$1.2 Billion Investment Seriously Threatened! VanEck CEO: Quantum Computers Break Bitcoin Privacy

Jan van Eck, CEO of investment management firm VanEck, stated that quantum computers could threaten the encryption and privacy of Bitcoin, but for now, it remains a solid investment. Van Eck pointed out that the Bitcoin community has been asking itself: Is Bitcoin’s encryption sufficient? Because quantum computing is on the horizon. He said the company believes in Bitcoin, but if it is ever fundamentally broken on a theoretical level, they will ultimately abandon it.

VanEck CEO Questions Whether Bitcoin’s Encryption Is Sufficient

(Source: CNBC)

Van Eck’s comments on Saturday sent shockwaves through the crypto community. He said, “There are still things within the Bitcoin community that people outside of crypto need to understand. The Bitcoin community keeps asking itself: Is Bitcoin’s encryption sufficient? Because quantum computing is coming.” This concern comes from the CEO of one of the world’s largest crypto asset management firms and carries much more weight than that of a typical market commentator.

VanEck is one of the world’s largest crypto asset managers, offering a variety of Bitcoin products, including a spot Bitcoin exchange-traded fund launched in the US, which has attracted over $1.2 billion in inflows since its launch at the start of 2024. This means Van Eck’s concerns are not baseless pessimism but are based on professional judgment managing billions in Bitcoin assets.

He said that while the company believes in Bitcoin, it existed before cryptocurrencies were invented, “If we think Bitcoin’s theory is fundamentally broken, we will abandon Bitcoin.” The shock comes from the clear stance of “will abandon.” For an institution managing $1.2 billion in Bitcoin ETF assets, abandoning Bitcoin would mean liquidating all holdings, which could have a huge impact on the market.

Van Eck’s concerns focus on the potential threat quantum computers pose to Bitcoin’s encryption algorithms. Bitcoin uses the SHA-256 hash algorithm and the Elliptic Curve Digital Signature Algorithm (ECDSA) to secure transactions and user privacy. These algorithms are secure under current conventional computing, requiring astronomical computing time to break. However, quantum computers operate on fundamentally different principles and could theoretically break these algorithms in a short time.

If quantum computers could really break Bitcoin’s encryption, the consequences would be catastrophic. Hackers could reverse-engineer private keys from public Bitcoin addresses and steal assets from any address. Bitcoin’s privacy would also collapse—while all transaction records are already public, at least the true identities behind addresses are hidden. Once encryption is broken, the association between address and real identity could be traced, destroying Bitcoin’s anonymity.

Timeline and Technical Reality of the Quantum Computer Threat

Cryptographer and cypherpunk Adam Back stated earlier this month that Bitcoin is unlikely to face a substantive quantum threat for at least the next 20-30 years. This view is in stark contrast to Van Eck’s concerns, highlighting the industry’s divided assessment of the quantum threat.

Adam Back is a legendary figure in Bitcoin technology; his Hashcash proof-of-work algorithm is the predecessor to Bitcoin mining, and Satoshi Nakamoto cited his work in the Bitcoin whitepaper. As a cryptography expert, Back’s technical judgment is highly authoritative. He believes quantum computers won’t threaten Bitcoin for another 20-30 years based on several technical realities.

First, today’s quantum computers are still at an early stage. Google’s recently announced Willow quantum chip, while showing advantages in some computing tasks, is still far from the required number and stability of qubits needed to break Bitcoin’s encryption. Theoretical estimates suggest cracking Bitcoin’s ECDSA would require 1,500-2,000 logical qubits, while current state-of-the-art quantum computers have only a few hundred physical qubits with high error rates.

Second, the Bitcoin community is not sitting idly by. Research on quantum-resistant encryption algorithms has been ongoing for years, and if the quantum threat becomes real, Bitcoin can upgrade to quantum-resistant algorithms via a hard fork. This upgrade is technically feasible; the challenge is coordinating global nodes to achieve consensus. However, faced with an existential threat, the likelihood of consensus is very high.

Third, quantum development may be slower than expected. Qubit stability and error correction are the main bottlenecks, and solving these issues requires breakthrough advances in physics and engineering. Even with optimistic roadmaps, truly threatening quantum computers may still be at least 15-20 years away.

Two Perspectives on the Quantum Computer Threat

Optimists (Adam Back): No substantive threat for the next 20-30 years, Bitcoin has ample time to upgrade to quantum-resistant algorithms

Cautious (Jan van Eck): Must continually monitor quantum technology progress; if encryption is fundamentally broken, will exit Bitcoin investments

This divergence reflects the different priorities of each role. Technical experts focus on concrete feasibility and timelines, while asset managers must consider tail risks and fiduciary duty. For VanEck, which manages $1.2 billion in client assets, even a small probability of a quantum threat must be factored into their risk assessment framework.

Bitcoin Whales Turn to Zcash for Privacy Protection

Van Eck noted that many “OGs” or “whales” in Bitcoin are turning their attention to Zcash, a privacy-focused token aimed at providing greater privacy for their transactions. This observation reveals deep privacy concerns within the Bitcoin community.

Bitcoin’s privacy has always been a paradox. Bitcoin addresses aren’t directly linked to real identities, but all transactions are publicly recorded on the blockchain, allowing anyone to track fund flows. As on-chain analysis tools improve, it’s increasingly easy to link Bitcoin addresses to real-world identities through transaction patterns and correlation analysis. For large holders (“whales”), such transparency could pose security risks.

Zcash uses zero-knowledge proof technology (zk-SNARKs), allowing users to validate transactions without revealing transaction details. This means transaction amounts, senders, and receivers can all be completely hidden, while still proving the transaction adheres to protocol rules. This technology provides a solution for users seeking maximum privacy.

In the past three months, as interest in anonymous crypto transactions has surged again, privacy coins have gained traction, and Zcash’s price has soared over 1,300%. This astonishing increase not only reflects renewed recognition of its technical value but also highlights the market’s urgent demand for privacy. Increasing regulatory pressure, stricter exchange KYC requirements, and the proliferation of on-chain tracking tools have all fueled the resurgence of privacy coins.

However, privacy coins also face regulatory challenges. Many national regulators are wary or even hostile toward privacy coins, fearing their use in money laundering and illegal activities. Some exchanges have already delisted or restricted privacy coin trading. This regulatory risk is something investors must consider.

Investment Strategy: DCA in Bear Markets and Cycle Forecasting

Van Eck concluded that the four-year cycle has now been priced in by the market and recommends using dollar-cost averaging (DCA) during bear markets rather than chasing bull runs. He stated that due to “mainstream global liquidity reasons” and “on-chain realities,” Bitcoin “definitely” needs to be included in investors’ portfolios.

He briefly explained the halving cycle, adding that in the past decade, Bitcoin has experienced a major down year every four years, “and 2026 is expected to see another major down year,” with investors already positioning themselves for this bear market. This forecast provides investors with a timeline and suggests using DCA to gradually accumulate during the expected 2026 bear market.

“Every cycle is different. Obviously, Bitcoin’s upside in this cycle is relatively small, so many expect the downside during corrections will also be smaller.” Since hitting an all-time high in early October, Bitcoin has dropped more than 30%, bottoming out just above $82,000 last Friday and briefly approaching $88,000 in early Monday trading.