Bitcoin\u2019s quantum risk may show up in derivatives markets well before any compromised coins move on-chain, according to FalconX co-head of markets Joshua Lim, who used an X thread on April 16 to map out what he sees as the most tradable signals around a potential \u201cq-day\u201d event.<\/p>\n
Lim\u2019s core argument<\/a> is that the market problem is not simply whether Bitcoin can migrate to post-quantum cryptography. It is also whether the network can politically resolve what to do with Satoshi Nakamoto\u2019s coins and other old outputs that may never participate in such a migration.<\/p>\n Lim framed the issue as two separate questions. The first is technical: how Bitcoin could move away from elliptic curve cryptography used to secure private keys. The second is more fraught. \u201cHow to deal with the fundamentally non-mathematical and wholly sociopolitical question of what to do with Satoshi\u2019s coins,\u201d he wrote, arguing that the largest risk around quantum computing is not just cryptographic breakage but the governance crisis that could follow.<\/p>\n He said a migration path for most of Bitcoin\u2019s UTXOs is at least conceivable, pointing to BIP 361 as one example of a proposal that addresses both post-quantum migration<\/a> and the handling of Satoshi-era coins. But that only solves part of the problem. Lim estimated that Satoshi\u2019s holdings amount to roughly 1.1 million BTC, while other old or lost coins in pay-to-public-key addresses could push the total exposed supply to as much as 1.7 million BTC, which he called a \u201c$127bn question.\u201d<\/p>\n Those coins, he argued, are different because they likely would not participate in any community-led migration unless Satoshi is still active and willing to move them. That creates two outcomes, neither comfortable for markets. \u201cEITHER Satoshi<\/a> is still around and can move coins pre q-day, in which case BTC price will tank because the market will re-price the probability of those coins being sold in the future,\u201d Lim wrote. \u201cOR Satoshi is not around and someone will decide to steal the coins via a sufficiently powerful QC.\u201d<\/p>\n That is why, in Lim\u2019s telling, Satoshi\u2019s coins are \u201cnot a math problem.\u201d The available responses are political. One option would be to burn those coins through governance, a move he said would raise serious questions around immutability, sovereignty, and precedent. The other would be a hard fork that lets the market choose between a chain that neutralizes the coins and one that preserves the current ruleset, even if that leaves open the eventual risk of a quantum-enabled seizure.<\/p>\n Lim suggested that even an attempt at the first path could lead to the second. \u201cOur only prophylactic is to EITHER A) burn Satoshi\u2019s coins via governance,\u201d he wrote, before outlining the trade-off, \u201cOR B) create a hard fork and allow for the market to decide which is the true BTC.\u201d In his view, that likely becomes a political contest over Bitcoin\u2019s identity as much as a security response. He added that the most likely quantum thief, if such a scenario emerged, would be \u201ca state-level actor.\u201d<\/p>\n From there, Lim shifted from theory to market structure. He contrasted any future fork with Bitcoin\u2019s August 2017 split, which produced BTC and BCH. Back then, he noted, Bitcoin was a roughly $45 billion, mostly retail market, and many holders welcomed the fork because it effectively created an additional asset. Today\u2019s market is different: around $1.5 trillion, far more institutional, and wrapped in ETFs, listed futures, and options. That changes how risk would likely transmit.<\/p>\n \u201cA hard fork today, or even the prospect of one, would be an entirely different beast,\u201d Lim wrote. \u201cIt would result in extreme volatility and likely downward price action: a large gap down and massive cascading liquidations.\u201d He added that if the community were close to evenly split on whether to burn exposed coins, institutional investors might have a mandate to de-risk ahead of the event, amplifying downside pressure.<\/p>\n That is where derivatives come in. Lim argued the earliest warning signs of q-day risk are most likely to emerge in long-dated options skew, forward basis, and the distribution of open interest across traditional and crypto-native venues. He pointed out that long-dated BTC put skew is near multi-year highs, with downside protection relatively expensive compared with calls, and said the last comparable elevation came around the Three Arrows Capital and FTX collapses in 2022<\/a>.<\/p>\n He also flagged long-dated basis, noting that Bitcoin futures are trading near multi-year lows relative to spot. In Lim\u2019s framework, q-day risk should compress or even invert basis because market participants hedge for downside while others position for a possible fork-related \u201cairdrop,\u201d similar in concept to 2017. Since the timing of any quantum breakthrough would be uncertain, he expects those signals to appear farther out on the curve.<\/p>\n Still, he stopped short of saying the market is already pricing an imminent quantum event. Some signals are \u201cflashing red,\u201d he wrote, but they can also be explained by broader systemic risks or secular shifts, including growing institutional participation through venues such as CME and IBIT options<\/a>. For now, Lim described the picture as mixed. His broader point was simpler: if q-day ever begins to look real, traders likely will not first see it in dormant coins moving. They will see it in derivatives.<\/p>\n At press time, Bitcoin traded at $75,024.<\/p>","protected":false},"excerpt":{"rendered":" Bitcoin\u2019s quantum risk may show up in derivatives markets well before any compromised coins move on-chain, according to FalconX co-head of markets Joshua Lim, who used an X thread on April 16 to map out what he sees as the most tradable signals around a potential \u201cq-day\u201d event. Lim\u2019s core argument is that the market […]<\/p>\n","protected":false},"author":0,"featured_media":151418,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-151417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/151417"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=151417"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/151417\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/151418"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=151417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=151417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=151417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Quantum Risk Could Hit Bitcoin Through Derivatives<\/h2>\n