The Great Dip

[GreenBooth]

Hi, let's talk about what I just named "The Great Dip".

EDIT: I copy here one of my following answers, to clarify the context:
Let's imagine the following timeline with random dates:

• 2025: a BIP introducing some form of post-quantum cryptography for wallets passes
• 2030: 99% of Bitcoin wallets are now QC-proof ; 99% of computer world is QC-proof as well
• 2032: QC breakthrough ; corpos can break old / lost / satoshi's wallets ; the rest of computer world is safe

Then what ?


I am talking about when QC (quantum computing) will let some corpos or governments break old, including Satoshi's, wallets.
Let's call the wallet breakers "actors".


Will they just stack to new, secure wallets ?
Will they sell OTC ?
Will they market sell ?

Here is what I think:

• Either it will be a surprise to everybody: market panic, whether actors dump it or not.
• Either BlackRock and corpos will do massive marketing first, to prevent panic.

In the first case scenario, we would probably see the biggest dip ever on Bitcoin markets, not by price % drop but by capital outflow. This is where I got the name from.
In the second, well we would probably tank a lot of selling pressure, but slowly. If they sell.

So yeah, let's discuss here about this Great Dip  

[Sanitough]

If quantum computing could break Bitcoin's algorithm, it wouldn’t just cause a dip in Bitcoin’s value; it would be a major blow, as that would mean the system could be manipulated and would lose our trust. This presents a significant challenge. I think quantum computing is inevitable since there are already companies, like IBM, actively developing it. They claim it’s the future and will unveil many secrets in the world. Hopefully, it won’t uncover the secret code of Bitcoin, allowing the network to remain secure and the market to continue growing.

There's also another topic about quantum computing in this thread below.

Bitcoin VS Super Computers in 2040

[GreenBooth]

I think I didn't made myself clear, sorry about that...
I assume that post-quantum crypto will reach Bitcoin and the vast vast majority of its wallets in a few years, at least before QC becomes a problem for the most of us.
So this post assumes QC break will crack the tiny % of wallets that could not switch in time = dead / lost / satoshi wallets.

I hope it makes more sense now ? 

[Fortify]

Hi, let's talk about what I just named "The Great Dip".

I am talking about when QC (quantum computing) will let some corpos or governments break old, including Satoshi's, wallets.
Let's call the wallet breakers "actors".

Will they just stack to new, secure wallets ?
Will they sell OTC ?
Will they market sell ?

Here is what I think:

• Either it will be a surprise to everybody: market panic, whether actors dump it or not.
• Either BlackRock and corpos will do massive marketing first, to prevent panic.

In the first case scenario, we would probably see the biggest dip ever on Bitcoin markets, not by price % drop but by capital outflow. This is where I got the name from.
In the second, well we would probably tank a lot of selling pressure, but slowly. If they sell.

So yeah, let's discuss here about this Great Dip 

Trying to deny advancement because it will interfere with another technology is incredibly naive. If it is possible for us to build quantum computing that can break into wallets, then it is likely that all financial and banking systems would also be vulnerable to similar forms of attack. Trying to obfuscate the problem or ignoring it will not stop some people from eventually building devices that can do this. Things like quantum computing could start finding cures to cancer and enumerable other leaps forward for humanity, so trying to stifle it for your own financial benefit is incredibly greedy and selfish. We should accept that it is coming and have to evolve security countermeasures to defend against it.

[GreenBooth]

Hi, let's talk about what I just named "The Great Dip".

I am talking about when QC (quantum computing) will let some corpos or governments break old, including Satoshi's, wallets.
Let's call the wallet breakers "actors".

Will they just stack to new, secure wallets ?
Will they sell OTC ?
Will they market sell ?

Here is what I think:

• Either it will be a surprise to everybody: market panic, whether actors dump it or not.
• Either BlackRock and corpos will do massive marketing first, to prevent panic.

In the first case scenario, we would probably see the biggest dip ever on Bitcoin markets, not by price % drop but by capital outflow. This is where I got the name from.
In the second, well we would probably tank a lot of selling pressure, but slowly. If they sell.

