Laura Shin (2:39)

Nick Carter, Of Castle Island Ventures has been sounding the drum about the threat of quantum computing to bitcoin in particular. Although this is probably at least a few years out. He makes a lot of valid points about how bitcoin governance is extremely slow, and that means that developers should begin trying to come up with solutions to prevent issues. Now, your company, Project 11, is focused on this problem, not just for bitcoin, but for all of crypto and blockchains. Before we get to what exactly your company, Project Love, is working on, why don't you just start by explaining what quantum computing is and how that differs from current computing?

Alex Pruden (3:18)

Yeah, so it's. It's a new computing paradigm, first of all, that's based on quantum mechanics, right? Which is, you know, a branch of quantum physics that deals with the very small. Quantum computing is special in terms of it, like, from differentiating it from classical computing because it can do certain things that classical computers can't. Right. And so it uses the quantum mechanical position or practice principles of superposition entanglement, for example, to basically use as building blocks for new types of algorithms that, for example, can factor very large numbers much more quickly than a classical computer could. And in terms of what's relevant to cryptography, actually, this problem of factoring large numbers, or this algorithm for factoring large numbers, Shor's algorithm is the algorithm that we would expect a quantum computer to run when. And that. That would be the point at which quantum computing is cryptographically relevant. Right. So effectively the way you can. There's many great videos on YouTube on this, and I encourage people to check them out. But at a very high level, you can sort of think of a quantum computer being able to parallelize the process of being able to factor a large number or solve a hard problem in a way that a classical computer simply cannot. Right. So that's. That's quantum computing in a nutshell. That's why people are excited about it for many applications. But because this problem of factoring large numbers is the basis for security in many cryptographic algorithms, including the ones used in Bitcoin and virtually every other crypto network. This is why we have to consider it and worry about it as an industry.

Laura Shin (4:46)

And when would you project that it would be a threat to Bitcoin? And how reliable are the projections about when it will become a threat?

Alex Pruden (4:55)

Great question. And you can probably imagine. I get this question all. But. And look, full disclosure, I'm not a quantum physicist myself, right. And we have an advisor, actually, who, you know, is a quantum physicist from Harvard. He's actually currently, she was the one in Harvard and I was at Caltech. Right. So we talked to physicists working on quantum computing all the time. We talked to cryptographers all the time, many of whom, you know, are well known in space and you know, advise projects and they're, they're maybe closer to the pulse of kind of post quantum cryptography. But look, if you, if you poll the audience among these experts, you'll get a giant range of answers. Anywhere from two to three years to 30 to 50 years, I will say. So in short, I think it's hard to project. However, I think the uncertainty, and this is the second part of your question, how much uncertainty is there around this? I think there's an enormous amount of uncertainty around this one data point though. And quite frankly, the thing that led me to want to start Project 11 that I find quite interesting is in the last year in particular, quantum physicists have gotten a lot more bullish about quantum computing and its timelines and whether or not it's going to be viable sooner rather than later. And you can just, for example, just read Scott Aronson's blog or John Prescoll. John Prescoll is a Caltech physicist. He's quite well known. You can just read the difference in what they put out even in the last few months and tell there's been a change in their attitude towards this. To them it is not just 20 years away. And 20 years is a placeholder for a long time. They see a sea change and that was really driven by a year and a half ago. Actually, just about a year ago, Google released a chip called Willow. Some of your listeners may remember this news, but the key thing there was it basically demonstrated that the science problem of quantum computing had been solved. The engineering problem, though still substantial, was basically all that was left. And now it's just a process of scaling that up. Now how quickly will that happen? That's the million dollar question, right? But I think the reason why we started this is there's not a guarantee in this being Project 11. There's not a guarantee that this doesn't actually happen sooner than people expect. And as you combine that risk, if things may be moving a little faster, like AI for example, I think took everyone by surprise. Many disruptive technologies in the past have come and taken people by surprise. And if you combine that fact or that possibility with the fact that these are decentralized systems that secure an enormous amount of value that entirely rely upon this cryptography, that will be broken like those two things are facts. Bitcoin and all crypto networks rely on broken cryptographic algorithms and quantum computing can break them. Like we know those things. Just a question of when. So I didn't give an answer, but I would say, generally speaking, what I tell people is it is not out of the realm of possibility this happens in the next five years. And even the fact that that's possible, I think is enough that as a conservative measure, we should prepare now.

Laura Shin (7:43)

Yeah, potentially even four years. I don't know, just from some conversations I was listening to, I was like, oh, they keep talking about 2030 and now that it's 2026, I was like, oh, that's. That's actually four years out.

Rebecca Simons (7:56)

Yeah.

Alex Pruden (7:57)

If I could say one more piece on this is important. I think, like, some people think there's going to be a long lead up where you're like, we're going to know it's four years out. If you just think about the capabilities of these systems and what they do. Either they're going to be used for espionage or someone is going to use them to recover lost. Whatever. Right. But bottom line is whoever has the capability really has no incentive to share it right before they use it. And so I think as we get closer and closer to these systems being more and more capable, I would fully expect us as a public to know less and less about what is the state of the art. So I think that's just an important fact to keep in mind for concept. Yeah.

