Renowned strategist abandons Bitcoin, citing 'concerns over the rapid advent of quantum computing.'

Christopher Wood, the global equity strategist at Jefferies, completely removed Bitcoin from his portfolio, citing concerns that rapid advancements in quantum computing could undermine the cryptocurrency.

In an analytical column on January 16, Christopher Wood stated that progress in quantum computing would weaken the rationale for Bitcoin as a 'reliable store of value,' particularly for long-term investors such as pension funds.

He liquidated the entire 10% Bitcoin position in his portfolio model, reallocating to 5% physical gold and 5% gold mining stocks.

He explained that this decision was driven by concerns that the advent of quantum computing could shake the foundations of Bitcoin, with breakthroughs potentially occurring within years rather than decades.

Quantum computers could theoretically crack Bitcoin's encryption algorithms and reverse-engineer private keys used to authorize transactions. Wood stated:

“It undermines the concept of Bitcoin as a store of value, thereby eroding its status as a digital alternative to gold.”

Wood, an early institutional supporter of Bitcoin, included it in his portfolio in December 2020 amid widespread stimulus measures during the pandemic and growing concerns over US dollar depreciation, increasing his allocation to 10% in 2021.

Shifting from Cryptocurrency to Traditional Safe-Haven Assets

In December last year, Nic Carter, a partner at Castle Island Ventures, noted on social media that Bitcoin developers were in 'denial' about the risks posed by quantum computing, a view refuted by prominent Bitcoin advocates including Adam Back of Blockstream.

Wood believes the debate itself is telling. The divergence between some developers downplaying the risks and other industry insiders viewing the developer community as failing to address the threat highlights the uncertainty within the cryptocurrency community in responding to emerging technological challenges.

The Bitcoin network is based on cryptography, which is used to secure tokens and verify transactions. With current computing technology, breaking this cryptography is almost impossible. However, quantum computers may change this situation, Wood wrote in his column.

The Bitcoin community is increasingly concerned that quantum computing could become a reality in just a few years rather than a decade or longer.

Wood believes that the long-term issues caused by quantum computing will be "a long-term positive for gold." He described gold as a historically proven hedge in an increasingly uncertain geopolitical environment.

Editor/KOKO