Intel’s 17-qubit quantum test chip.
Stefan Thomas really could have used a quantum computer this year.
The German-born programmer and crypto trader forgot the password to unlock his digital wallet, which contains 7,002 bitcoin, now worth $265 million. Quantum computers, which will be several million times faster than traditional computers, could have easily helped him crack the code.
Though quantum computing is still very much in its infancy, governments and private-sector companies such as Microsoft and Google are working to make it a reality. Within a decade, quantum computers could be powerful enough to break the cryptographic security that protects cell phones, bank accounts, email addresses and — yes — bitcoin wallets.
“If you had a quantum computer today, and you were a state sponsor – China, for example – most probably in about eight years, you could crack wallets on the blockchain,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings.
This is precisely why cryptographers around the world are racing to build a quantum-resistant encryption protocol.
Right now, much of the world runs on something called asymmetric cryptography, in which individuals use a private and public key pair to access things such as email and crypto wallets.
“Every single financial institution, every login on your phone — it is all based on asymmetric cryptography, which is susceptible to hacking with a quantum computer,” Thiel said. Thiel is a former director of Utimaco, one of the largest cryptography companies in Europe, which has worked with Microsoft, Google and others on post-quantum encryption.
The public-private key pair lets users produce a digital signature, using their private key, which can be verified by anyone who has the corresponding public key.
In the case of cryptocurrencies such as bitcoin, this digital signature is called the Elliptic Curve Digital Signature Algorithm, and it ensures that bitcoin can only be spent by the rightful owner.
Theoretically, someone using quantum computing could reverse-engineer your private key, forge your digital signature, and subsequently empty your bitcoin wallet.
“If I was dealing in fear-mongering … I’d tell you that among the first types of digital signatures that will be broken by quantum computers are elliptic curves, as we use them today, for bitcoin wallets,” said Thorsten Groetker, former Utimaco CTO and one of the top experts in the field of quantum computing.
“But that would happen if we do nothing,” he said.
Crypto experts told CNBC they aren’t all that worried about quantum hacking of bitcoin wallets for a couple of different reasons.
Castle Island Ventures founding partner Nic Carter pointed out that quantum breaks would be gradual rather than sudden.
“We would have plenty of forewarning if quantum computing was reaching the stage of maturity and sophistication at which it started to threaten our core cryptographic primitives,” he said. “It wouldn’t be something that happens overnight.”
There is also the fact that the community knows that it is coming, and researchers are already in the process of building quantum-safe cryptography.
“The National Institute of Science and Technology (NIST) has been working on a new standard for encryption for the future that’s quantum-proof,” said Thiel.
NIST is running that selection process now, picking the best candidates and standardizing them.
“It’s a technical problem, and there’s a technical solution for it,” said Groetker. “There are new and secure algorithms for digital signatures. … You will have years of time to migrate your funds from one account to another.”
Groetker said he expects the first standard quantum-safe crypto algorithm by 2024, which is still, as he put it, well before we’d see a quantum computer capable of breaking bitcoin’s cryptography.
Once a newly standardized post-quantum secure cryptography is built, Groetker said, the process of mass migration will begin. “Everyone who owns bitcoin or ethereum will transfer [their] funds from the digital identity that is secured with the old type of key, to a new wallet, or new account, that’s secured with a new type of key, which is going to be secure,” he said.
However, this kind of upgrade in security requires users to be proactive. In some scenarios, where fiat money accounts are centralized through a bank, this process may be easier than requiring a decentralized network of crypto holders to update their systems individually.
“Not everybody, regardless of how long it takes, will move their funds in time,” said Groetker. Inevitably, there will be users who forget their password or perhaps passed away without sharing their key.
“There will be a number of wallets … that become increasingly insecure, because they’re using weaker keys.”
But there are ways to deal with this kind of failing in security upgrade. For example, an organization could lock down all accounts still using the old type of cryptography and give owners some way to access it. The trade-off here would be the loss of anonymity when users go to reclaim their balance.
GameStop shares jump after the company raises over $1B in stock sale
A GameStop store is pictured in New York, January 29, 2021.
Carlo AllegriI | Reuters
GameStop shares climbed after the video game retailer said it sold 5 million additional shares, raising $1.13 billion in capital to accelerate growth.
The original Reddit-favorite meme stock jumped 10.6% at one point Tuesday morning after the company announced the completion of its at-the-market equity offering program that was initially disclosed on June 9. By late morning, the daily gain was about 6%. GameStop said it will use the proceeds for general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet.