Laura Shin (8:30)

And there was a blog post that I quickly skimmed. It was obviously by somebody who's deep in the field, but basically, you know, the. The brief gist of it is they just talked about how some of the quantum capabilities are developing. And they said, you know, it's kind of like incremental. Incremental. Incremental. And then foom, there's like a big leap. And so they were saying that, you know, it could seem like something that's further out and then all of a sudden the timeline just jumps. So I did want to ask, you know, for this moment in time when the quantum computing threat becomes real, what are all the ways in which Bitcoin could be harmed or broken or Bitcoin holders could be, you know, lose their money or. Or, you know, have. Have alarm about their funds.

Alex Pruden (9:20)

Great. So first, the first thing I want to start is the preamble is we're going to talk about Bitcoin because you asked about it specifically. All crypto networks use the same cryptography. But the risks do differ somewhat. Right. For example, bitcoin uses proof of work versus proof of stake. And there's, there's nuance there. But let's talk about Bitcoin for a second and then if you want, we can, we can get into some of the other networks. Okay, so Bitcoin specifically. So actually there's two categories of quantum attacks that could theoretically be relevant to Bitcoin. One is the attack that targets asymmetric cryptography. So these are the digital signatures that basically confer ownership. Like the only way actually we, we have a concept of ownership in the digital world is this concept of a digital signature. Like if I like all the Bitcoin ledger really is, is a record of who paid whom when and that who is the digital signature. Like I have the private key only I should be able to produce the digital signature Or Shor's algorithm. One of the two relevant quantum algorithms does, is let me recover your private key from only the knowledge of your public key. And so I am able to then sign for you right now. We'll come back to this because I think not all Bitcoin is vulnerable because people generally don't just display their public keys. Bitcoin addresses in fact are hashes of public keys. But that said, a significant amount of Bitcoin public keys are exposed. We'll come back to that in a minute though. But I said something in the other category of attack that's relevant is an attack called Grover's algorithm. So Grover's algorithm is, is really just a, it's a quantum algorithm for unstructured search and it's a way that you could theoretically reduce the security of a hash function. Bitcoin uses hash functions all over the place. I mentioned a second ago, it's how an address is basically created from a public key. You hash the public key. It's also, as many of your listeners are no doubt aware, used in mining. That's basically all mining is. Right? And so that is, that is a category of attack. That said, this is the last I'm going to mention Grover's algorithm because the performance boost you get versus a classical GPU or classical machine, say from Grovers, is just not that impressive. Quantum computers would truly have to be astronomical in size to make that attack relevant. So we don't focus on that. We don't think that's a short term threat at all. The short term threat is Shor's algorithm. And the reason it's, it's the threat is because compared to the classical alternative, the GPUs try to factor numbers. Shores is exponential in the advantage. So that means every basically additional qubit that you add to your quantum computer basically gets you almost another order of magnitude of speed up. Right? So it's very, you can't just make your keys bigger, you can't, there's, there's no easy way to mitigate that. Okay, so Bitcoin is vul. So effectively what I'm claiming is Bitcoin, the most vulnerable point of Bitcoin is really the, really the foundation, right. Which is this concept of ownership. Right. Okay, so who is now vulnerable is the question. Well, it's anywhere that a public key is exposed. Maybe just as a point to make a comment of bitcoin. Compared to other places where public key cryptography is used, Bitcoin is special because unlike say the web where we use public key cryptography, like as a TLS connection to this website, like we authenticate and we authenticate, you know, via the certificate authority that you, you know, whoever owns this website is real person, et cetera. Those are, those public keys are typically ephemeral. Like we create them in the session, they get destroyed later. And so most usually public keys don't stay around forever. Blockchains, they stay around forever. Right? Like this is a ledger. It's literally you go back to the genesis and it's there you can find the record of these things. Right? And so the long lived nature of these public keys kind of makes blockchains especially vulnerable. In addition to the fact that it is the public key explicitly that secures an explicit amount of value. Compare this to like a bank account for example, where again we could authenticate using public cryptography, but I don't know what's in the bank account, whereas I can look at Satoshi's bitcoin addresses and I know exactly what I'm going to make by attacking those things. So okay, to conclude the main area of concern is the public keys that are exposed on chain. That is approximately, you know, six. You know, it's like around 35 to 40%. The number fluctuates. We have a risk list on our website. This includes satoshi, right? So early satoshi bitcoin was mined to a paid a public key address, so they were not hashed. As well as a lot of exchange, wallets, bridges, basically any business that has on chain infrastructure where for a variety of reasons they sort of have to sign twice to the same key. And so what you end up with is roughly a third or so of bitcoin of the total bitcoin in circulation. So hundreds of billions of Dollars is exposed today to a quantum here. And that represents arguably the biggest, you know, cyber security honeypot that's ever existed.

