Bitcoin plummets after quantum supremacy, rallies to end month higher
It’s been a wild week for Bitcoin investors. Strike that; it’s been a wild month. Actually, it’s been a wild year. The cryptocurrency plummeted halfway through this week, only to rally on Friday to end the week up 18%. Currently, Bitcoin is up 51.58% for the year.
The world’s most popular cryptocurrency fell about 6.25% on October 23rd to about US $7400, the same day that Google announced it had achieved quantum supremacy. Multiple Bitcoin investors expressed concern for crypto in a future powered by quantum computers. One of the main applications for quantum computing is cryptography, and the main draw of cryptocurrencies like Bitcoin is their difficult-to-solve underlying computations. The value of a cryptocurrency lies in the perceived difficulty of generating a new unit, or “coin.” If quantum computers have already started to solve in minutes problems that would take classical computers millennia, that would commoditize cryptocurrency as the underlying algorithms would become trivial to compute.
However, these concerns are nothing more than speculation, at least for the foreseeable future. As it stands, Google’s quantum computer still has a long way to go before it could be used to solve complex cryptographic problems. As it stands, quantum computing is still a proof-of-concept rather than a genuinely useful tool.
This reminder is a likely root of the massive rally Bitcoin enjoyed on Friday; the cryptocurrency shot up over 30% to eclipse $10000 before settling back down to about $9000. At the time of publications, Bitcoin is just over $9700, marking a total year-over-year gain of almost 52%.
There is another factor in this weekend’s crypto dip and subsequent rally. Facebook’s homegrown cryptocurrency, Libra, has run into a mass of problems: key partners in the project have abandoned ship, government regulators have expressed concerns that have stalled its development, and more. While Libra’s troubles this week may have caused a dip in the crypto market, it also appears that investors poured back into competing cryptos in response to LIbra’s stumbles.