This is the second stock sale that GameStop has conducted since the company became a star on Reddit’s WallStreetBets forum, where retail traders aimed to push stock prices higher and squeeze out short-selling hedge funds. GameStop sold 3.5 million additional shares in April and raised $551 million.
Investors have been encouraged by the moves and looked past the dilution of their stakes as GameStop took advantage of its monstrous rally this year — more than 1,000% — to speed up its e-commerce transformation.
White Square Capital, a London-based hedge fund, is closing its main fund and returning capital after suffering losses from betting against GameStop, the Financial Times reported Tuesday.
Earlier this month, GameStop named former Amazon executive Matt Furlong as its new CEO. The company also hired several other former Amazon executives, including Jenna Owens, its new chief operating officer; Matt Francis, its first chief technology officer; and Elliott Wilke, its chief growth officer.
For its fiscal first quarter, GameStop reported narrower-than-expected losses per share and revenue that topped Wall Street estimates. As of May 1, GameStop said, it had paid off its long-term debt and no longer had any borrowings under its asset-based revolving credit facility.
Enjoyed this article?
For exclusive stock picks, investment ideas and CNBC global livestream
Sign up for CNBC Pro
Start your free trial now
Gen Z investing in cryptocurrency BTC, ETH and meme stocks AMC, GME
The next generation of investors are super online — instead of traditional investments, many Gen Z and young millennial investors, from teens to those in their early 20s, are bullish on cryptocurrency and the technology that surrounds it.
Some have spent the bulk of their savings on these type of investments: Nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies, according to a new CNBC Millionaire Survey. More than a third of millennial millionaires have at least half their wealth in crypto and about half own NFTs.
Young investors have also taken part in recent meme stock rallies, which occur when retail investors buy up shares of stocks shorted by Wall Street hedge funds, like GameStop and AMC Entertainment. In part, the investors hope to force hedge funds to pay, overcoming what they see to be an inefficient system.
One reason young people have turned to alternative investments like crypto is simple: Many just don’t trust traditional investment institutions, as Allison Reichel, 23, tells CNBC Make It. They prefer to rely on their own research rather than use insights from traditional institutions, like financial advisors from legacy firms.
That includes Reichel herself. While working on her PhD in economics, Reichel is also a senior editor at crypto news site Blockworks in Washington, D.C. She started to invest “heavily” in crypto this year, and her crypto holdings account for most of her portfolio, she says. Reichel plans to hold her bitcoin and ethereum long-term.
But this distrust isn’t the only thing driving young people to invest in cryptocurrencies and meme stocks. First, many have a genuinely positive outlook on blockchain technology. And second, at the same time that they feel disconnected from traditional investments, many are finding community, and sometimes fun, in the crypto space. They want to invest in what they connect with, whether it be stocks, coins or digital assets.
CNBC Make It talked to several Gen Z and young millennial investors, like Reichel, about how these factors impact where they choose to put their money, and why they’re still investing with caution.
“In any crypto, you have those super strong network effects where people believe in it so much that they’re like, ‘I’m never selling because I believe it’s the future of finance,'” Reichel says. “I see the long-term applicability and use of crypto,” she says of her own plans to hold.
That’s true of many young investors, who believe in the technology itself.
While doing research for her PhD, Reichel was inspired by how bitcoin was being used to help those in need in different countries. In Venezuela, for example, crypto was a way that families could still receive money from relatives in the U.S. during a time when the president wasn’t allowing humanitarian aid.
Similar reasons led 23-year-old Kyla Scanlon to begin investing in bitcoin and ethereum during college in 2016. “I really liked the application that [bitcoin] has for people who are unbanked. My whole life thesis is, ‘How do we create financial accessibility and equality for everybody?’ I think crypto is one step in allowing people who don’t have access to traditional methods like banks to do so,” she says.
Scanlon first started trading options in high school and began working in asset management after graduating from college, which has boosted her confidence in her personal investment decisions, she says. Her core cryptocurrency holdings still consist of bitcoin and ethereum, and she also owns stock in companies like Roblox, Facebook and Etsy.
Scanlon is also bullish on blockchain technology, which is a decentralized digital ledger that documents cryptocurrency transactions and other information. “I don’t know if bitcoin will ever be like a currency, but I’m big on the technology,” she says.
Kayla Kilbride, a 24-year-old known on financial TikTok as @girlstalkstocks with over 108,000 followers, has “a growing confidence in bitcoin and ethereum specifically,” due to the capabilities of each blockchain.
