BTC Sessions - Bitcoin + Gold Correlation, Futures Volumes Explode, The Quantum Threat EP005

Starting point is 00:00:01 Wasabi wallet. I'm fairly private. What's up everyone? Ben with the BTC sessions here and this is your daily session. Before we dive into the news, of course, shout out to sponsors of the show. Ledden.com. This is where you can use your Bitcoin for a variety of services. They've got their Bitcoin savings account where you can earn interest on your Bitcoin paid in Bitcoin. They've got their Bitcoin backed loans. This is where you can use your Bitcoin. as collateral to obtain a Canadian or US dollar loan. This would be great for if you're in a pinch, maybe you need to get your hands on dollars, but you don't want to sell your Bitcoin. You think

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Starting point is 00:01:33 super easy for onboarding new people to Bitcoin. So if you're looking to get a family member or a friend interested, this could be a great way to do it. Way it works is you swing by the store, you pick one of these up and you gift it to your friend. On the back, it has instructions. They download the app, they scratch the back of the card and scan the code. It instantly creates a brand new Bitcoin wallet for them on their phone and then sends an on-chain transaction to that person for the face value of the card. So if you want to check these guys out, head over to risewollet.com, click on locations in the top right hand corner, and it'll tell you where you can grab one. This is currently only available in Canada, but they are looking at expanding, so keep an eye out.

Starting point is 00:02:18 And if there's no location where you are in Canada to pick one of these up, head over to coincards.cai, and you could get one delivered. With that, let's dive into the news. So we've obviously seen quite a bit of price action with Bitcoin the past few days with tensions in Iran and de-escalation of that by President Trump over just yesterday. And so with that, we saw an interesting correlation between Bitcoin and gold, which reignited conversations about Bitcoin being a safe haven asset. So I'm just going to read a little excerpt here. For a long time now, Bitcoin has been referred to as digital gold by many crypto enthusiasts, yet the topic of actual correlation remains a controversial one. Bitcoin's price rose at the same time as events in Iran heated up,

Starting point is 00:03:15 in line with other traditional assets such as gold and oil that saw similar price movements. This reignited debates over whether Bitcoin is becoming a safe haven investment. Maddie Greenspan, crypto analyst and founder of quantum economics, noted that the resemblance between digital gold and the physical stuff is uncanny. According to him, both assets have been moving in a very similar pattern throughout most of 2019. Now, there is some data to back this up. Further down the article here on Decrypt, they state that there was a Bloomberg report in August of 2019, also on the topic of correlation with gold price and Bitcoin. So the statistics revealed that correlation surged to 0.837, where previously it was 0.496, which is a doubling, in comparison to 2018.

Starting point is 00:04:12 Now, when it comes to scoring something on a correlation kind of sliding scale, a 1 indicates that something is perfectly correlated with something else, whereas a negative 1 would denote that something is. is completely uncorrelated. So 0.837 is actually quite high when it comes to the correlation with Bitcoin and gold. I'm inclined to think that it's maybe not necessarily everybody 100% believing that Bitcoin is a correlated asset, but maybe betting that somebody will think that. So I guess it's kind of like a chicken versus egg

Starting point is 00:04:52 kind of which came first kind of theory here. But yeah, there's definitely speculation going on that Bitcoin could be a safe haven asset and people are behaving as such. But whether or not that is really the case, it's open to interpretation, we'll say. But yeah, and just looking at the price chart, you know, we did see at the absolute peak when shit was really hitting the fan, when And, you know, rockets were being fired from Iran. And we saw, you know, the assassination, the rockets and all of that. Prior to the de-escalation speech by President Trump, we were up pretty close to 8,400 U.S., and now we've seen that dip down since Trump has basically dialed things back.

Starting point is 00:05:42 And we're in and around the 7,800 range. So we'll see how that fairs in the coming days. Now, of course, with all of this volatility, the Bitcoin futures volumes have exploded. A lot of people speculating on future price of Bitcoin using these futures products. Now, the volumes peaked quite a bit overall, more so from the crypto to crypto exchanges versus the traditional markets like the CME and backed futures. So serious, so this is a tweet that says, says serious Bitcoin futures volumes yesterday, 20 billion plus on our radar. And this is an aggregate

Starting point is 00:06:27 of multiple sources like Binance, BitFinex, BitFliar, BitMex, CME, CoinFlex. So just across all of the futures aggregates that were put together, some of the top performers. Now, Bact did actually also see some pretty inflated volume with the peak of the the craziness of the geopolitical stuff the other day. It went up to around 40.8 million in monthly futures. That wasn't an all-time high. The all-time high previously was 47.3 million, but it got up pretty close. It since dropped back to about 32.59 million. However, open interest did hit an all-time high up 45. percent to nine, sorry, 9.53 million. So, interesting to see that.

Starting point is 00:07:26 I mean, yeah, with higher volatility, you're going to see liquidations of people that were either long or shorting at the wrong point. And I'm sure we've not seen the last of the volatility. Let's dive into one more story here that I wanted to touch on. And this has to do with quantum computing. There's been a lot of interest and, maybe even worry around quantum computing and what it could mean for Bitcoin. This came up again just the other day as IBM unveiled its new quantum computer,

Starting point is 00:07:59 which has doubled in power since last year. So just a little bit outlined in this article here from Decrypt. Although IBM's latest advancements can be considered significant progress, quantum computers can currently only be used for various. specific tasks. They are far from general-purpose classical computers we are accustomed to using. As such, concerns that they could be used to break the cryptography used to secure cryptocurrencies like Bitcoin remain unfounded, at least for now. As a network built entirely around cryptographically secured transactions, it stands to reason that a sufficiently powerful quantum computer could

Starting point is 00:08:43 eventually crack the encryption used to generate Bitcoin private keys. However, According to a June 2017 paper, such a machine would need to command approximately 2,500 cubits of processing power to break the 256-bit encryption used by Bitcoin. Since the current most powerful quantum computer only features 72 cubits, it will take several years at least for quantum computers to reach encryption-threatening levels. So it's not an immediate threat, but it could be. So with the threat there, what is at risk? So number one, we should take into account that, of course, getting to that level quantum computing doesn't only threaten Bitcoin.

