DIRECTION (February 3 at 20:15 UTC): Corrects previous story that said Galaxy CEO attributed $9 billion in bitcoin sales to a 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 during the earnings conference call on Tuesday. But Novogratz doesn’t see this as much of a threat as it’s being made out to be. “I think in the long term, quantum will not be a big problem for crypto. It will be a big problem for the world, but crypto, especially Bitcoin, will be able to handle it. But that has been the excuse [for selling]” he added.
And he has a point. In recent times, the debate about quantum computing and its potential to affect Bitcoin’s encryption has heated up. Just last month, Jeffries’ global head of equity strategy, Christopher Wood, removed a 10% allocation to bitcoin from his model portfolio because of the threat from quantum computing.
More recently, Coinbase has acknowledged that quantum computing could be a real, long-term threat to the cryptocurrency market, while the Ethereum Foundation this month 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 the Bitcoin network will be ready when the technology actually takes off. “As we get closer to quantum, we will get closer to quantum resistant. And you will have the Bitcoin code change over time,” he said.
Regardless of the threat, the debate rages on. Some Bitcoin developers have pushed back, saying that machines capable of breaking Bitcoin’s cryptography don’t exist today and probably won’t for decades. But for some investors, the risk to bitcoin’s “store of value” fundamentals is real, despite how far-fetched or theoretical it may seem.
AND the seller
Another fact Novogratz touched on during the earnings call is whether the long-term bitcoin holders, or “OGs,” are selling their stashes.
The issue of OGs selling their stashes began last year when Galaxy said it had facilitated a $9 billion sale of more than 80,000 bitcoin to a Satoshi-era investor. The firm said the sale — one of the largest fictitious bitcoin transactions ever — was part of the seller’s estate planning strategy.
This sale sparked debate about whether the early bitcoin community, which has long championed “HODLing” or holding onto their bitcoin through volatility, has lost its faith.
Novogratz believes that OGs taking profits is real, and once sales start, it just becomes a cycle. “Then you sell a little more, you sell a little more, and it’s so hard to HODL.”
“There was a huge amount 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 to see some sales.”
