"Everything Just Lined Up For Bitcoin" | Adam Back

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In the last couple of weeks, a quantum prize said that they have broken Bitcoin's cryptography on a level never seen before.
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There are algorithms that could be effective if you had a quantum computer,
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but it's talking about the hypothetical future computer that they have not finished the physics research to figure out how to construct one.
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For whatever reason that say she stopped participating in the forums,
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I believe it's actually beneficial for Bitcoin that there isn't inventor or founder or discoverer.
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It's quite hard to contemplate all of these altcoins as being something that individuals
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or a company or a government would consider as a sovereign reserve.
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And do you think that seed phrases will be the standard for decades to come?
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Well, I do think there is room always for improving usability.
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The technologists are quietly working in the background.
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You know, they're not seeking marketing, they're not generating news clicks.
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So a lot of things are going in Bitcoin's direction at this time.
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Hello everyone and welcome back to the Bitcoin News Channel.
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I'm your host Rob Wallace and today I'm very grateful to be joined by a man who does not need
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any introduction, Dr. Adam Back.
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Well, thanks for having me on.
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Sir, how are you doing? How is your conference so far?
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That's good, yeah. Some good conversations with industry people and new Bitcoiners and old school Bitcoiners as well.
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Well, you are a very busy man. You, of course, have Blockstream. You're all over the news.
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And you also spend a good amount of time defending Bitcoin on X.
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And so in the last couple of weeks, we saw a prize, a quantum prize,
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said that they have broken Bitcoin's cryptography on a level never seen before by this group, Project 11.
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But you were very quick to come out and say that this was not a proper claim.
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Can you break down the situation for us, please?
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Well, I mean, there are algorithms that could be effective if you had a quantum computer,
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but nobody has a quantum computer with sufficient capabilities to do anything very interesting.
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So believe it or not, the state of the art is they factorize the number 15, i.e. 3 times 5, right?
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So of course when they try to make a benchmark, the hardware can't do it.
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So they cut some corners so they have no error correction.
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And as a result, it's not a useful or real calculation.
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So one of the Google researchers jumped into the conversation and explained this as well.
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So I think that conversation kind of got normalized and died down a bit.
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Now I think the interesting thing for Bitcoin ultimately is that the technologists are quietly
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working in the background, you know, they're not seeking marketing, they're not generating
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news clicks.
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They're developing security protocols and a new post-quantum signature algorithm for
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Bitcoin.
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So Jonas Nick, who is the head of research at Blockstream, recently proposed an optimized
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version of the hash-based signatures for Bitcoin called Shrinked and Shrimps and put out an
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explanation of how that works. And I think that is probably the leading candidate for a concrete
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proposal for post-quantial signatures for Bitcoin. Now, this actual signature scheme
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is the one used and proposed by NIST in October or November 2024 and that is
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based on Lamport signatures which was a quite old paper in 1979 and the
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benefit of that is it's a very conservative old trusted type of
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cryptography it's just relying on hashes and actually coincidentally Leslie
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Lamport, the proposer of Lamport signatures, is the same computer science professor that
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wrote the Byzantine Generals problem paper. It's the same guy. And so that, you know, the NIST
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standard is an optimized version of that. And what Jonas and our research team did is optimized it
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further for the Bitcoin-specific use case. Because if you make it general, it's less efficient. And
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And the challenge with these post-quantum signatures is they're either big or they're
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using relatively novel cryptographic assumptions.
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Using novel cryptographic assumptions without extensive period of peer review is risky.
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And you can see proof of this in that the NIST process, which stretched some years before
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the 2024, invited academics globally to submit candidate post-quantum skills signature algorithms.
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And during that review process, some of them were cryptanalyzed, broken mathematically,
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and proven to not only be post-quantum secure, but not even classically secure, and actually
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breakable in short periods of time on a laptop or something.
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So it shows you that if you grab all of the latest shiny proposals, they may not turn
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out to be secure, and they may not even survive for many months before people turn secure.
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So if you imagine a scenario that some people are agitating to make rapid, quick, reactive
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changes to Bitcoin, there's actually a material risk in that, right?