So yeah, let's discuss here about this Great Dip 

Trying to deny advancement because it will interfere with another technology is incredibly naive. If it is possible for us to build quantum computing that can break into wallets, then it is likely that all financial and banking systems would also be vulnerable to similar forms of attack. Trying to obfuscate the problem or ignoring it will not stop some people from eventually building devices that can do this. Things like quantum computing could start finding cures to cancer and enumerable other leaps forward for humanity, so trying to stifle it for your own financial benefit is incredibly greedy and selfish. We should accept that it is coming and have to evolve security countermeasures to defend against it.

I don't know if I expressed myself clear enough, but apparently not because your answer seems to be based on assumptions I did not make.


Again, what I say is:
(dates are for examples, do not take them seriously)

• 2025: a BIP introducing some form of post-quantum cryptography for wallets passes
• 2030: 99% of Bitcoin wallets are now QC-proof ; 99% of computer world is QC-proof as well
• 2032: QC breakthrough ; corpos can break old / lost / satoshi's wallets ; the rest of computer world is safe

THEN: what happens ? => This topic is to discuss the THEN WHAT

[mu_enrico]

Quantum Computing (QC) always offers promise without delivering any real results IMO. I still remember many years ago when I still studying the Intel 8086 microprocessor, QC was already a thing and would be the future of humanity. Decades later, here I use a powerful PC with NVME SSD, 7nm multi-cores CPU, ray tracing GPU, etc., and the QC is still nowhere to be seen and still limited for research in some underground bunker. I think the researchers are just too embarrassed to let go of this failure because of the sunk cost fallacy.

[sunsilk]

I have been hearing this for so long that Quantum Computers are going to break the crypto market and Bitcoin's protocol and security.

Until then we're going to wait for that? AFAIK, China, and US have already these types of computers but are they going to use it to break encryption with the Bitcoin wallets?

We will never know.

[HeRetiK]

• 2025: a BIP introducing some form of post-quantum cryptography for wallets passes
• 2030: 99% of Bitcoin wallets are now QC-proof ; 99% of computer world is QC-proof as well
• 2032: QC breakthrough ; corpos can break old / lost / satoshi's wallets ; the rest of computer world is safe

THEN: what happens ? => This topic is to discuss the THEN WHAT

Apart from reused addresses, the only old addresses possibly affected by this kind of attack are P2PK. Accordingly preventative measures could be taken to make coins from this address type unspendable in the future (i.e. a hard fork that makes inputs from P2PK addresses invalid [though maybe that's not technically possible for reasons I'm not aware of]). Whether the community would be up for it is a different question of course, but under such circumstances I guess an argument could be made to consider these coins burned; giving the original owners a grace period of course to move coins to a new address first.

Assuming no such hard fork happens and QC indeed becomes viable at scale, deriving the private keys of satoshi's old stash will likely still take a considerable amount of time and resources, which means these coins are unlikely to hit the market all at once. In a way it would be like mining, just with larger variance. Currently P2PK addresses hold 1.7M BTC [1], i.e. 8% of Bitcoins end supply. Recovering and releasing these coins into the market over the course of 1-2 years (speculative timeframe, but I doubt it would be much faster) will likely have limited impact. There's a psychological factor of course, but with years of anticipation for such an event to happen it will probably be only a short term fluctation, similar to when Silk Road shut down or FTX went under.

[1] https://unchained.com/blog/bitcoin-address-types-compared/

[TheUltraElite]

Been on this forum for quite some years and quantum computing is still not the thing. There was a time when users of this forum used to say that quantum would break the bitcoin security and hence nobody should invest in crypto. Unfortunately their wet dream never came to reality and on the other hand bitcoiners became rich with their bitcoin.

So doomsday predictions and all that -  I see a similarity with that type of mentality and what is being talked about here. I would rather enjoy the present and use bitcoin than wait for someone to break it let alone live that long to be able to see that.

