Billionaire warns: ‘Bitcoin gets hacked and goes to zero’

Billionaire Chamath Palihapitiya warns that Bitcoin (BTC) could be hacked in the future, potentially resulting in a complete collapse of the price.

According to the well-known investor, the rise of artificial intelligence and the development of quantum computers pose an increasing risk to the security of Bitcoin.

That's a striking twist. Earlier, Palihapitiya predicted that the Bitcoin price could rise to $200,000.

During the October 21 Moonshots podcast, Palihapitiya warned that Bitcoin's security could potentially be cracked in the future. According to him, developments in the field of artificial intelligence and quantum computers could ultimately have major consequences for the crypto currency.

“I think crypto eventually gets hacked and then goes to zero,” the billionaire said.

According to him, a successful attack could seriously damage confidence in Bitcoin. Older wallets in particular, including possibly those of Bitcoin creator Satoshi Nakamoto, can become vulnerable if quantum computers are powerful enough to breach current security.

Palihapitiya also doubts whether Bitcoin can be adjusted in time. To prevent such attacks, the network must switch to new security that is resistant to quantum computers. This requires broad consensus within the Bitcoin community.

According to the investor, this is a major problem. According to him, it is difficult for developers, miners and other stakeholders to agree on drastic changes to the network.

His doubts have also affected his own investments. Palihapitiya says it no longer owns Bitcoin directly. Instead, he has opted for shares in Digital Currency Group, an investment company active in the crypto sector.

In addition, he questions the suitability of Bitcoin for central banks and other large financial institutions. Because transactions on the blockchain are public, according to him, Bitcoin does not provide sufficient privacy for parties who do not want to make their financial activities fully transparent.

Palihapitiya's warning is in line with recent research by Google Quantum AI. Researchers found in March that future quantum computers may require much less computing power to crack certain security methods than previously thought.

According to the study, under specific circumstances, the cryptography that Bitcoin uses could be broken with less than 500,000 physical qubits. That's about twenty times less than previous estimates. Qubits are the building blocks of quantum computers, which can perform certain calculations much faster than ordinary computers.

That does not mean that Bitcoin is currently at risk from such an attack. Quantum computers are not yet powerful enough to break the security of the network in this way. However, the research underlines why Bitcoin should prepare for this development.

An analysis by blockchain research firm Glassnode shows that about 6.04 million BTC, over thirty percent of all Bitcoins issued, may be vulnerable to future quantum attacks. With these coins, the public keys are already visible on the blockchain.

With a sufficiently powerful quantum computer, attackers could theoretically find out the corresponding secret key from such a public key. This would give them access to the Bitcoins in question.

A separate study estimates that even around 7 million BTC could be exposed to this risk. For the time being, however, these coins cannot be stolen in this way. For this to happen, quantum computers would have to become considerably more powerful.

Experts disagree on when quantum computers can actually pose a threat to Bitcoin. Bernstein analysts previously warned that crypto networks may still have three to five years to adjust their security. Other experts think that powerful quantum attacks will only be possible in decades.

According to Palihapitiya, artificial intelligence can also increase the risk. Increasingly advanced AI systems can help to discover weaknesses in software and security methods. However, that doesn't mean they can crack Bitcoin's security already.

For the time being, hackers do not have the technology to steal Bitcoins on a large scale by breaking the underlying cryptography. Moreover, not all wallets are equally vulnerable. According to Glassnode, users can mitigate certain risks by moving their Bitcoins to new addresses where the public key is not yet visible.

In the coming years, it will therefore be important to better protect Bitcoin against quantum computers. This requires adjustments to the network, on which developers, miners and users must agree.