Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Marc Hochstein, CoinDesk’s deputy editor-in-chief for features, opinion and standards.
In this issue:
- What does Google’s quantum computing chip mean for Bitcoin?
- Dev’s defection highlights Ethereum’s growing Solana problem
- OrdinalsBot inscribes largest-ever file on Bitcoin blockchain
- Polygon touts speed of Plonky3 proving system
- Crypto’s most influential techies of 2024
Network News
NEED FOR SPEED: Polygon Labs claims its newest proving system, Plonky3, is the fastest on the market. (Vitalik Buterin, Ethereum’s creator, apparently agrees.) A proving system is at the core of zero-knowledge rollups, and a crucial component for transactions that rely on cryptographic security. It is the main piece of technology that creates proofs that summarize off-chain transactions, which are then sent back to a base blockchain (in this case, Ethereum). “If a zkVM is a car, you could look at the proving system as being the engine, so Plonky3 is kind of what makes everything work,” Brendan Farmer, a co-founder at Polygon, tells CoinDesk’s Margaux Nijkerk. The quicker a proof is generated, the less computing time that must be paid for. “If we improve speed, then we’re improving costs,” Farmer said. “And so what this does is it makes ZK rollup really competitive in terms of costs.” In January 2022, Polygon released its previous proving system, called Plonky2, claiming then that it was the fastest one on the market. Plonky3, the new and improved version that has more flexibility, was released in July.
IN AWE OF THE SIZE OF THIS LAD: Bitcoin inscriptions project OrdinalsBot minted what it says is the largest file ever on the oldest and most valuable blockchain: the last in a collection of 1,500 “Pizza Ninjas.” It’s part of a phenomenon in the Bitcoin development community known as “four meggers,” which are files that take up an entire block on the network. They are called four meggers because they are almost 4 megabytes (MB) big (the maximum size of each block of transactions on Bitcoin). Ordinal collectors consider them valuable due to their visibility on the blockchain. “There’s more than just bragging rights behind wanting to have the largest file on Bitcoin,” said Toby Lewis, co-founder of OrdinalsBot. “Four meggers will be on the Bitcoin blockchain forever and they already hold significant market value.” Bitcoin inscriptions, similar to non-fungible tokens (NFTs) on Ethereum, were made possible by the Ordinals protocol. It allows data to be “inscribed” onto individual satoshis, or “sats” (the smallest unit of BTC at 1/100,000,000 of a full bitcoin), making each one unique and potentially valuable. Read more.
JUMPING SHIP: Ethereum’s place near the top of the crypto market is unquestioned from the perspective of market cap. Beneath the surface – at the product, developer and decision-making levels – the original smart contracts platform continues to take a beating from Solana, one of its closest competitors. Ethereum and its many closely-linked networks are still the most important, influential, and largest platforms for decentralized finance. That lead is beginning to erode, however, with many newcomers to crypto choosing Solana’s speed and low fees. The dynamic was further punctuated Monday with news that longtime Ethereum ecosystem developer Max Resnick was moving into Solana’s orbit, abandoning his job at the developer studio Consensys. “There’s just so much more possibility and potential energy in Solana,” Resnick said in an interview with CoinDesk. He framed the decision as rooted in his own career path, but noted “frustration” with Ethereum’s inability to adapt contributed to the move. Ethereum lacks a streamlined process for making quick changes. Some see that as a point of strength for a decentralized network, while others, like Resnick, see it as a hindrance for long-term success. Read more
MOST INFLUENTIAL: This week, for the tenth time, CoinDesk has selected the people who defined the year in crypto: Our Most Influential list. (Here was the first edition in 2015.) Most Influential highlights personal achievements in the last calendar year. People are chosen for their projects, ideas, leadership, personality, or notoriety. There is a top 10 of the most Most Influential – people we feel had outsize influence or led the most important projects. Then, we profile another 40 people who were only a little less influential. (Certain prominent people in crypto – Vitalik Buterin, say – would naturally be Most Influential every year. But we choose not to feature the same names each time.) Among the tech luminaries we highlighted in this year’s series were Solana’s Lilly Liu, Optimism’s Jin Yang, EigenLayer’s Sreeram Kannan, BitVM’s Robin Linus, Rootstock’s Sergio Lerner, TON’s Steve Yun, NEAR’s IIlia Polosukhin, Akash Network’s Greg Osuri; Bitcoin’s Taproot Wizards founders … and of course, Satoshi Nakamoto, whose secret identity remains a parlor-game topic after all these years. (Writing that last piece was downright cathartic for me.) Find all the profiles here.
