Security Notes: Is Washington Walking into a Trap?

At some point recently, President Trump flipped from dismissing Bitcoin to glorifying this coin, and declaring his wish to turn Washington into the “Crypto Capital of the World.” He even spoke of establishing strategic Bitcoin reserves.

For those who are familiar with the mathematical foundation of this digital currency, the alarm bells ring loud and clear. For the many enemies of the United States, the situation suggested by Trump offers a golden opportunity to humiliate Washington. And the more American treasure is banked as Bitcoin, the harder will be the blow.

All the money banked as Bitcoin is hinged on something called the “elliptic curve,” which is a mathematical premise that claims that a well-defined mathematical riddle does not have an innovative solution. This premise is cemented by the fact that many academic mathematicians tried to solve this riddle, and they all failed, in that no one published a solution. So we decided to adopt the assumption that U.S. adversaries are not smarter than the academics who failed. And, based on this assumption, we have a reasonable foundation for Bitcoin as a safe way to bank our money.

To solve a mathematical riddle of this kind, one needs matching computer power and matching mathematical insight. It is very difficult for the U.S. to estimate how powerful the computers are that its enemies have. And it is virtually impossible for the United States to assess the brain power of the smartest mathematicians put to work on this challenge.

Say, then, that any statement of confidence about Bitcoin being a safe banking place for American treasure is not of sufficient foundation to risk so much on its prospective validity.

The Elliptic Curve has presented itself as a cryptanalytic target for decades now. The more popular it becomes, the more attractive it is for hackers. Applying the principles of innovation science, and rating the innovation load associated with solving this mathematical riddle, one comes to the conclusion that at least one U.S. adversary has cracked the riddle, or is very close to doing so. And the closer they are, the more vociferously they would argue in public that the riddle is too hard for human innovation to conquer, that Bitcoin is safe, that the elliptic curve is secure.

Whether one thinks that cracking Bitcoin is imminent or far off, there is no disputing that advanced mathematical insight and strong-enough computers will ultimately defeat the elliptic defense. There is also no dispute that, should people be innovative enough to crack Bitcoin’s math, all the money held in Bitcoin form will instantly evaporate, leaving no trace, nothing to recover, no remnants. Do we really want to migrate our national wealth to Bitcoin and risk its instant loss?

The risk of instant collapse is shared by all digital coins that rely on stationary mathematical complexity as their vault. What to one person looks like overwhelming complexity looks to a smarter mathematician like a negotiable challenge.

This is not a death sentence on digital money per se. Any digital money that is based on a mathematical defense that is dynamic enough to outrun its pursuers, and that offers an open-ended use of randomness, is a solid candidate for the money of the future. BitMint LeVeL, as well as other digital coins, qualify.

Should Bitcoin be thoroughly modified, it will also claim operational security, and then the debate will switch to Bitcoin’s claim that a currency that is based on nothing more than crowd enthusiasm can maintain this enthusiasm long enough to argue that it is not a Ponzi scheme.

—Gideon Samid gideon@bitmint.com