Quantum Threat? BlackRock Highlights Potential Risks in Bitcoin ETF Submission
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BlackRock has introduced a warning regarding quantum computing in its iShares Bitcoin Trust (IBIT) application. Reports suggest that the asset management firm recognizes a potential risk that advanced computers could undermine the mathematical security of Bitcoin. This marks the first instance BlackRock has raised this warning in its spot Bitcoin ETF documentation.
BlackRock Highlights Quantum Risk
As per the updated regulatory submission dated May 9, BlackRock identifies “quantum computing” as a potential risk to its Bitcoin ETF. The trust currently holds roughly $64 billion in net assets, making it the largest spot Bitcoin fund to date.
Legal representatives from the company mention that should quantum processors reach sufficient power, they could expose private keys, thereby threatening wallet security. It is a common practice in ETF filings to outline every possible risk, even those that may seem far-fetched.
BlackRock recognizes “quantum computing” as one of the imminent risks to its Bitcoin ETF. Source: BlackRock SEC IBIT filing.
Quantum Technology Sparks Concerns
Reports indicate that anxieties surged last December when Google launched Willow, a chip that reportedly accomplishes tasks in minutes that would take today’s supercomputers 10 septillion years. Subsequently, Microsoft unveiled Majorana 1 to address enduring scaling challenges. These revelations triggered concerns throughout the cryptocurrency community.
Theoretically, a quantum machine employing Shor’s algorithm could factor the large prime numbers underlying Bitcoin’s elliptic-curve signatures. However, we are currently in the early, unreliable “NISQ” phase, and actual attacks remain years away.
BTC is currently priced at $103,747. Chart: TradingView
Concerns Over Missing Bitcoin
Tether CEO, Paolo Ardoino, introduced another perspective in February, suggesting that once quantum hackers manage to bypass old private keys, they could potentially recover Bitcoin from the approximately 3.7 million coins believed to be permanently lost.
Ardoino emphasized that quantum computers are still far from breaching 256-bit security, so these coins are unlikely to resurface in the near future. Crypto analyst Willy Woo raised the question of whether Google, a government entity, or an emerging startup would be the first to unlock those inactive assets. He estimates that the $350 billion worth of lost coins could ignite renewed investment in quantum technology if those keys ever become exposed.
Image: The Quantum Insider
Record Inflows in ETFs
In the meantime, Bitcoin ETFs have attracted unprecedented amounts of capital. Data from Farside Investors indicates over $41 billion in net inflows since these funds were launched in January. Notably, on May 8, weekly ETF inflows surpassed the previous all-time high of $40 billion.
Eric Balchunas, an analyst at Bloomberg Intelligence, highlighted that lifetime net flows are “the hardest metric to grow,” yet ETFs have reached new highs despite recent market uncertainties. It seems that investors are currently focused on immediate price movements rather than potential quantum challenges on the horizon.
In the coming months, cryptocurrency developers and standards organizations plan to work on “post-quantum” signature protocols. If they meet their timelines, Bitcoin networks could adopt new, quantum-resistant algorithms well before any real threat materializes. For now, the substantial inflows into the market suggest that mainstream investors are not yet deterred by the possibilities of advanced computing technology.
Featured image from Getty Images, chart from TradingView
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