WHAT DOES GOOGLE’S QUANTUM COMPUTING CHIP MEAN FOR BITCOIN?
Google’s new quantum computing chip could mean bitcoin (BTC) is finished.
That was the sentiment for some on Monday as the internet giant unveiled Willow, a quantum supercomputer that can perform certain computational tasks in just five minutes that would take classical supercomputers an astronomical amount of time—specifically, 10 septillion years (or one followed by 24 zeroes; a trillion trillion).
10,000,000,000,000,000,000,000,000. Such an amount of time is greater than the existence of the entire universe at 13.8 billion years.
In superficial theory, such a powerful computer could mean no passwords are safe, encrypted messages are intercepted, nuclear weapons codes are found out, and almost anything can be unlocked by brute-forcing combinations of numbers and letters.
But it isn’t all doom and gloom yet.
While quantum computing does indeed pose significant threats to current security systems, it’s not a master key to the universe, at least not right now. And there is no looming threat to Bitcoin, either.
Quantum computing leverages the principles of quantum mechanics, using quantum bits or qubits instead of traditional bits. Unlike bits which represent either a 0 or 1, qubits can represent both 0 and 1 simultaneously due to quantum phenomena like superposition and entanglement. This allows quantum computers to perform multiple calculations at once, potentially solving problems that are currently intractable for classical computers. Willow uses 105 qubits and demonstrates an exponential error reduction as the number of qubits increases. This is a critical step towards building a practical, large-scale quantum computer, said Google CEO Sundar Pichai.
Bitcoin uses algorithms like SHA-256 for mining and ECDSA for signatures, which might be vulnerable to quantum decryption. And the short answer is that quantum computers, even advanced ones like Google’s Willow, do not possess the scale or error correction capabilities needed to immediately decrypt widely used encryption methods like RSA, ECC (used in Bitcoin transactions), or AES (used in securing data).
If quantum computers like Willow reach a scale where they can easily factor in large numbers, they could potentially break these encryption schemes, compromising wallet security and transaction integrity. That would require quantum computers with millions or even billions of “qubits” with extremely low error rates, far beyond the current technology.
“Google claims to have demonstrated ‘below threshold’ error correcting capabilities with their latest quantum chip,” said Chris Osborn, founder at Solana ecosystem project Dialect, in a post on X (formerly Twitter). “‘Below threshold’ is industry jargon for turning physical qubits, which are noisy, s*itty quantum bits that are basically useless, into logical qubits, which are multi-qubit abstractions that correct for errors & let you actually perform real computation.” he added.
It takes roughly 5,000 logical qubits “to run Shor’s algorithm to break encryption. In other words, millions of physical qubits are needed to break encryption. Google’s chip today: 105 physical qubits,” Osborn noted.
Until then, cryptocurrencies (and other sectors) have time to develop quantum-resistant algorithms.
CLICK HERE FOR THE FULL ARTICLE BY COINDESK’S SHAURYA MALWA
Money Center
Hole in the wallet
- Magic Eden’s $5B Token Airdrop Raises Crypto Wallet Security Questions
Deals and grants
- Binance Partners With Circle to Push USDC Stablecoin Adoption Across the Globe
- Stablecoin Trading Startup Perena Tries Its Luck on Solana
Happy perp-day
- As BitMEX Turns 10, the Market Is Still Thankful for the Perpetual Swap
Regulatory and policy
- El Salvador and Argentina Regulators Sign Agreement to Help Develop Crypto Industry
Calendar
- Dec. 4-5: India Blockchain Week, Bangalore
- Dec. 5-6: Emergence, Prague
- Dec. 9-12: Abu Dhabi Finance Week
- Dec. 11-12: AI Summit NYC
- Dec. 11-14: Taipei Blockchain Week
- Jan 9-12, 2025: CES, Las Vegas
- Jan. 15-19: World Economic Forum, Davos, Switzerland
- January 21-25: WAGMI conference, Miami.
- Jan. 24-25: Adopting Bitcoin, Cape Town, South Africa.
- Jan. 30-31: PLAN B Forum, San Salvador, El Salvador.
- Feb. 1-6: Satoshi Roundtable, Dubai
- Feb. 19-20, 2025: ConsensusHK, Hong Kong.
- Feb. 23-24: NFT Paris
- Feb 23-March 2: ETHDenver
- May 14-16: Consensus, Toronto.
- March 18-19: Digital Asset Summit, London
- May 27-29: Bitcoin 2025, Las Vegas.