Bitcoin Descends on Las Vegas w/ Alex Thorn

0:00Alex Thorn:Welcome to Galaxy Brains.

0:21Alex Thorn:Welcome to Galaxy Brains. As always, I'm your host, Alex Thorne, head of firm wide research at Galaxy. Bitcoin, not zero. We have a great episode for you today. I'm in Las Vegas at the Venetian Hotel and Casino Resort for Bitcoin 2026. And I'm going to walk around a little bit and show you some of what's going on. Talk about my impressions of the conference. Of course, I'll head up back to the room, get on the live stream with Bim Netta BB from Galaxy Trading. Talk about markets. Before we get to all that, I need to remind you, please refer to the link to the disclaimer in the podcast notes. So note that none of the information in this podcast constitutes investment advice or an offer, recommendation, or solicitation by Galaxy or any of its affiliates to buy any securities.

1:02Alex Thorn:I have a big panel on the main stage right now. How real is the quantum threat? I'm moderating four great panelists, Brandon Black, James O 'Byrne, Hunter Beast, and Alex Pruden from Project 11, who we recorded an episode on Galaxy Brands just a few weeks ago. Let's go to the panel and show you guys some clips. I'm Alex Thorne from Galaxy. I've got Brandon Black, James O 'Byrne, Hunter Beast, and Alex Pruden. This is the talk of the town. Like Greg said, this is a big topic. A lot of people are asking a lot of things about it. I hear about it from our institutional counterparties. What's the deal with quantum?

1:38Alex Thorn:We're going to get into some of these things. We're going to talk about the urgency. We're going to talk about possible solutions and mitigations. And then we're going to talk about what to do with coins and exposed addresses, such as Satoshi's coins. All right, gentlemen, let me give Hunter a chance to get in here. Hunter from Surmount Systems, also one of the authors of BIT 360. What's your perspective on this part of the conversation, Hunter? Well, I think we need to do our best to seek truth here and be intellectually honest. And the intellectually honest answer is that there is no hard evidence that would point to definitively disproving or proving the threat yet.

2:18And so I think in this time of uncertainty, we need to fall back on first principles and we need to do the work to build the tools we need to convince people with proof and evidence that the

2:34Alex Thorn:threat could maybe be imminent. Also, I'm not sure if it's the right question to be asking. I think one of the most depressing things I think about is just like, are we going to be coming back here year after year, having done nothing to address the concern, and just keep bickering about this and doing nothing productive? In a way that's its own grift, right? Like we could, if quantum computers really are impossible, we could come back here five years, ten years, Build a whole career on this, just bickering over this grid. Many have done that. You know, and so I would like, in my opinion, to just put the FUD to rest.

3:15Alex Thorn:Do the work. It's an engineering problem. And present evidence and strategies and give people the opportunity to change their minds based on new input. I don't think people are particularly unreasonable or intransigent in the Bitcoin community as people like to think. I think we've gotten this far based on evidence and reason and not on ideology and coercion. All right. So we can, and I know we will, and maybe we'll do it for the next five Bitcoin conferences, debate the urgency of the problem. But if we grant that it could be possible, let's say even a 1 % chance, chance. I want to talk a little bit about some of the work that is being done as mitigations or solutions or that could be done or the difficulty in enacting something on the Bitcoin protocol.

4:08Alex Thorn:If something was to be done, maybe sticking with you, Hunter, BIP360 is one of the most reviewed BIPs and also more advanced that has been proposed as a mitigating solution. Would you give a high level of what the proposal is? Yes, so BIP360, and not to be confused with BIP361, it's a very different BIP, so BIP360 exists as essentially an opt-in new output type in Bitcoin. An output type is kind of similar to an address for the plubs, right? And so this allows us to essentially have like a first step for wallet optionality on how you wish to spend your coins and you might commit to a path that lets you spend them with elliptic curve cartography as it currently exists it will also allow you to maybe spend post-pronography at some future date and commit to a script path in your wallet before that's even active on mainnet and we might even combine that with elliptic cartography so that there's no reduction in security assumptions of what we currently understand is safe.

5:23Alex Thorn:And so we need to be very rigorous and conservative in solving this problem. And I think we should, at a bare minimum, activate BIP54, which is the great consensus cleanup, that it's very uncontroversial. We need to do that. It protects us against a number of other threats we also need to uh activate bit 360 and maybe not any other post-pronography but 5060 and 5054 are both very solid uncontroversial conservative approaches to solving these problem this problem and hopefully uh maybe even another another thing that we've been working on for BIP 360 to hopefully bridge the gap and divide amongst Bitcoiners around, you know, a lot of the things we're talking about.

