CORRECTION (February 3, 8:15 p.m. UTC): Corrects previous story that Galaxy CEO attributed $9 billion bitcoin sale to quantum computing threat and updates story throughout.)
Galaxy CEO Mike Novogratz does not see quantum computing as a major risk to Bitcoin, although some are selling their holdings using the threat as an excuse.
“Quantum has been the big excuse for people,” he said on Tuesday’s earnings conference call. But Novogratz does not see this as a big threat as is claimed. “I think in the long run, quantum won’t be a big problem for crypto. It will be a big problem for the world, but crypto, Bitcoin in particular, will be able to handle it. But that’s the excuse. [for selling]”, he added.
And he’s right. Lately, the debate over quantum computing and its potential to impact Bitcoin encryption has intensified. Last month, Christopher Wood, Jeffries’ global head of equity strategy, removed a 10% allocation to bitcoin from his model portfolio due to the threat posed by quantum computing.
Recently, Coinbase acknowledged that quantum computing could pose a real long-term threat to the cryptocurrency market, while the Ethereum Foundation this month officially elevated post-quantum security to a strategic priority by creating a dedicated post-quantum team.
Although Novogratz said quantum computing technology is real, it is still in its early stages and 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 the Bitcoin code will be changed over time,” he said.
Whatever the threat, the debate rages. Some Bitcoin developers have pushed back, saying machines capable of breaking Bitcoin’s cryptography do not exist today and are unlikely to do so for decades. But for some investors, the risk to the fundamentals of Bitcoin’s “store of value” is real, even if it may seem remote or theoretical.
OG sells
Another fact Novogratz brought up during the earnings conference call is whether long-term bitcoin holders, or “OGs,” are selling their stash.
The issue of OGs selling their reserves began last year, when Galaxy said it facilitated the sale of more than 80,000 bitcoins worth $9 billion to a Satoshi-era investor. The company said the sale – one of the largest theoretical bitcoin transactions ever – was part of the seller’s estate planning strategy.
This sell-off has sparked a debate over whether the early Bitcoin community, which has long championed “HODLing” or holding on to its bitcoin due to volatility, has lost faith.
Novogratz believes the OG profits are real and once the selling starts it simply becomes a cycle. “Then you sell a little more, you sell a little more, and it’s so hard to HODL.”
“There were a huge number of these religious believers in this concept of HODLing and not letting go of your bitcoin,” he said. “And somehow that fever broke and you started seeing sales.”