Starting point is 00:09:36 It threatens every facet of everything that we've come to rely on, whether it be banking systems, whether it be the nuclear codes. Just everything would have to be upgraded in order to contend with that level of quantum computing. We are still a ways out from it. So is it an immediate concern? No. Will it be a concern eventually? Quite possibly. Is there a solution?

Starting point is 00:10:03 Absolutely. Stronger encryption. So what specifically is the worry here? One worry that people bring up is if somebody gets a hold of quantum. quantum computing, can't they just mine all the remaining Bitcoin? And the answer is no, because of the way that Bitcoin mining works, there's something called a difficulty readjustment. Every 2016 blocks, the network looks at how quickly those blocks were mined. And if it was on aggregate more than every 10 minutes, a block being mined, then it ups the difficulty of mining Bitcoin. So that's

Starting point is 00:10:41 why we've seen as new miners pile into the space, the difficulty of mining Bitcoin continues to go up. If somebody got an unfurred advantage and had a lot of quantum computing power, well, and they were able to quickly mine 2016 blocks, as soon as that flipped over and the difficulty adjustment took over, all of a sudden Bitcoin would be exclusively minable by quantum computers and, you know, people would have to follow suit and new mining operations entirely built with quantum computers would start to pop up inevitably and we would see a decentralization of that as that type of technology became more widely spread across the world. Now, so the mining thing does not really hold up. The worst that would happen is we get a short period of slightly higher inflation and

Starting point is 00:11:39 back to the norm. Okay. And by slight period, it would just depend on how quickly people could mine. It could be that what would have taken two weeks takes a day. Who knows? It could be a lot of different things, but that would readjust quite quickly. Now, what is a worry is the way that Bitcoin functions in terms of securing your Bitcoin. So it works with key. pair is you have a private key, which is the key that is able to unlock all of your funds, and you have a public key of which all of your addresses are derived from. If somebody were to get a hold of your public key right now, no big deal. They could see your transactions, but they couldn't actually steal any money from you. If somebody gets a hold of your private key right now,

Starting point is 00:12:32 then yes, they can steal the funds allocated to any of those addresses that you've received money into. Now, with 256-bit encryption broken, you could feasibly be able to take somebody's public key and reverse engineer the private key and steal funds. So how that would work and what that would look like is if you had received Bitcoin into an address, your public key is not widely known. But if you spend money out of that address, at that point, it reveals your public key and with strong enough quantum computing, you could reverse engineer that private key and steal the remaining funds from that wallet. So there are solutions being worked on for this,

Starting point is 00:13:25 but I do tend towards that being utilized when it becomes a clear and present danger as opposed to a preemptive thing. Bitcoin is, is, you know, it's capable of being hard forked into changes or, and I'm sure there's plenty of things being discussed. But it, Bitcoin and the developers around it are not in the habit of preemptively doing something that could possibly happen. So I have no doubt that if that becomes a clear and present nature, something will be implemented and people can upgrade as they see fit. But as of right now, it is nowhere near the levels it needs to be to break that encryption. So that's my thoughts on that. Long and short of it is if we need to, we will. Or at least I will. And it's up to the individuals running the nodes, running the software.

Starting point is 00:14:28 so it's up to you and I and developers how to handle it. And I'm sure we will. So I'm going to wrap it there, guys. Thank you very much for watching and or listening, whether you're on YouTube or whether you are on the podcast. By the way, if you're on YouTube and you can't always be watching this show every single day, you don't have time to sit in front of the computer. Well, I am audio only now as well.

Starting point is 00:14:56 I'm on Spotify. I'm on Google Podcasts. It would just a ton. So if you head over to Angkor FM, there's a link down below in the show notes about where you can pick that up. So you can listen to and from work. If you prefer that method,

Starting point is 00:15:10 be sure to check that out. And if you're already listening or if you're already watching, be sure to like, subscribe, and share in whatever order you see fit. If you want to help out the show in another way, of course, hit up the sponsors down below. There's Leddon, there's Rise Wallet.

Starting point is 00:15:25 And of course, check out Wasabi Wallet. Wallet, wasabiwollet.io, to help you with your privacy when it comes to your Bitcoin. And finally, if you want to help in one other way, you can check out NordVPN. This is basically to help with your privacy as well. It encrypts your browsing data. It hides your IP address, and it has other added benefits like unlocking Geoblock content. So if you can't access some sort of content within your country, you can just change where you're from within the NordVPN app.

Starting point is 00:15:56 and boom, it's unlocked for you. So if you head to NorvPN.com and use the code BTC sessions, you'll actually end up getting a pretty sweet deal where it ends up only being $3.49 a month. So with that, I thank you guys very much, and I will see you tomorrow for your daily session.

BTC Sessions - Bitcoin + Gold Correlation, Futures Volumes Explode, The Quantum Threat EP005

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