6:14Alex Thorn:I would like to make BIP 360 compatible with BIP 110. And that takes a lot of engineering effort, but we've been doing it. And I think, I know, so there's some BIP 110 skeptics out there. I think, you know what, these people have enough shared common values with us, we should focus on the fact that Bitcoin is a direct challenge to nation-state monetary sovereignty, and we need to remember our mission to separate money from state. I think that the real number at risk of dormant coins or lost coins, including Satoshi's, would be more like 2.66 million. Okay, so let's focus on those coins, because then I'm going to cut right to the chase.

6:55Alex Thorn:people say what to do with satoshi's coins you could do nothing we bitcoiners could do nothing um or you could on the far end of the spectrum hard fork seize them burn them etc so there's some ideas in the middle let's just go down the list here the panel here what would you do brandon

7:15Beimnet Abebe:i would i would just leave the coins alone um if a quantum computer can start stealing people's coins and we haven't migrated. It's Bitcoin's ownership is not about, I think there was a talk about like proving ownership with signatures. Bitcoin is a protocol and the protocol depends on signatures. Whoever can produce a valid signature can spend the coins. I think it would be controversial to the point of fracturing the Bitcoin community and creating lots of drama if we were to say we're going to break that premise, that whoever produces the signature can move the coins. That is, of course, predicated on that we do get Bit360 and some additional cryptographic assumption in before a quantum computer really starts attacking, which I think is very likely because the timeline for quantum computers is very long.

8:00Alex Thorn:So you're saying a little bit of mitigation work and then do not violate the property rights of Satoshi.

8:06Beimnet Abebe:Yeah, but the tips fall where they may.

8:07Alex Thorn:What about you, James? I'll keep it simple and short. If you undermine the property right guarantees of Bitcoin were cooked. It was pointless. So leave them alone. Hunter? We have to be really careful here because as you both correctly pointed out, that essentially we have something as drastic as BIP-361 would be a very egregious violation of the private property promise. And that's also understood to be essentially the social contract of Bitcoin, That we don't necessarily support or promote activation of protocol changes that unilaterally prevent people from spending their coins. That said, I think it's also important to understand these different positions and perspectives that we're doing things based on the right principles.

8:57Alex Thorn:And, you know, obviously, burning those coins permanently just because we want number to go up is a bad idea. It's just a bad idea all around. And even I will also point out every author of BIP 361 does not support their own writing, their own BIP. Which was an informational BIP. Here was an idea. By the way, that said ban the spending to the P2PK addresses after a period of time. Right. Then ban them sending after a period of time effectively freezing them. Right. And now on the other side, the liquidation argument, we have to also be careful about why we want to support liquidation. If we want liquidation for a number to go down so that we can buy people's stolen property at a discount, I think that's also probably not a good reason.

9:49Alex Thorn:That's an interesting framing of the do-nothing argument. Alex, what's your answer here?

9:53Beimnet Abebe:Yeah, so my answer just quickly is, look, I don't have a strong opinion. I think there are good arguments for and against. And if anything, I would advocate to not focus on this issue in particular as much as focusing on a solution for the contingency that a quantum computer exists and taking care of the folks that are still using Bitcoin and thinking about Bitcoin into the future. I will point out two things, though. One is that there are quantum computing companies out there that are absolutely looking at Satoshi's coins as part of their go-to-market.

10:21Alex Thorn:Yeah, I saw Greg Maxwell actually posted this on Reddit saying that he was aware of quantum computing companies specifically raising money for the purpose of attacking Satoshi's coins.

10:32Beimnet Abebe:So that is true. I think the other thing, you know, the other fact is, you know, I think this is the question the community is really split on. I think the last survey I remember was last summer. Presidio did a post-quantum Bitcoin thing and they surveyed everyone there and it was 50-50 split. You know, freeze or don't freeze. And so I think this is going to be a hard issue, but I don't think we focus on it. I think we focus on doing what we can to secure the Bitcoin network for everyone alive today.

10:53Alex Thorn:All right. 15 seconds left. I'm going to ask the question of the title of the panel. How real is the quantum threat, Brandon? Not at all. James? Bitcoin's maybe the most geopolitically potent technology that any of us will be privy to in a long time. And in terms of potential, we have to be cognizant that there will be attacks. When the government shows up and tells me that they're here to help and that they're retiring my ECDSA scheme, I'm a bit wary. Quantum's not a threat. Do the research. All right, quick, Hunter. I don't think that we should focus too much on whether the threat is real or not.

