Investment Firm Drops Bitcoin Over Quantum Computing Security Fears

Global investment bank Jefferies has removed Bitcoin from its strategic investment recommendations due to growing concerns about quantum computing's potential to break cryptocurrency encryption. Christopher Wood, Jefferies' Global Head of Equity Strategy, announced the shift in his latest GREED & Fear newsletter, eliminating the 10% Bitcoin allocation he first introduced in 2020.

Wood's decision stems from advancing quantum computing capabilities that threaten the SHA-256 cryptographic algorithm securing Bitcoin transactions. "Developments in quantum computing undermine Bitcoin's core value proposition of security through cryptographic verification," Wood stated. He replaced the Bitcoin allocation with 5% physical gold and 5% gold mining stocks.

The strategist initially added Bitcoin to his model portfolio in December 2020 amid inflation concerns during COVID-19 stimulus programs. By 2021, he'd increased this allocation to 10%. Current projections suggest quantum computers could crack Bitcoin's encryption by the 2030s—potentially collapsing cryptocurrency values overnight if security is compromised.

Cryptocurrency developers express less urgency, noting current quantum systems remain years away from practical attacks. Google's 2019 quantum supremacy demonstration involved a specific calculation 200 seconds faster than supercomputers—not cryptographic cracking. Actual attacks would require error-corrected quantum processors millions of times more powerful.

Three factors temper developer concerns:

1. Publicly documented quantum progress allows advance warning for cryptographic upgrades
2. Bitcoin's breakage would compromise global systems (banking, infrastructure, government data)
3. NIST-standardized post-quantum cryptography solutions are already being developed

Despite these safeguards, Wood maintains gold's historical stability makes it superior for long-term holdings. Gold has delivered 11% average annual returns over 50 years without technological vulnerability risks. "The quantum computing debate ultimately strengthens gold's position as a non-correlated asset," he concluded.

Jowi Morales is a technology journalist specializing in hardware and consumer electronics with industry experience since 2021.