[Cryptography] BitCoin as Quantum Cryptanalysis canary.

Jon Callas jon at callas.org
Sat Dec 19 18:20:44 EST 2020

I am not quite sure I quite understand your question/comment.

Unpacking it, I see a few things:

(1) I think it is important to remember that bitcoin was created as a payment system, not an investment/speculation system. The Bitcoin Game as I've described it in the past, rewards people who create cashflow by giving them cash to flow (that's what mining is). I know a number of people who were early in the game who used their payouts to buy holiday presents from flat-screen TVs to cashmere socks (and this was in the days when the TV would have cost about 1000btc and the socks 20btc each), tuition for advanced degrees, needed yet "cosmetic" surgery, and so on. It's important to look at all those through the lens of thinking of bitcoins as a payment system that might fluctuate, but it wasn't an investment instrument.

If you're thinking that way, then orphaning an early block of coins is not really a big deal. Today, when people treat it primarily as an investment, and at best secondarily as a payment system, then you look at that stash as some sort of lost treasure. I think that while it is in theory treasure, it is almost certainly lost.

Think about it -- you want to set up a payment system and in firing up the servers, you glitch and lose the initial block of tokens. You can either start over or keep going. Starting over has a weird, scary reputation cost. A payment system is only as good as people's belief, and if people wonder if you might start it over then they wonder if they should stick their actual money into this thing that might just get restarted. It's turning coins into bits, and wondering if those bits are going to get zeroed. Also, let's suppose you don't realize you lost that block of until a day into having fired up the game. It's inconvenient to go back as well as a reputation hit. It's easier to move on. It's even easier psychologically because your mindset is that this is a payment system and early in the game they're like potato chips not only in value, but because you can always make more. It doesn't take long before it is literally easier to just make more than to go back and deal with the ones you lost.

Most thought about them presumes that they knew then what we know now. It's the classic problem that history is very different when you look back rather than forward.

(2) Should we get a gadget (like a quantum computer) capable finding lost coins, we also have a gadget capable of unlocking any chunk of coins. The effect on unlocking a few billion dollars of moolah, almost *must* be a collapse of bitcoin. Even the most cold, unpanicked rational analysis of this sets the maximum value of a coin. You end up with some sort of hysteresis and minimax of the cost to mine a coin and the cost to conjure the key to one (or a group of them). 

Bitcoin is a payment system, a speculation system, and also an information betting network on the question of the existence of practical quantum computers. Holding a bitcoin is making a bet that there are no practical, high-speed quantum computers.


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