11:29Alex Thorn:I think we should. You're refusing to answer the question, but you have one second. How real is the quantum threat, Hunter? We need to do the work to build the solutions to make sure that we provide, based on evidence and truth, whether we should make changes to mitigate the fund. Alex. I don't want to roll the dice and bet my Bitcoin and my family's Bitcoin on the chance that those guys are wrong. So we need to do something. Thank you, everyone. Alex Pruden, Hunter Beast, James O 'Byrne, and Brandon Black. I'm Alex Thorne. Thank you. Let's go now to our friend, Bimnet Abibi from Galaxy Trading.

11:59Alex Thorn:As always, Bimnet, welcome back to Galaxy Brands. Thanks for having me. I'm in Las Vegas for the Bitcoin conference. It's day three this morning as we record on Wednesday, April 29th. That's why my voice is a little bit lost because I've been talking a lot and networking here at the conference. But another consequence of me being here, I haven't been able to follow the equity markets as closely as normal, but it did look to me like after a new all-time high on Monday that the S &P, sort of the shape of the month-long rally that equity markets have been on, it looks like it might be plateauing here.

12:32Alex Thorn:Is that what you think? And if so, what's standing in the way of a further risk rally?

12:37Beimnet Abebe:Yeah, I think you just have a lot of earnings-related catalysts coming up. I think four or five MAG7 names report this week, and you've got a bunch more earnings next week. And so I think markets just need a clear picture on how last quarter went and what folks are thinking in terms of guidance for the rest of the year. And so I really think we're stalling because we've got a bunch of earnings-related catalysts today, tonight, actually. And then you also have the Fed as well as other central bank meetings that are happening this week and a whole host of economic data as well as potential response to the Iranian response in terms of the terms they've provided.

13:29Beimnet Abebe:And so we are stalling out, I think, some of the optimism. There was a lot of optimism baked in in terms of a deal getting done with Iran sooner rather than later. And so I think you might have gotten to close to peak optimism pricing in the market with respect to just benign outcomes happening. And kind of the left tail of, you know, which I would describe as just like massive kinetic warfare, that kind of being taken out of the market. And so at this point, with that left tail taken out of the market and with a lot of optimism baked in, your risk-reward is a little bit more skewed towards repricing in those left tail risks and or being a little bit less optimistic about a deal getting done.

14:14Beimnet Abebe:But the issue is it's not really about a deal getting done. It more has to do with timing. And so if this conflict drags on, the impact is going to get worse and worse. And so I would think about it as a constantly decaying bill. particularly with respect to the energy complex. You know, and so essentially, you know, I think the longer the conflict goes, the higher oil prices end up averaging over the course of the year. I would pay less attention to kind of like the front contracts and stuff and more attention to like, where's crude expected to be like in December of this year or early next year.

14:55Beimnet Abebe:And those prices are coming up and they're coming up for, you know, not just WTI crude and Brent, but, you know, kind of the rest of the energy stack, diesel, jet fuel, things of that nature. And so in theory, I think there's a pathway to a resolution. I'm less optimistic about it being done sooner rather than later now. And so my thinking is you're probably like four to six weeks out now is kind of my guidepost in terms of a resolution. And then you have to think about, okay, if you're like, okay, let's say you agree to a deal, there's some nuclear terms, both sides are kind of content. There still has to be the facilitation of the terms of the deal, and it also takes time to demine the strait.

15:41Beimnet Abebe:It takes time for new vessels to come in. There's frictions. And essentially what's happening is, because of that, and because of how long the straits have been closed, we're drawing on inventories across the world. And so you're seeing huge inventory draws, and they're probably going to continue. And so what happens when there's genuine scarcity and a really inelastic good? And so you might have a little element of price discovery in the energy complex, and that risk might be a little underpriced. But let me just leave it there in terms of just kind of setting the stage. I wanted to ask you about another topic.

16:24Alex Thorn:I think that's very, by the way, that's very in line with how you've been thinking about it. And I think, you know, helps, you know, bring us up to speed a little bit on just the evolution week over week, which hasn't been, you know, enormous, but nonetheless is continuing to evolve on the ground there. I wanted to ask you about Kevin Warsh. The Senate Banking Committee this morning voted him out of committee on a party line vote, as was expected, but was not allowed to go forward by Senator Tom Tillis, a key vote on that committee until the DOJ had dropped their inquiry into the Fed spending, which they did drop and Tillis did lift his block.

