Recent Technology Raises Concerns
Recent progress in quantum computing has resurfaced persistent concerns for bitcoin.
According to bitcoin analyst James Check, a powerful enough quantum computer that is relevant cryptographically could, in principle, break the curve signatures of bitcoin, exposing coins with vulnerable public keys, particularly wallets from the time of Satoshi Nakamoto.
Quantum alarmists foretell that this would release an immense flood of bitcoin supply that can potentially crash the market. But the math suggests otherwise.
Quantum Computing Threat Is Not in Question
Approximately 1.7 million bitcoin are held in Satoshi-era addresses that could be rendered vulnerable under such a situation. In current prices, that is equivalent to $145 billion in potential sell pressure. This indeed sounds catastrophic, but after scrutiny, it is in fact manageable.
Quantum Supply Exposed
According to James Check, during bull markets, long-term bitcoin holders (investors that have held it for at least 155 days) routinely distribute from 10,000 to 30,000 BTC per day. At the said pace, the whole Satoshi-era supply is equivalent to roughly two to three months of the usual profit taking. In the most recent bear market, up from 2.3 million BTC were traded in a single quarter, exceeding the full quantum “target,” with no systemic collapse.
Revived Supply Breakdown
Moreover, monthly exchange inflows can be approximated at 850,000 BTC. Derivatives markets go through estimated volumes equivalent to the whole pile of Satoshi-era coins every few days. What appears huge seen by itself is rendered ordinary when set against bitcoin’s existing liquidity and turnover.
Rational Behavior
Though a sudden, concerted release would still be important. It would likely increase volatility and could possibly trigger an extended downturn, according to Check. But one has to consider that even that scenario assumes irrational behavior in terms of classical economics. Any agent who can access such a large concentration of coins would be incentivized to distribute slowly. He would likely hedge through derivatives to minimize slippage and maximize returns.
Bitcoin markets regularly absorb supply on the same scale as the P2PK-era coins. The timeframe is set in months, not years.
The real contention is not mechanical sell pressure; it is governance. The bigger issue is potentially freezing the Satoshi-era coins, through BIP-361, then letting everything play out as it should.
