Quantum tackles Bitcoin's quantum problem

Starting today, Quantus, a new private, quantum-resistant L1 posing as an alternative to Bitcoin, is tradable through NEAR Intents, giving QTC its first real connection to cross-chain liquidity.

The proof-of-work chain itself has actually been operational since September 9, but until now it has remained largely isolated due to the lack of a true liquidity network, making QTC difficult to purchase and, therefore, difficult to build a holder base. Bringing NEAR Intents online changes that, opening Quantus to a much wider pool of crypto liquidity.

To discuss the launch, co-founder Christopher Smith joined our podcast to learn more about L1, what he sees as quantum’s real hurdles, and why it’s working so closely with NEAR.

The following is a summary of the conversation and what it says about how Bitcoin, Zcash, and Quantus each trade off credibility, privacy, and quantum risk.

Let’s get started.

— (@)

What is how much?

Quantus is an L1 designed to resist quantum attacks while remaining private.

It replaces Bitcoin’s vulnerable elliptic curve signatures with a system based on a quantum-resistant network, while borrowing a design proposed by Ethereum to keep transactions private without any knowledge. Like Bitcoin, its supply cap is 21 million, although 27% has been pre-mined for investors, founders and the team, with the rest regularly distributed as block rewards rather than halves.

What has sparked interest (or raised eyebrows depending on who you are) is that it’s backed by many of the same names that made a lot of noise about Zcash last year. Balaji led the second round, and AngelList co-founder Babak Nivi and Solana resident ZODLer Mert are among the investors.

All of this is in service of the quantum problem, the scale and social complexity of which Smith describes better than anyone I’ve heard recently.

The quantum problem

Smith’s central point is simple: the technical problem can be solved, but the problem of social coordination remains enormous.

BIP-360, a proposal to add a new type of quantum resistance address to Bitcoin, offers a technical path, but it only protects coins that emigrate. This leaves Satoshi’s coins, as well as coins lost, forgotten, or held by the deceased, effectively inaccessible, unable to migrate even if the BIP-360 or something like it passes, and therefore indefinitely vulnerable. Of course, Bitcoin’s 17 years of distribution reinforces its decentralization, but also makes it almost impossible to reach all exposed holders. For Bitcoin, this is a credibility issue as much as a technical one, since its fundamental promise is that you own your coins.

And Bitcoin is not the only one facing the quantum threat. According to Smith, the entire industry has been layering one cryptographic scheme on top of another for a decade, leaving a disparate system incredibly difficult to upgrade in its entirety.

For example, on Ethereum, migrating a normal wallet could mean unwinding a loan position, repaying debt, moving the assets, and rebuilding the position in a new wallet. Staking and crosschain systems have their own cryptography to upgrade on top of that.

Do you like this article?

Subscribe to Bankless or log in

This is where Quantus believes it can compete, by offering a clean and simple solution, a chain that starts without the layers.

— (@)

The catch

Yet, as we know, there is generally no such thing as a “cut and dry solution,” and Quantus’ speech sounds a lot like the “I can fix Bitcoin with my new L1” promises we’ve heard before. The difference is that the problem reported is real. But a real problem doesn’t guarantee that someone will come forward with the solution.

Smith recognizes it: Quantus delete Bitcoin presents a crypto migration risk, but trading it for an adoption problem, which is really a credibility problem. From the start, there is no liquidity, no brand, no holder, no network effect.

Their work with NEAR is, in part, an attempt to revive that credibility. Think of NEAR Intents as where QTC is now effectively “listed,” connecting it to cross-chain liquidity and a much larger pool of potential traders than Quantus could build alone, which is especially difficult for a proof-of-work coin whose initial supply has yet to be mined.

Being easier to trade does not build credibility, but it does feed some of its ingredients: liquidity, distribution and network effects. It also presents NEAR as a sort of port for new specialty chains looking for access to the rest of crypto.

Three assets, three risk profiles

Put the three channels I’ve mentioned so far in this article side by side and the trade-off is clearer:

Bitcoin has the most credibility, but little confidentiality and a real risk of quantum migration. This credibility is declining.
Zcash has privacy, a quantum roadmap via Tachyon and credibility that tends to increase.
How much today has some confidentiality and quantum resistance, but not yet credibility.

None of the three is strictly better. They are different blends of the same qualities, each covering the others’ weaknesses and each asking you to take a different risk.

This is also why I don’t think Zcash backers funding Quantus are necessarily undermining Zcash. Yes, both present themselves as alternative stores of value to Bitcoin. But Zcash has something Quantus can’t just code: a decade of development, organizations dedicated to improving it, and a decade of token distribution. Quantus has been online for less than a month.

This brings us back to the bigger picture: I expect this array of “Bitcoin, but better” alternatives to become a broader theme during this cycle. We’ve seen Bitcoin challengers promise faster blocks or cheaper transactions before, but these have never threatened Bitcoin’s core promise. Quantum does it. This attacks ownership, what Bitcoin is ultimately supposed to guarantee, and with it the credibility that Bitcoin has built. Pair this with a growing sense that Bitcoin has been absorbed by the financial system it was built for, as I argued recently, and that challengers have more room than they have had in some time.