CORRECTION (February 3 at 8:15 pm UTC): Corrects previous story that said Galaxy’s CEO attributed a $9 billion bitcoin sale to a quantum computing threat and updates the story in its entirety.)
Galaxy CEO Mike Novogratz does not see quantum computing as a big risk for Bitcoin, even though some are selling their stake using the threat as an excuse.
“Quantum technology has been the big excuse for people,” he said during the earnings conference call Tuesday. But Novogratz does not see this as much of a threat as it is made out to be. “I think that in the long term, quantum technology will not be a big problem for cryptocurrencies. It will be a big problem for the world, but cryptocurrencies, especially Bitcoin, will be able to handle it. But that has been the excuse. [for selling]”he added.
And he is right. In recent times, the debate over quantum computing and its potential to affect Bitcoin encryption has been intensifying. Last month, Jeffries global head of equity strategy Christopher Wood removed a 10% allocation to bitcoin from his model portfolio due to the threat posed by quantum computing.
Recently, Coinbase has acknowledged that quantum computing could be a real long-term threat to the cryptocurrency market, while this month the Ethereum Foundation formally elevated post-quantum security to a strategic priority by creating a dedicated post-quantum team.
While Novogratz said that quantum computing technology is real, it is still in its early stages and that the Bitcoin network will be ready when the technology really takes off. “As we get closer to quantum, we will get closer to quantum resistance. And over time we will change the Bitcoin code,” he said.
Regardless of the threat, the debate continues. Some Bitcoin developers have objected, saying that machines capable of breaking Bitcoin cryptography do not exist today and are unlikely to exist for decades. But for some investors, the risk to bitcoin’s “store of value” fundamentals is real, despite how distant or theoretical it may seem.
OG is selling
Another fact that Novogratz addressed during the earnings call is whether long-term, or “OG” holders of bitcoin are selling their reserves.
The question of whether the OGs were selling their stash began last year, when Galaxy said it had facilitated a sale of more than 80,000 bitcoins for $9 billion to a Satoshi-era investor. The firm said the sale, one of the largest theoretical bitcoin transactions in history, was part of the seller’s estate planning strategy.
That sale sparked a debate over whether the early bitcoin community, which has long advocated “HODLing” or holding on to its bitcoins through volatility, has lost faith.
Novogratz believes that OG profit-taking is real, and once selling begins, it simply becomes a cycle. “Then you sell a little more, you sell a little more and it’s very difficult to HODL.”
“There were a huge amount of religious believers in this concept of HODLing and not letting go of your bitcoins,” he said. “And somehow that fever went away and you started seeing some sales.”