[GreenBooth]

• 2025: a BIP introducing some form of post-quantum cryptography for wallets passes
• 2030: 99% of Bitcoin wallets are now QC-proof ; 99% of computer world is QC-proof as well
• 2032: QC breakthrough ; corpos can break old / lost / satoshi's wallets ; the rest of computer world is safe

THEN: what happens ? => This topic is to discuss the THEN WHAT

Apart from reused addresses, the only old addresses possibly affected by this kind of attack are P2PK. Accordingly preventative measures could be taken to make coins from this address type unspendable in the future (i.e. a hard fork that makes inputs from P2PK addresses invalid [though maybe that's not technically possible for reasons I'm not aware of]). Whether the community would be up for it is a different question of course, but under such circumstances I guess an argument could be made to consider these coins burned; giving the original owners a grace period of course to move coins to a new address first.

Assuming no such hard fork happens and QC indeed becomes viable at scale, deriving the private keys of satoshi's old stash will likely still take a considerable amount of time and resources, which means these coins are unlikely to hit the market all at once. In a way it would be like mining, just with larger variance. Currently P2PK addresses hold 1.7M BTC [1], i.e. 8% of Bitcoins end supply. Recovering and releasing these coins into the market over the course of 1-2 years (speculative timeframe, but I doubt it would be much faster) will likely have limited impact. There's a psychological factor of course, but with years of anticipation for such an event to happen it will probably be only a short term fluctation, similar to when Silk Road shut down or FTX went under.

[1] https://unchained.com/blog/bitcoin-address-types-compared/

Thank you for the source !
So we are talking first about 1.7M BTC, that's quite a lot on 21M 

I previously made a post, not in Economics, about this "burn the coins" idea.

https://bitcointalk.org/index.php?topic=5493483.msg63966677#msg63966677 - Perishable UTXOs

Apparently, it is a frequent idea, and always rejected.
To be honest, I think the reasons to avoid that are really good, and a Great Dip would be preferable.
This topic is kind of a "what if we don't do that" following episode of the Perishable UTXOs.

About the release time-frame, this is a good idea that I did not think about, maybe some QC expert could enlighten us on that aspect ?
What I am kind of sure though, is that this 1.7M BTC bag will be one of the biggest money incentive to develop QC: if BTC is not a world-wide reference by this time, its price will probably be at least 200k$, rising the bag's value to at least 340 Billion dollars.

This topic is here to start this anticipation you are talking about.
Let's imagine the market, if an additional 340B$ was slowly dumped in 2 years ?
Comparing it to current mining, it would be like a 32.41 BTC addition to every block reward, rising it to 35.53 BTC per block. That is ~11.37x the miners' selling pressure.

We could put this calculation in a spreadsheet, to have better precision, but if we imagine that such an event happens in one or two Epochs, the pressure would actually be ~22.7x to ~45.5x.

I think the "size" of the dip will mostly depend on the "wallet mining" speed.

Been on this forum for quite some years and quantum computing is still not the thing. There was a time when users of this forum used to say that quantum would break the bitcoin security and hence nobody should invest in crypto. Unfortunately their wet dream never came to reality and on the other hand bitcoiners became rich with their bitcoin.

So doomsday predictions and all that -  I see a similarity with that type of mentality and what is being talked about here. I would rather enjoy the present and use bitcoin than wait for someone to break it let alone live that long to be able to see that.

I understand your point, and it makes sense.
But I might be filled with more hope, or just be younger than yourself, and believe that I will live this event.
And if not, maybe this topic's reflections can help the future ? Who knows..

Though I agree on enjoying the present ! Thinking about one future eventuality should not ruin the present.[/list]

[d5000]

This is definitely a scenario that could happen, although I would expect it much later (2040s as earliest), as millions of qubits are needed for a sucessful attack.

For me it depends on the situation Bitcoin is experiencing at this stage. If as you wrote in a previous post the QC potential is already known, then it won't be really a surprise if the P2PK keys are broken eventually.

It is also possible that before the old P2PK keys are "cracked", there is an uptick in the progress in the solving of the puzzle transactions which could be attributed to QCs. So in this scenario basically "it's a matter of time" it happens. Of course, it's possible that the QC operator deliberately ignores the puzzle transactions to not raise suspicions, or if their goal is to create a big dip selling several hundreds of thousands of coins at once. However, I think if QC is that advanced then there will not be a single group having access to this technology and thus one of them will probably break the puzzles first.