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So I think the process is correct, which is to proceed with a reasonable pace for a security
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first outlook, which is what Bitcoin is.
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is probably the most high assurance, cryptographic use, and a software system of anything in
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the world, right?
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By a large margin.
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And so it has to be heavily peer reviewed and take a conservative outlook.
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So that's what Blockstream Research has been working on along with other companies in the
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space.
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researchers, you know, constructively working on proposals don't grab the mainstream news.
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You know, a dramatic claim about what quantum computers might do is much more newsworthy,
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like negative news cells.
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But unfortunately, it's also not realistic because it's talking about the hypothetical
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future computer that they have not finished the physics research to figure out how to
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to construct one, right? And then, you know, once they do have a scalable architecture for
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constructing it, that's really the time that things might start to move and that they can
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start to scale them and make them bigger. At the moment, there are many physical challenges that,
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you know, they're trying different architectures to try and find one that works, basically.
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So at Blockstream, how big is the team that is working on Quantum and how long have they been
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going? So, I mean, the overall research team is about 20, 21 people. Andrew Polstra is a member
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of the team working on simplicity. Some of the team are working on sort of quantum specific. I
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think there might be eight or nine people depending on how you count it. Some people are working on
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other how to make other aspects of cryptography post secure For example confidential transactions which is related to the signatures but different And then others are working on simplicity which is
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next generation, low-level smart contract system for Bitcoin, which is live on Liquid.
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The other thing that the research team did with Shrinks, the proposal, is to actually implement
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it on Liquid. So you can try it out and see what the signatures look like, how the experience is,
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how fast they are to create a signature, to verify a signature, how big they are.
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So there's some interesting trade-offs.
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I think that ultimately Shrink gets the size down to a practical size
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so that you don't necessarily need to change the block size or it doesn't have a big impact.
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Wonderful.
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And so even if we do come up with a new signature and a way to do this,
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all the coins still need to be migrated over to these new signatures, correct?
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Right.
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So that's one of the interesting parts of Taproot, which it was designed with quantum
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readiness in mind for the future.
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So the Taproot commitment, Tim Ruffing, another PhD researcher at Blockstream Research, proved
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that the Taproot commitment scheme is post-quantum secure.
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It was designed to be so, but he proved it mathematically.
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and then with Taproot you have one way to spend which is the default using a
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Schnorr signature and then you have an optional additional ways to spend which
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are sort of hidden if statements inside that. So one proposal is
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that you continue to use Schnorr signatures today with a new key format
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But there's an optional way to spend using a post-quantum signature,
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post-quantum opcode, which will be added.
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You know, that's what's being contemplated.
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And the beauty of that is that you can continue to sign
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using the compact Schnorr signature that people are used to,
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but be prepared for the future.
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So in future, then you are ready because if quantum computers
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get big enough and fast enough to become cryptographically relevant, then people can switch because
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they're ready. They don't have to migrate. They're pre-migrated without incurring a rushed one-off
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switch. And the other advantage, if you make the formats distinguishable, is we should have some
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data to indicate what proportion of the Bitcoin, what proportion of the UTXOs are migrated over time.
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And the other nice thing about this approach is that if the quantum hardware research starts to be moving a bit faster with benchmarks and data about their different architectures, then people can accelerate their migration too, right?
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And I think in that context, you know, once you have that there, if the quantum hardware materializes, then it becomes a useful conversation to talk about what would happen with people that lost their keys.
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Exactly.
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Right.
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Yes, it's a huge question.
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And I mean, a lot of the, you can boil it down simply to either to freeze those coins that we think are Satoshi's or to let them be sort of the hidden treasure, right?
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That someone with a quantum computer can try to go after.
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Where do you land on that debate?
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Well, I think it's, the problem with having that conversation at the moment with a lack of data and it being hypothetical is people are not thinking about it in concrete terms.
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So they arrive at negative conclusions about both paths.
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Some say that, you know, it's theft.
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If the signature algorithm that has become insecure is deprecated,
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and others say that if you don't deprecate it, that also results in theft.
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So nobody likes theft.
