Introducing Hourglass

In a recent discussion on the potential of blockchain technology to mitigate economic volatility in the wake of quantum computing advancements, Boris Nagaev critiques a proposal aimed at diluting the impact of quantum attacks on Bitcoin's economic stability. Nagaev argues that the proposed measure, which mandates the spread of Pay-to-PubKey (P2PK) output spends over a year, may not sufficiently address the issue. This skepticism is rooted in the assumption that post-Quantum Day (QDay), the capabilities of quantum computers could enable the cracking of cryptographic keys in under ten minutes, thereby undermining the effectiveness of the proposed temporal distribution of spends.

Nagaev further elaborates on the limitations of this proposal by pointing out its ineffectiveness against certain types of addresses that are likely targets for quantum adversaries due to their high value. Specifically, he mentions an address with 31,000 BTC, which, despite not being a P2PK address but a Pay-to-PubKeyHash (P2PKH) with an exposed public key due to address reuse, would still be vulnerable to rapid exploitation by quantum-powered attackers. This example underscores the proposal’s inadequacy in curbing the initial shockwaves of economic volatility expected at the onset of the quantum era.

Moreover, Nagaev suggests that even an extension of the proposal to include spends from reused addresses would not prevent a swift depletion of significant Bitcoin holdings, such as the 31,000 BTC within a mere hour or two. He also reflects on the issue of high-value reused addresses that haven't transitioned to a quantum-resistant scheme, highlighting another potential source of front-loaded volatility through the example of James Howells' funds, which consist of 8,000 BTC spread across just 16 Unspent Transaction Outputs (UTXOs) and would thus be highly susceptible to rapid liquidation under the current proposal.

Overall, Nagaev's critique emphasizes the need for a more nuanced and comprehensive approach to leveraging blockchain analysis in crafting strategies that could genuinely mitigate the economic disruptions anticipated with the advent of quantum computing capabilities in the context of Bitcoin and potentially other cryptocurrencies.