Bitcoin Fair Value Faces 20% Quantum Discount—And Rising

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure New research shows Bitcoin is facing a discount of about 20% due to the Quantum Computing threat, and it could rise further without an upgrade.

Bitcoin Quantum Discount Could Hit 60% By 2028

Capriole Investments founder Charles Edwards has published a new research piece on how the Quantum Computing risk could discount the fair value of Bitcoin. Quantum Computing is an upcoming technology that could, in theory, be used to break into certain old BTC wallets.

Related Reading: Bitcoin Losses Now Equal 19% Of Market Cap, Echoing May 2022“A quantum hack would compromise the core tenets of Bitcoin,” noted Edwards. The analyst further added:

“Trust the code” and “hard money” value propositions would be crippled overnight as up to 30% of all Bitcoin supply (the coins with exposed public keys) are stolen and liquidated.

Currently, it’s yet unknown when Quantum Computing will advance enough to be able to compromise BTC’s cryptography (an event known as the “Q-Day”), but there has been an increasing amount of discourse surrounding the topic.

Edwards, who has been a vocal voice about the issue in the Bitcoin community, has argued that, given the Quantum threat, logical market participants must now discount the asset’s fair value by a “Quantum Discount Factor.”

The research article describes this metric as the number of years to upgrade BTC against the threat subtracted from the cumulative probability of Q-Day occurring by year. To find the probability of Q-Day taking place, Edwards has referred to estimates from various experts.

Below is the compiled data of these predictions.

The probability of Q-Day occurring by year | Source: @caprioleio on Substack

As is visible in the chart, there is a 60% chance that Q-Day could occur by 2030 and about 80% that it could happen by 2031. All of the predictions put it as happening sometime in the next nine years (2035 and before).

As for how long it could take to upgrade Bitcoin, the article puts a realistic estimate at approximately two years. “In an extremely optimistic and aggressive scenario this might be feasible in 1 year, but is more likely to be closer to 3 years, as the below diagram elicits,” said Edwards.

Putting both the estimations together, the analyst has mapped out the Quantum Discount Factor for the digital asset.

How the Quantum Discount Factor will rise with each year | Source: @caprioleio on Substack

From the graph, it’s apparent that the 2026 Quantum Discount Factor sits at 20% for Bitcoin. This means that the fair value of the asset should be 20% lower today due to the Quantum risk.

Related Reading: Bitcoin Activity Plummets: New & Active Addresses Both Down 40%+ Since 2021In the scenario that no action is taken for proofing the network against the threat, the discount will increase to nearly 40% by 2027. The figure will rise further to about 60% in 2028 and 75% in 2029.

BTC Price

At the time of writing, Bitcoin is floating around $67,700, down 2% in the last seven days.

Looks like the price of the coin has been moving flat | Source: BTCUSDT on TradingView

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