Kilbride began investing in bitcoin and ethereum earlier this year, starting with small amounts here and there. She has just a few hundred dollars invested in cryptocurrency, but plans to continue to grow her holdings. In lieu of a full-time job, she currently day trades and sells NFTs of her social media content to earn income.
“As I began to understand the blockchain and the technology behind it, that is when I felt comfortable saying ‘OK, even if I invested when bitcoin was priced at $60,000 and it drops down to, let’s say, $20,000 or even lower, I can still support it, even if I lose money in the endeavor,'” Kilbride says. “The risk was worth it because I liked the technology.”
But this doesn’t worry Reichel, Scanlon and Kilbride much, in part because they’re intentional with their investments.
Reichel is extremely bullish on bitcoin’s future value, but only invests what she can afford to lose. “I’m comfortable losing it because I make sure that I have all my bills paid,” she says. “Obviously it’s great when the gains come, but for me, [bitcoin is] truly something that I believe has the potential to revolutionize monetary regimes throughout the world.”
Of course, many Gen Z and young millennial investors initially turned to cryptocurrency as a way to avoid traditional financial institutions, but still build wealth.
Reichel, Scanlon and Kilbride, who all research on their own and invest without the help of financial advisors, say part of their distrust stems from witnessing inequitable and inefficient financial systems.
The younger generation worries about their wealth and retirement, Reichel says. They don’t want to rely on the same traditional systems that their parents did. “I think a lot of people see inefficiencies and really want to change it,” she says.
Scanlon agrees. She also believes concerns over inflation are driving some interest in cryptocurrency among young people.
And with crypto, the barrier to entry is often low.
“It’s about accessibility,” says Cooper Turley, a crypto strategist at ethereum-based streaming app Audius. “With most tokens, there is no IPO. Retail investors have the same opportunities to contribute to and earn value from early stage [crypto] projects the same way venture capitalists do.”
Turley, 25, invested in bitcoin and ethereum in 2017 while in college, and now, he says those investments have made him a millionaire. Turley is an angel investor in the space, he says, and also acts as an advisor for Variant Fund, a crypto venture firm.
“This paradigm shift of democratized ownership paired with 24/7 trading and always-on exchanges is far more native to an internet-savvy generation than using a brokerage,” he says.
Still, it’s important to note that there are significant downsides to crypto. Experts warn investors to be cautious when putting money into cryptocurrency; it can be extremely volatile and it’s possible to lose your entire investment.
Many young investors also choose to have fun with their investments by buying meme coins, like dogecoin, and meme stocks, like GameStop and AMC Entertainment.
“Crypto and meme stocks are more memorable to young investors than traditional companies,” Turley says. “Young investors care far less about the bottom line of a corporation and far more about a meme or narrative they can collectively share with their friends.”
Dogecoin, for example, launched in 2013 based on the “Doge” meme, which portrays a shiba inu dog. Its creators didn’t intend for dogecoin to be taken seriously, but it is now one of the top 10 cryptocurrencies my market cap, with a market value of over $22 billion.
Kilbride sees dogecoin as a way to introduce people to crypto. “Dogecoin, being very cheap, is affordable. It’s easy to understand,” Kilbride says, which is part the reason she bought it too. “I’ve invested more in bitcoin and ethereum because of dogecoin [gains].”
“Meme stocks take away those super scary aspects of finance,” Reichel says. “When you think about the stock market, the typical picture is all of these older guys in suits who have been running it for years.” That’s not true for something like dogecoin.
There’s also the feeling that seemingly everyone is getting in on the action. Though many meme coins are entirely speculative, very risky and sometimes fraudulent, it can be difficult to not jump in on the trades. “It can be hard with all the FOMO (fear of missing out), because you see all these coins taking off,” Reichel explains.
For Turley, “the best example of a meme coin I’ve invested in is unisocks, or $SOCKS, a digital token representing a claim on a physical pair of socks,” he says.
But sometimes, it’s about more than fun. For many, the rallies of meme stocks like GameStop and AMC symbolized standing up to big-name Wall Street hedge funds, a desire that stems from a feeling of “a lack of access for the ‘little man,'” Kilbride says.
To Scanlon, “there’s this underlying resentment because our parents were able to have a 60/40 stock/bond portfolio and be fine and retire with no worries at all. But that’s not the case for this generation.”
Yet despite putting money into “fun” investments, these young investors still aim to be somewhat careful.
