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Here is a blast from the past that occurred exactly 10 years ago, on the 26th of March 2013.
The Cyprus government faced its worst Banking crisis in 2013 as a result of the constant unstability since the infmaous 2008 worldwide crash that triggered shock waves across the globe for many years. The Banking crisis of Cyprus was also a direct influence by the Greek debt crisis, which had led to significant losses for many Cypriot banks.
To help shore up the country's banking system, the European Union and International Monetary Fund agreed to a bailout package for Cyprus, although, one of the conditions of the bailout was that Cyprus would need to contribute a significant portion of the funds itself, through a "bail-in" program.
Under this program, the government would seize a portion of bank deposits over 100,000 euros in order to help finance the bailout.
This announcement of course caused widespread panic among the Cyprus population, who were worried about losing their savings. There were long lines at ATMs as people tried to withdraw their money, and many businesses and individuals began transferring their funds out of Cyprus and into other countries.
More interestingly, at the same time there was a huge demand for Bitcoin in Cyprus together with other countries that were afraid of the same scenario. Many people wanted to protect their savings from a potential government seizure and allocate it somewhere where the government won't have the control. Back then, Bitcoin and its decentralization seemed like the perfect solution for many and was seen as a effective was to hold on the wealth without the risk of government intervention.
The effects of this were huge for Bitcoin. Within a couple of days, the price of Bitcoin surged x3 rising from $30 up to $90 and also triggering the famous bullrun of 2013 where Bitcoin reached and ended its year at a $754.01 price tag.
https://preview.redd.it/c4h8nzt2j1qa1.png?width=1706&format=png&auto=webp&v=enabled&s=41c4363daa65a7108f7a354ac1322aba65905cae
Hello all,
As we have all seen, the cryptocurrency market has once again entered a bull market, proceeding last month's bear. During this time, I have spent countless hours (roughly 7 and a half minutes) analyzing bitcoin's price trends and charts and have concluded that $100k BTC is on the table for Q10 2021.
Here's my analysis:
First off, we have seen massive gains in price in the past few weeks.
don't look at the rest of the chart plsIf we zoom in and look at this growth closer, we see this:
big green circle in the middle*Now take a good look at this. What does it look like?
f(x) = 2^xExponential growth.
If you're out of the loop, we have seen recently seen the SEC go after many exchanges over their "Earn" or staking rewards programs. Many have been fined and settled with the SEC, but Coinbase choose to fight tooth and nail with the SEC, resisting them at every step.
The SEC has accused Coinbase of offering securities on their platform, mainly the Staking Rewards programme and has issued them a Wells Notice, which is typically a final step before legal action. However, we have seen Coinbase push right back and say they are "happy" to fight the case in court. But there's always a story behind the headlines.
Taking a look at Coinbases 2022 Q4 financial report we can view a very simple breakdown of their revenue:
As we can see here, under "Subscription and services revenue", Coinbase staking products brings in a significant portion of near a full 25% of Coinbase's revenue. This 25% does also include thing like Coinbase One where you pay a subscription instead of pay monthly fees, but the vast majority of the 25% is from staking. as the company specifically outlines multiple times that "interest-bearing income" is a significant and still-growing factor of the subscription and services revenue.. Here we can see why it would be so disastrous for Coinbase to lose their staking offerings. And it is fairly uncommon for staking to be so high a generator of revenue for crypto firms which is why Coinbase have been the one to stand and resist so hard, as other firms simply don't lose out on all that much.
I have seen a lot of comments from people who are aware that quantum computers pose an impending threat to most cryptos but they are confused or fuzzy about the details. This is to be expected, it is a complicated topic, to say the least. I wanted to make a post to explain what the problem is, what solutions are on the horizon and some common misconceptions about quantum computers. This should be approachable for anyone who knows the basics of how a blockchain works, so don't feel intimidated by the quantum aspect.
Me: I am a professor whose research is in applied cryptography. I am also currently in the process of prepping a class on quantum computing that I will teach next semester, so I am pretty well situated to know the issues. I don't own any cryptos and don't care at all about tokenomics, price action, etc. This post will be purely about the technical aspects of blockchains/cryptocurrencies.
First off, it is not something that is very intuitive. If someone tries to explain it to you in simple terms, you are probably not getting a clear picture. A common layman description of a quantum computer is that it is like a regular computer, but instead of having bits that can be 1 or 0 it has quantum bits that can be both 1 and 0 at the same time. This part, is actually true. But usually the next step of the explanation is that since these quantum bits can be both 1 and 0, a quantum computer can do computations on all possible values of an input at the same time.
This would be crippling for cryptography because the security of every cipher/signature/whatever comes from you knowing a secret key (stored in your wallet) and other people not knowing that key. "Not your keys not your crypto," right? If a quantum computer could try all possible keys at once, it would be able to break every type of cryptography1!
Fortunately, this is not the case. In reality, quantum computers are much more complicated and significantly less powerful than that. They do have capabilities beyond normal computers, and it does take the form of a kind of parallelism, but it is highly restricted. You can only leverage it if you are solving a problem that is particularly suited to the strange structure of quantum computing2.
I won't try to explain exactly how a quantum computer does work, that is best done in a much longer-form format. What I will do is say that, from an outside perspective, you can get all the context you need from understanding that there are some specific quantum algorithms that can solve some specific problems substantially faster than the best algorithms we know of on classical computers. Outside of these algorithms, quantum computers don't have any special advantages or powers that we currently know of, and there is no reason to expect that they would.
Shor's algorithm: This is the big one. The reason people talk about quantum computers so much. The reason I am making this post, ultimately. Shor's algorithm is a quantum algorithm that is able to break encryption schemes based on factoring or the discrete logarithm problem, which include RSA, DSA, ECDSA and DSS. If these sound familiar to you, it is because they are currently what secure 99% of blockchains and near 100% of the internet in general. It doesn't do anything more than that, but that is quite a lot.
Grover's algorithm: This is a bit of a weirder one. Grover's algorithm is a quantum algorithm that can do a brute force attack on anything in sqrt(N) steps instead of the normal N steps, to try N possible keys. This is a more general attack, that works on essentially any form of cryptography1. Fortunately, reducing N steps to sqrt(N) steps is actually not that powerful. It functionally halves the effective size of the key you are using. And we already are using some pretty large keys. sqrt(N) steps would still take you longer than the age of the universe to break existing ciphers. Moreover, there has been some research lately that suggests that in practice, Grover's algorithm would be even less effective than we think. This one is not a big worry.
Curent state of quantum computers: Shor's algorithm is really powerful, and it is as bad as people say, specifically for RSA, DSA, etc. Fortunately for us, it seems we are still several years away from it being implemented in practice, and that is with the most aggressively optimistic timelines for quantum computing. The biggest number they have been able to factor with it, on existing computers, is 21. For reference, a normal RSA modulus is a number about 1200 digits long. There will have to be a titanic engineering effort to scale up quantum computers to useful sizes. This is for a lot of reasons that I won't get into here, but the gist is that quantum bits are very unstable and the more of them you have, the more likely they are to break.
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