17:01Alex Thorn:and then now he's passed. So Kevin Warsh will go to the floor to be voted on as the new Fed chair. What's your thought in general on Warsh here? Very likely, it looks like now to be confirmed.

17:11Beimnet Abebe:Yeah, I mean, I think he stressed, you know, kind of the Fed independence, you know, from the administration, which is like a very crucial point. And I believe that, you know, he will be relatively independent. I also just think that, you know, the market's so big and, you know, oftentimes will make decisions for you. And so even if he wasn't as independent as folks might want him to be, the market would force an appropriate reaction. And so I was never concerned about it, but it was nice to kind of see and feel that he is kind of worried about the perception of independence and wants to be independent.

17:53Beimnet Abebe:So I thought that was notable. I think in terms of balance sheet policy, right now, we can talk about it all we want, but realistically, between Treasury and the Fed, they have all the tools they need to make sure that fixed income markets are well-functioning, and they have all the tools necessary to reduce the size of the Fed's balance sheet if they wanted to. By that, I mean deregulation of banks so that they can be a little bit more aggressive with their reserves. The Treasury can do buybacks in certain points of the curve. They can also, you know, adjust issuance. And so there's a lot of tools available for the Fed and the Treasury to kind of manage, you know, the bond market and the Fed's balance sheet.

18:43Beimnet Abebe:And so, you know, people talk about like that, but, you know, it's kind of the folks that are like very into, you know, the small trading nuances of like, you know, the 30-year point versus the 20-year point or the butterfly this, that. And I think just in terms of my approach to it, it's like, yes, we are going to make sure that the bond market is well functioning. And these are, you know, between Bess and Warsh, you have two guys that are very attuned to that market and they will, you know, they have the tools necessary. And I think generally, like, it is appropriate. It's just one of those things where, like, if you use your tools now, you won't have them later, right?

19:20Beimnet Abebe:And so if you deregulate the banks now, and you allow them to, you know, aggressively deploy their balance sheet, or less conservatively, let's put it that way, I don't, I wouldn't call it aggressive. But that just means that, you know, in three years from now when deficits are even bigger and we have like a genuine issue in the bond market, that's not a tool you can actually use. And so it's just another way of kicking the can down the road. But it'll take you through midterms and through, you know, the rest of the administration, which, you know, I think is kind of the objective here.

19:54Alex Thorn:Makes sense. as I guess the case with a lot of the Fed's tools, the more they use them, the weaker they get, particularly the big one, money printing, or the less impactful they get.

20:05Beimnet Abebe:I think the most notable thing in central bank world right now is that basically every central bank in the G10 economy is expected to hike rates this year. Take the Eurozone, I think out to December, they have 70 plus basis points of hike, so almost 325-bit pikes priced into their curve. and Canada, Japan, England, New Zealand, Australia, etc. All these places are expecting to hike interest rates. And right now, it seems like, given the pricing in the rest of the world, the release valve in terms of folks worrying about inflation and bond markets is the U.S. And so you've seen U.S. fixed income start to sell off And you're now seeing small pricing of hikes later this year in the U.S.

20:59Beimnet Abebe:market. And I honestly think that if inflation expectations continue to move higher and energy markets continue to push higher, I think that's going to be a genuine point of contention for the Fed potentially in terms of whether or not to consider hikes, the language around it. but it's getting a little uncomfortable.

21:20Alex Thorn:The president doesn't want hikes, right? And Warsh has been thought of as a dove, but your point too is, in addition to him having expressed independence, which is great, the market really drives this even more. It seems like, I mean, he can be a little dovish, but maybe he'll be able to resist hiking if he feels so strongly, but he's certainly going to cut into an environment where the rest of the world is hiking, right? or inflation is very bad. I mean, it just doesn't, wouldn't make sense.

21:50Beimnet Abebe:Well, it's also like the other issue is the labor market's okay right now. We, you know, immigration has been such a slowdown as well as like, you know, you see all these headline, you know, layoff numbers. But at the end of the day, like, you know, we're still adding jobs right now, if. And it's not like, you know, the unemployment rate actually went down last on farm payrolls. And so if you have the story of AI growth and the labor market being okay and inflation through the roof, it's really hard to not at least think about hiking rates. Because clearly the economy can withstand it. And you have to manage inflation and you have to manage inflation expectations.