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But both paths can be characterized by different voices as theft, right?
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So I think that it becomes less controversial and people can have a better discussion about it once it's concrete.
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And there is, you know, some data about how many people have migrated.
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And then I think that, you know, it's worth bearing in mind there are other ways to be able to spend coins potentially without migrating.
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So anything that is stored with a typical seed phrase, which has been the case since 2015,
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so probably a good proportion of coins are actually stored with this method,
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they can potentially migrate using a kind of complicated signature,
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which is a zero-knowledge proof that you know the seed that derives this key,
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and then spend it that way if you didn't migrate or you found the keys later or something like that.
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So from that way of looking at it, already a large amount of Bitcoin, already quantum ready, right?
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And then there are, you know, that type of proof or signature is not very compact.
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So Blockstream Research, you're looking at, you know, how compact can you make that kind of proof
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so that that could become a proposal.
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So I think it's important to sort of not overcomplicate things
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and start with something simple so people can get started on migration.
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But these other ways to spend can be added later.
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There's additional proposals.
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Of course, in Bitcoin, it's very decentralized,
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so nothing is going to get traction unless it's widespread agreement.
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So it's important to start simple.
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And then there are some other possibilities,
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something called commitment schemes,
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where you could sort of do a commitment and then a reveal.
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That's a bit two-step, but it could be a more compact way to move these kind of coins,
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depending on the specifics.
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So that's another area of research as well.
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So I think there are multiple tracks.
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It won't be a one-shot thing.
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And the other interesting curiosity is that the post-quantum signature research to design
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post-quantum signature schemes is itself a rapidly evolving area of technology.
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And so in a way, it's an inconvenient time to introduce a post-quantum signature
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because in five years, it's quite plausible that we'll have a better one.
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And so I think the way to do that is to take the best of the current crop,
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which we think is shrinks, the optimized one.
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it's very easy to defend it because it's very old, very mature, lots of peer review,
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and it's related to the NIST standard, which people respect the NIST standards. It's an
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optimized version of that. And then, you know, then you can start migrating. But what may happen
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in practice is that never gets used. And an additional way to spend is added later that
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it's more compact. But, you know, so the shrinks might end up being a bridge so that people can,
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you know, feel relaxed, feel protected, and then it can be improved over time,
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incrementally, basically.
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Yeah it very important that we don rush into anything right as a community And it great to show that teams like Blockstream are working so hard to make sure that we do have an answer eventually down the road
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And so right now, there's been lots of talk about Satoshi.
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Who is he, right?
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And you were the subject of an 18-month investigation by the New York Times.
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And there was also a brand new documentary, Finding Satoshi, that named Hal Finney and Len Sassaman as Satoshi.
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I know you've been asked this question a lot, but what are your thoughts of all this talk of Satoshi right now in 2026?
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Well, I mean, it's completely understandable that people are fascinated about it because, you know, myself, I was curious as well, right?
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Because once you realize that it's a pseudonym and it's a really unique situation that somebody that founded or did the discovery or design of a hugely popular and widely impactful system did so anonymously.
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So, of course, it's curious, but my suspicion is that we'll never know who it is, most likely,
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because, you know, he stopped participating on the forums in 2011, two years after Bitcoin was released.
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And so there's no new data in the, you know, however many years that is since, right? 13, 14 years.
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So, and a lot of people have analyzed it and not really come up with anything conclusive.
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So really, you know, what's left is sort of speculation, right?
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And of course, the process is a reasonable approach, which is you look at people who are interested or were interested in e-cash and proof of work before Bitcoin
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and trying to design Bitcoin precursors in 1997 to 2005, that kind of time range,
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and trying to see who looks most similar, right?
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And I think one problem with that is because you, you know, this method,
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which a lot of people have used, right?
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So it's not criticism of anybody.
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It's just a kind of intuitive thing to do,
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is that you've self-admittedly selected people who are self-similar.
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So naturally, they're going to, you know, they get from a technical background,
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maybe they have a computer science degree.
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They're going to use similar kind of technical terminology.
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They're going to know something about cryptography, about network programming.