For Kilbride, that means avoiding any coins that seem sketchy. “When there’s so much hype … a lot of people are getting tricked, a lot of other people think it’s funny, but when you don’t have so much [money] where you can just lose, it’s too dangerous,” she says.
While traditional investments feel inaccessible to the next generation of investors, many are finding a sense of community in alternatives like cryptocurrency and meme stocks.
“I say the C in AMC stands for community, because I think that’s what [the frenzy] is about,” Scanlon says. “Post-pandemic, I think there’s a sense of loneliness. People are finding community within the stock market, in the Discord servers, in Reddit. People are just craving community because we don’t have that in the same way that we used to.”
Buying into things like GameStop and AMC is partially about being a small part of the movement, Kilbride says.
“When GameStop first rallied back in January, I invested as part of the community. I did not invest very much and I invested near the top, just to hold the line. I was like, ‘I want to purchase to be able to print it out and frame it on my wall,'” she explains.
The same was true for Reichel. “I invested a little bit just because I was like, ‘Oh this is fun,'” she says. “Companies that maybe never perform that well were having this crazy moment. I was like, ‘I want to be part of this.'”
For some, the community aspect is at the core of their motivation to invest.
That includes Turley, who always considers the community that surrounds a coin before investing. In fact, “I base my investments around the strength of the community,” he says.
YouTube secures a big win in the EU over copyright
YouTube’s logo is seen against the flag of the European Union.
Omar Marques | SOPA Images | LightRocket | Getty Images
LONDON — The European Union’s top court on Tuesday ruled that Google’s YouTube and other online platforms should not be held liable for copyright-infringing uploads in certain situations.
As things stand, online platforms “do not, in principle, themselves make a communication to the public of copyright-protected content illegally posted online by users of those platforms,” the European Court of Justice said.
However, YouTube and other platforms could still be held liable if it “has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it,” the ECJ added.
The EU recently introduced copyright reforms aimed at making its rules fit for the digital age. One part of the law which drew significant controversy at the time meant that YouTube, Facebook and other platforms would have to install filters to block users from sharing copyrighted material.
Tuesday’s ruling focuses on old copyright rules in the bloc. The case arose from a lawsuit from music producer Frank Peterson against YouTube over the uploading of recordings in 2008 over which he claimed to hold the rights.
The news marks a win for YouTube and other content-sharing sites, which have long tussled with artists and musicians over how to compensate them fairly for work that gets distributed on the web.
YouTube has clamped down on copyright violations over the years, a move that has drawn the ire of some popular creators on the platform. Tensions over YouTube copyright action escalated in 2020 as the company increasingly automated content moderation due to coronavirus lockdown restrictions.
A YouTube spokesperson said the company paid over $4 billion to the music industry over the past 12 months, with 30% of that sum coming from monetized videos.
“YouTube is a leader in copyright and supports rights holders being paid their fair share,” the spokesperson said Tuesday. “That’s why we’ve invested in state of the art copyright tools which have created an entirely new revenue stream for the industry.”
UK trade: China imports up staggering 65% post Brexit, while EU countries plummet – data
Brexit tensions set to explode: Frost issues new ultimatum to EU –threatens to rip up deal
GameStop shares jump after the company raises over $1B in stock sale
If Scotland gets independence, will Sturgeon change SNP's name to Alba?
Schumer urges passage of elections bill in the Senate
Euro 2020: Why no Scotland players have to isolate after Gilmour contracts COVID – but England pair do | UK News
Gen Z investing in cryptocurrency BTC, ETH and meme stocks AMC, GME
New DUP leader issues urgent Brexit warning to Boris Johnson – EU agreement MUST change
Afghan interpreters who worked with British military land in UK today after fleeing Taliban | World News
EU infighting breaks out as nations gang up on Hungary and Poland – punishment threats
Latest News1 week ago
G7 summit: World leaders discuss COVID origins – as WHO keeps Wuhan lab leak theory ‘open’ | Politics News
World6 days ago
Microsoft CEO Satya Nadella named chairman of the board
World1 week ago
Jeff Bezos’ Blue Origin auctions spaceflight seat for $28 million
World1 week ago
Doctor warns Southern states vulnerable to Delta variant this summer
World11 hours ago
Where are unvaccinated people not allowed to travel?
Politics3 days ago
Lib Dem deputy leader refuses to rule out standing aside for Labour in Batley by-election
Politics1 week ago
Jeremy Corbyn attends pro-Palestine protest outside No10
Politics4 days ago
German backlash as carmakers revolt at EU deadline to ban diesel and petrol vehicles