Now how would I expect the outcome, depending on the market situation? For me there are two main scenarios:

1. We still have a highly speculative market, where news trigger deep dips or raise FOMO, like now.

In this scenario yes, I expect a dip. Although it may be less deep as some think -- I have for example already started a thread about the possible influence of the MtGox coins in the recent dips (in July and August). The reason is that even in "peaceful" market times, hundreds of thousands of BTC are traded every day (at weekends about 200-300k, on weekdays about 500k and in the case of market dips or extreme FOMO up to a million BTC). So the potential of the market to simply absorb these coins is probably underestimated.

2. We have really progressed towards adoption. Bitcoin is used not only as a speculative means but also for regular savings -- "as a currency". This would only be possible if layer-2's begin to flourish, but it's not at all an impossible scenario as one can see on Ethereum where L2's are already processing a big part of the transactions and contracts.

In this scenario the Bitcoin dip would be much shallower, it is even possible that the market sees the news as a "relief" that Satoshi's coins and other P2PK coins ("a Damocles sword") are finally being redistributed and it could even increase the price in the medium term.

[Darker45]

In the event that quantum computing overtakes Bitcoin's security, it won't just be a great dip, it's going to be the greatest dip ever. Bitcoin will certainly be having a hard time to recover, if at all. There might only be a hairline of difference between this dip and death. Cracking Bitcoin's security is a proof that Bitcoin isn't invulnerable. It will never be the same again.

I don't think they will just move the coins to another wallet. Sharp eyes would notice it right away and signals a huge dump. Therefore, they must sell it quick, OTC most probably considering old wallets have hundreds of billions of USD in Bitcoin. It's going to be a race.

There will be a panic, a reasonable one. And rather than prevent the market from spilling blood, institutions will most probably exit as well and as fast as they could. They may put up a different stance in public, but they will surely dump everything.

Retail will notice and follow suit. I myself will do everything I can to sell everything before the price hits 3 digits or even double digits. Buying back is an option though.

[philipma1957]

Hi, let's talk about what I just named "The Great Dip".

I am talking about when QC (quantum computing) will let some corpos or governments break old, including Satoshi's, wallets.
Let's call the wallet breakers "actors".

Will they just stack to new, secure wallets ?
Will they sell OTC ?
Will they market sell ?

Here is what I think:

• Either it will be a surprise to everybody: market panic, whether actors dump it or not.
• Either BlackRock and corpos will do massive marketing first, to prevent panic.

In the first case scenario, we would probably see the biggest dip ever on Bitcoin markets, not by price % drop but by capital outflow. This is where I got the name from.
In the second, well we would probably tank a lot of selling pressure, but slowly. If they sell.

So yeah, let's discuss here about this Great Dip 

So I figure a way to crack the older wallets. I figure it out in 2040.

BTC is 3 million a coin each address is worth 150,000,000

If I can crack them asap ie 1000 of them cracked in a month. And all of 6000 addresses in six months.

What do I do? Sweep them all a disaster. crushes btc price. and causes a more complex layer to be laid on newer coin addresses.

Cash 1 address grab 150,000,000 which is around 30,000,000 of todays dollar.  If the coins are lost this is the better idea.

Since the person that lost them may be dead and no one will be sure that someone can crack wallets.

cashing 1 every once in a while could work for years and seems to me to be the better idea.

but is a government did it they just may want to crash everything.

 

[pooya87]

Based on history, different cryptography algorithms do not become weak or breakable over night to become obsolete overnight. It takes a long time.

Take SHA1 for instance.

• Introduced in 1995
• Was considered weak in 2005
• Was replaced by most by 2010-2011
• First collision was found by Google in 2017
• It still is in use and will only be phased out by 2030

By the time the quantum computing technology grows to the levels that can begin to threaten 256-bit ECC, the migration to a new algorithm will begin. Keep in mind that that kind of development is not something that can be easily hidden. So there is a good chance that by the time they manage to break it, we've already moved on from 256-bit ECC.

Besides, there are lots of more important things to attack with a quantum computer than Bitcoin!