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So they're quite similar.
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So they're going to use similar terminology.
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And in my particular case, you know, I was a postdoc at the time that Bitcoin was going on.
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And then at a later point, I was working in a startup.
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So I was quite talkative on the mailing list.
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So I was posting a lot.
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Anytime something came up about privacy tech or electronic cash, that was my favorite topic.
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So I was posting a lot.
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And so if you're searching for somebody who's commenting on things, my name's going to come up because I'm there talking about it.
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right? So I think that, you know, some people looked at that as, you know, the statistics will
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be biased by the volume of posts. It's my point. It's a kind of sample size bias. But, you know,
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there seems to be some coincidences too, but it's like it says, it's not me, right?
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then I think that adds weight to that argument.
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Right, it's a very cold trail, let's say, and a lot of people looked at the same data.
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And I think the other thing which is interesting is that for whatever reason that Satoshi stopped participating in the forums,
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I believe it's actually beneficial for Bitcoin that there isn't an identified inventor or founder or discoverer.
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And it helps Bitcoin be decentralized. It helps it be perceived as a discovery and a digital commodity where it's quite hard to contemplate all of these ICO coins and altcoins as being something that individuals or a company or a government will consider as a sovereign reserve.
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when there's a few early guys who own most of the coins, and there's a CEO, and it's just not plausible, right?
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Whereas Bitcoin, because it's decentralized, because it was the first, it's very neutral.
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There's no party controlling a lot of coins.
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There's so many participants that any given developers or researchers or companies or holders could leave,
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and it doesn't really change anything, right?
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So it makes it very robust.
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Yes, it's decentralized and allows us to build companies on top of Bitcoin,
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as you have for over a decade with Blockstream.
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So many different aspects of your company, from the research, the infrastructure, satellites,
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and even hardware wallets.
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So you guys got a new hardware wallet.
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What's going on with that?
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Yeah, so it's a new one in the lineup between the Jade Classic and the Jade Plus.
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This was just announced a couple of days ago.
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And we've been selling them at our booth at the conference venue and the Jade Plus as well.
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And the point is it kind of fills up the lineup fitting between the Jade Classic and the Jade Plus.
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It's for, you know, streamlined for new users to encourage people to do cold storage.
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A very simplified experience.
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You can connect it with USB.
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You can connect it with Bluetooth.
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You can use it with a Blockstream wallet companion app, which supports Bitcoin, Lightning actually
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on the hardware wallet, and Liquid for stable coins.
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And actually you can use Bitcoin on Liquid as well with confidentiality.
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And it also works with other companion apps.
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So with third-party wallets, there's interoperability so that you can use the Jade with a number
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of different wallet manufacturers.
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And what would you say is the state of self-custody in the Bitcoin community at the present moment?
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Yeah, I mean, it's getting easier over time.
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One of the things that Blockstream Research did some years ago is design and implement the first mini-script protocol,
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which is a quite nice way to describe more complicated ways to have storage policies So we have time locks and sort of a little domain language for expressing the spend policy that compiles into Bitcoin scripts and can
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decompile so you can interpret the Bitcoin script. And when you pair that with PSBT,
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Partial Assigned Bitcoin Transaction Standards, it's a way for a general software wallet to
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to understand new spending mechanisms, new spending policies that weren't proposed at
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the time the wallet was developed or implemented.
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So it sort of adds some interoperability and adaptability.
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Before the introduction of Miniscript and PSPT, if you wanted to introduce a new type
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of multi-sig configuration, you'd have to try and get adoption of that template in wallets
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before it worked.
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And so you use kind of deployment challenge because you have to get lots of different vendors to implement it.
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Where PSPT and Miniscripts allows it to automatically adapt and respond to something that's designed later, basically, which is pretty cool.
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And do you think that seed phrases will be the standard for decades to come?
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Or do you think that self-custody will be revolutionized in the years ahead?
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Well, I do think there is room always for improving usability, and we've certainly tried with the Jade Core.
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But, you know, there are other companies trying other strategies, including no seed phrase or redundancy between multiple hardware or a split between servers and hardware, just to try and simplify the experience.
