There are people who prefer to exist in a cash economy for reasons other than a negative economic analysis of central bank monetary policies or an attachment to the iconography of banknotes. Criminals and corrupt politicians, for example. Cash works rather well for them, but can sometimes be quite inconvenient. Hereâ€™s a case I wrote about last year: two Californian working-from-home pharmaceutical freelancers were arrested after police caught them dumping nearly $1 million in cash which was intended to buy Mary Jane for business purposes. Cash? Yes.
I can understand why the disconnected, marginalised poor in remote parts of the world eschew the benefits of electronic payments for the currency of choice for the global criminal on the go, the $100 bill. But in California? Don’t they have Bitcoin there?
Given the huge hassle of bagging the Benjamins, why didn’t these wacky baccy impresarios simply buy a few Bitcoins, drive to the drop zone and press the “giddy up” button when the goods were in place!
Yet they stayed analogue. They grabbed the greenbacks and set off in their car. But why? It could have been that they’d read that quantum computers will be able to break Bitcoin’s cryptography next year and decided that the trunk of a car was a more secure alternative or perhaps they just liked the smell of money – many people do, after all. For whatever reason, they eschewed friction-free instant internet cash for their purchase and muddled through with legacy lolly. So I must ask the obvious question: if drug dealers won’t use Bitcoin to buy stuff, who will? How can it be more convenient to cart around great wodges of cash than to zip some magic internet money through the interweb tubes?
That’s not to say that Bitcoin is the perfect solution for criminal on the go, though. You will, I’m sure, another case: that of the Irish hashish horticulurist who wisely decided to invest in cryptocurrency rather than euros. He amassed a fortune in virtual loot. He hid the passwords to the Bitcoin wallets holding his ill-gotten gains in his fishing rod.
He got five years.
Meanwhile, his dozen wallets, containing 6,000 Bitcoin (then worth $50m-ish but now worth $200m-ish) were seized by Ireland’s Criminal Assets Bureau (CAB). Unfortunately, his fishing rod has “gone missingâ€�. Fortunately, CAB believes it is only a matter of time before what they refer to as â€œcomputer advancesâ€� allow them open the digital treasure chest.
A Quantum of Satoshi
Presumably by â€œcomputer advancesâ€� they mean that they are waiting for the quantum computers to come along and unlock the wallets. They are in good company, because a great many other people (eg, organised crime, unscrupulous “whales” and the tax authorities of many nations) are waiting for them too!
It’s a great story, and if any film writers want a script consultant to develop this into a blockbuster based on real events, as they say, then I stand ready to answer the call! Jason Statham as the unconventional special agent who gets things done is trying to get the quantum computer before the dying Mafia don Al Pacino gets hold of it to decrypt the identity of a rat who sent his brother to jail. Meanwhile, trained killer Jody Whittaker is also looking for it. She doesn’t know that her client is North Korea, who want to wreck Bitcoin as soon as they have dumped their stash to buy a nuclear missiles from Tommy Lee Jones, who has hijacked an American warship…
(Reality is sadly mundane. The drug dealer in question, Mr. Collins, was stopped but the Irish police in the early hours of the morning by chance. Unfortunately for him, he had â‚¬2,000-worth of weed in the car and he was arrrested. His properties were searched, and thatâ€™s how his industrial scale cannabis farming was discovered.)
Anyway, back to code-cracking quantum computers. These will happen (as I explained 15 years ago), but they won’t happen tomorrow. Professor John Martinis, who used to be the top scientist in the Google
Building that programmable quantum device which can solve a problem that no classical computer can solve in any feasible amount of time deliver â€œquantum supremacyâ€�. Thatâ€™s an important milestone in technological evolution and Google is only one of the players in a race that many observers see as being the next space race, but this time between the USA, Europe and China.
What does this have to do with Bitcoin? Well, code-cracking quantum computers can crack its codes. For technical reasons to do with public keys and things, the accountants Deloitte reckon that about four million Bitcoins could be stolen by a quantum computer. With Bitcoin at $40,000 that means a pot of over a hundred billion dollars or so is at the end of the quantum rainbow. This makes it well worth spending a few billion to build such a device if you are a the Mafia, treasure hunters after lost or abandoned stashes or agents of foreign powers bent on mischief in the markets.
It’s a serious threat, and plenty of people have already started work on plans to migrate Bitcoin to more quantum-resistant forms of cryptography (see, for example, “Committing to quantum resistance: a slow defence for Bitcoin against a fast quantum computing attack” from 2018) but these schemes still need access to the old, vulnerable wallets to transfer the cryptocurrency to the new, less vulnerable wallets.
All is not lost in the world of cryptocurrency when quantum computers arrive, of course. Even if quantum computers were invented tomorrow, however destabilising this might be for Bitcoin, this would not mean the end of decentralised cryptocurrencies. In the long run, one might expect alternatives to Bitcoin to arise, based on the properties of quantum computing and communications. Apart from anything else, as these Chinese researchers note, the fact that quantum data can’t be copied or non-destructively read means that quantum cryptocoins can act more like actual coins that cannot be double-spent and that opens up some pretty interesting thinking.
Still, assuming that the Irish police get hold a quantum computer before the Mafia do, there is a tidy amount sitting in Mr. Collins wallets (as there is in Mr. Satoshi’s) and the next time the Garda pull someone over in the middle of the night it will be in a Lambo.