi, which has been dominated by Ethereum (ETH) and other smart contract platforms, BTCFi is built around Bitcoin as the core asset.
In the last quarter of 2024, BTCFi’s total value saw a massive surge—from $800 million all the way to $6.5 billion. The momentum is impressive, to say the least. More institutional players are taking notice, and analysts predict that by 2030, roughly 2.3% of Bitcoin’s circulating supply (about $47 billion) could be actively used in decentralized finance.
So clearly, BTCFi is not just a passing trend. But why is it gaining so much traction? Can it really be called the future of Bitcoin’s utility as a financial asset?
Let’s try to figure it out.
What is BTCFi, and why is it growing now?
BTCFi represents the intersection of Bitcoin and decentralized finance, with the first crypto playing the role of the core asset in this case. Typically, DeFi platforms have been built on blockchains like Ethereum, while Bitcoin holders had to wrap their BTC into ERC-20 tokens (like wBTC) to participate in this field.
This kind of tokenization started picking up the pace around 2020, allowing BTC holders to access DeFi services that are typically not available on the Bitcoin blockchain. These “wrapped” tokens are built in a way that makes them compatible with other blockchain networks. And so, they effectively extended Bitcoin’s functionality.
However, advancements in Bitcoin L2 solutions and LRTs, or layered rollup technologies, are now changing the rules. It is becoming unnecessary for Bitcoin to use “second class citizen” ERC-20 tokens anymore.
BTC LRTs, for example, operate on Ethereum and other chains as well, but use Bitcoin as the primary collateral in transactions. This means unlocking the use of Bitcoin as a yield-generating asset in other networks beyond its native chain.
The emerging Bitcoin L2s, meanwhile, are tackling this blockchain’s long-standing scalability issues, allowing for faster and more cost-efficient transactions. These innovations are going to fundamentally redefine Bitcoin, turning it from a passive store of value to an actively utilized financial asset.
Why is BTCFi the gateway for Bitcoin whales in 2025?
Large Bitcoin holders—miners, in particular—have often used CeFi loans backed by their BTCs to fund their operations since they didn’t want to outright sell those assets. This practice is still going on today, but BTCFi promises to make some changes. And that’s where everything will start from, really: by BTCFi enabling new opportunities for Bitcoin holders to put their assets to work.
Soon enough, Bitcoin whales will start looking at BTCFi as a powerful gateway that can be used to enter the DeFi space. And the way I see it, there are two key factors in 2025 that will influence that perception.
The first is the rise of Bitcoin ETFs. BTC ETFs currently account for almost 6% of all Bitcoin supply, having crossed $100 billion in holdings at the beginning of 2025. With them gaining mainstream traction, Bitcoin is increasingly perceived as the safest and most stable cryptocurrency asset.
This makes it a prime choice for DeFi, attracting large-scale holders who want to use their BTC without selling. Earlier in February this year, Goldman Sachs announced that it had invested $1.63 billion in Bitcoin ETFs. That’s easy proof right there.
The second major factor is the appearance of BTC L2 technologies, which we’ve already covered earlier. Until recently, the lack of scalability and transaction efficiency held Bitcoin back from DeFi adoption. Now, we are going to see a surge of L2 solutions that will enhance the network’s performance. And here’s the important part: they will do so while preserving Bitcoin’s core principles of decentralization and simplicity (and, hence, its robustness).
What DeFi platforms need to do for proper BTCFi integration
There are several challenges that will need to be overcome before BTCFi can achieve truly seamless integration. The biggest technical issue will be ensuring that Bitcoin-based L2 solutions become genuinely trustless. At the present time, they are not quite there, often relying on intermediaries and centralized elements, which goes against Bitcoin’s core philosophy.
The good news is that there’s a lot of R&D going on to make it happen. If successful, it could make the vast amounts of BTCs that are currently just lying there “collecting dust” be useful in DeFi.
Another big challenge is going to stem from people’s trust. Among Bitcoin holders, there are many who do not quite trust Ethereum and the existing Bitcoin tokenization methods. The key to winning them over will lie in creating robust and cost-effective solutions on the native Bitcoin network. Having a fully trustless and inexpensive execution layer on the BTC blockchain could really become the dealbreaker for these people.
The future of Bitcoin: More than just ‘digital gold’
For years, Bitcoin has been carrying the moniker of “digital gold”—a safe-haven asset meant for holding rather than using. These days, this is becoming increasingly untrue. As more institutional players enter the crypto space, the potential for BTCFi to become Bitcoin’s next-level evolution is very real.
The demand is on the rise, and the infrastructure is already being built. For Bitcoin whales looking to maximize their assets without selling, BTCFi could become the perfect answer.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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Donald Trump’s upcoming “Liberation Day” tariff announcement is being framed by some experts as a reset of global trade and could have negative implications for crypto.
While much of the attention is focused on the political fallout and trade disruptions, the broader consequences for digital assets, and the global frameworks that support them, deserve a closer look.
Heidi Crebo-Rediker, senior fellow at the Council on Foreign Relations, recently described on Bloomberg TV U.S. President Donald Trump’s plans as a “tearing up” of existing free trade agreements with America’s closest allies. This includes the so-called “Dirty 15”, a group of major trading partners that together make up 80% of U.S. trade.
Trump’s proposed system, built on unilateral tariffs and non-tariff barriers, represents a complete shift away from the cooperative global order that has defined the last several decades of international trade.
Why does this matter for crypto?
Crypto is inherently cross-border. Its infrastructure, users, capital flows, and regulatory frameworks depend on global alignment and relatively open markets. Any shift toward economic fragmentation risks disrupting that progress.
Crebo-Rediker notes that countries like Canada are already preparing to diversify away from the U.S., bracing for a reconfiguration of trade and investment relationships. In this new era, markets could become more closed, regulation more inconsistent, and capital controls more common.
She may agree (I don’t know), but these are all hostile conditions for crypto adoption. She also warns of a broader retreat from the multilateral frameworks that underpin both global finance and regulatory cooperation.
If America turns inward while allies look elsewhere, especially towards China, which is positioning itself as a defender of the global system – it could weaken the West’s influence over digital asset standards.
Crypto advocates have cheered Trump’s recent embrace of stablecoins and digital finance, but they should be cautious. A fragmented world, with each country pulling in a different direction on trade and tech, is not a world where crypto can thrive.
Forget about Michael Saylor’s vision of Bitcoin surpassing a $200 trillion market cap and we can only hope it can hold on to a $1 trillion valuation.
If global coordination erodes, so too might the prospects for crypto’s next wave of adoption. If so, it was a fun run. If not, I’ll be glad to admit being wrong.
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