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Of course, effectively, the ETFs are an even simpler interface.
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And for some people, that is something they have more confidence or feel comfortable doing.
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Because, you know, people can get interested in Bitcoin from different directions.
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So if they start an ETF, then they might take an interest in buying a hardware wallet and setting it up to understand.
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Maybe they'll get the confidence and move more into it.
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But I think it's all about accessibility, basically.
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And you can think about the treasury companies, the phenomena that micro sales started with
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micro strategy as, you know, a kind of another kind of proxy for Bitcoin in a public share format.
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And that is, you know, of course, it had some volatility on top.
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There's never any return without risk.
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But those companies have the objective to increase the Bitcoin per share.
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Yes. And you got your own Bitcoin treasury company, correct?
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Yes, so we did the SPAC fundraise last year and still awaiting regulatory approval.
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People can look at the prospectus and so on on the SEC website.
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And really, the differentiator for BSTR, Bitcoin Standard Treasury, is that it's seeking to be active,
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to actively manage Bitcoin, to create a return on Bitcoin.
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in addition to the normal capital market strategies that MicroStrategy and the other treasury companies have demonstrated over time.
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And if you could go back 10, 15 years in early Bitcoin and look at where we are today with Wall Street, the financialization,
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would this have blown your mind or do you think this is natural on the path of just Bitcoin's adoption wider across the world?
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Yeah, I mean, I think ultimately it's a sign of adoption, a success metric for adoption,
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which is that as Bitcoin gets more widely used in the market in private companies and public companies,
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and then the CIO of Bitcoin Standard Treasury, Sean Bill, was a hedge fund manager for a couple of decades
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and then spent some time helping pension funds and became CIO of a pension fund,
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which became the first public pension fund to add Bitcoin to the balance sheet in 2021.
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And so you can see that's another area of finance that can benefit from Bitcoin.
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And then MicroStrategy again has been doing different preferred shares,
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including Stretch, which has the most traction amongst their preferred instruments.
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And that is kind of a risk transformation.
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So it's providing a steady stable price by varying the interest rate monthly and I think
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more recently bimonthly and trying to target a whole $100 price per share by paying an
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11.5% annualized interest bimonthly coming soon.
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And they use the prestige of that to buy Bitcoin, so it's sort of implicitly collateralized
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by the Bitcoin that the company holds to ensure their solvency to pay the interest.
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But it's a different return.
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So I mean, I think ultimately you should see sort of more risk trade-offs where people
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can participate in instruments that provide partial Bitcoin upside but reduce downside
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or some kind of blend of these characteristics.
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So we're in 2026.
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You've been in Bitcoin for well over a decade plus.
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What gets you excited about Bitcoin these days?
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And where do you see us going in the years ahead?
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Well, I think there's a lot of positive things for Bitcoin in the last year or so.
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You know, improved, more open for business regulation in the US.
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That's flowed through to other countries.
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The institutional adoption we've heard about is mostly at the early stages.
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So I don't think that's really hit in volume yet, but I suspect that's still ahead.
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It's a good time for Bitcoin Layer 1 research, you know, between the post-quantum signatures,
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some new Layer 1 ideas from Robin Linus and others,
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which are showing that you can do more with Layer 1 than people realize.
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And, you know, also discussion tracks on new opcodes to improve the support for secure Layer 2
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in the Layer 1, like Covenants.
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and then innovation in the layer 2 space, you know, a whole new layer 2 is like the ARK,
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the different ARK products built in the ARK protocol, as well as Fedimint, you know, another
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architecture for highly private and scalable, but a different security trade-off. So it's all
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positive. Seems to be a lot of things are going in Bitcoin's direction at this time.
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Yes. Well, thank you so much for your time, Adam. It's been a real pleasure. I think you
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educated us a lot, especially about quantum, some great insights that you shared with us.
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And thank you. It's been amazing. Cheers.
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in the description.
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Then come hang with us live every Monday at 11 a.m. Eastern.
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We break it all down live on stream with a new guest
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and you can add your two sats in the chat.
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See you next week.