Laura Shin (13:47)

And actually I'm so sorry I didn't understand this because I guess I would have thought so the public key is, you know, where anybody would send the coins, right? So then on any block explorer showing all the bitcoin transactions, you know, going back to January of 2009, then wouldn't every single address that held Bitcoin be visible and easily scraped on the block expl. So I don't understand why you're saying only 30%.

Alex Pruden (14:13)

Great. This is. Okay, so great, let's unpack. Why? So because in Bitcoin what we. So okay, so actually this isn't like a new realization. People realize this was a problem 10 years ago when they were thinking about quantum and other things. Privacy was another consideration. And so what, an address type got added which was pay to public key hash. And so Satoshi's early coins that were mine were all paid to public key, which was the original thing that supported but kind of the de facto way that people were encouraged to spend Bitcoin online was this paid a public key hash. Because Bitcoin is a UTXO system. You spend from one address. You said I sent something, you say, and then I send the remainder. It does the remainder, does it stay in that address? It goes to a new address that I control. Right? So this is the whole point of hierarchy generation. So really when I'm spending on bitcoin, because Bitcoin is a UTXO based system, even though I'm spending, if I have good wallet hygiene, I'm only using the address once. Right? And so for people that have basically have wallets and or you know, follow this, this, these practices themselves, they're not actually exposed to a quantum. And a lot of wallets enforce this. Right? So so contrast this, I'm just briefly contrast this to a system like Ethereum where Ethereum has accounts. We don't have UTXOs. There's actually accounts there. Technically your address is hidden by a hash too. But as you point out, because it's account based, really the second you do anything on Ethereum, you've exposed yourself. And so we don't have a tracker for Ethereum, but the vast majority of Ethereum are on chain is exposed. So does that make sense? Does that.

Laura Shin (15:43)

Oh, okay, I'm so sorry. So when you said 30%, that wasn't only bitcoin, that was all. All.

Alex Pruden (15:49)

No, no, no. So that 30% number is 30% of all Bitcoin is under public keys that have been exposed either because they were under the P2Pay, the P2PK address type, or someone spent twice from the same address. Whether you were. You're not supposed to, but people do. And let me just give you an example why people would. Exchanges are very often exposed walls. Why is an exchange, what, you have to sign twice? Well, you have to deposit. You want to deposit Bitcoin to sell it, say. Right. And you save that address that they give you into your wallet because you don't want to write it down. You don't want to write down. You want. You want to screw it up. Well, now the exchange to get your money out has to sign again from that same address. Right? So that's how they end up kind of exposing themselves. Bridges have the same problem, right? How. Where do you tell people to send their money? You don't want to give them a different address. Does that make sense?

Laura Shin (16:34)

Yeah, I guess. I'm so sorry to belay for this, but so with the UTXO model, then what happens is you, you know, send to wherever, you know, whatever address the recipient is, and then the remainder goes somewhere else. But aren't both of those addresses visible on a block explorer? That's why I don't understand why you're.

Alex Pruden (16:56)

Yes, yes, the addresses are visible. The addresses are always visible. And maybe I didn't explain it. So the addresses are always visible, but the addresses themselves are not vulnerable. But when you send from a given address, you need someone to be able to verify your signature. That signature verification requires you to expose the public key, the raw public key. Oh, all that connection. When you send, then you're exposed. Okay, sorry, I probably should have mentioned that very key fact.

Laura Shin (17:23)

So, okay, now I understand belaboring.

Rebecca Simons (17:28)

Before we built Walrus, what we heard a lot from developers was the need for speed. And we had it ourselves. So reads and writes are extremely fast on Walrus. And this means that apps don't lag even with really large files. Privacy was another thing that we heard a lot about. And Walrus lets developers encrypt data with our primitive core called seal. And with that, you have full control over who accesses your data. And everything is enforced on chain. And this enables these really incredible use cases that haven't been possible before. Everything from more reliable AI models to data markets where users can monetize their data. So if you put this all together, what this actually means is the developers can finally build apps and they feel web two fast. But you've Got web three level guarantees.

Laura Shin (18:24)

So we're going to talk about the threat to these other blockchains. So. So go ahead, Alex, tell us of the other chains. You know, as you mentioned, so Bitcoin does proof of work and then we also have proof of stake coins. You know, we have the UTXO model, we have account based. So amongst all the different change chains, which types of chains are most at risk? And break it out into risk for technical reasons and cultural reasons.

Alex Pruden (18:51)

Great. The simple way to think about this is bitcoin is kind of the least at risk for technical reasons, but the most at risk because the value is highest. And culturally it's very decentralized, quite frankly. So it's hard to solve this problem. We see Bitcoin also, other chains are kind of more at risk technically, I guess, if by that, I guess to be specific about what I'm saying is on average more of the total supply. The public key for that is exposed, like I said, the Ethereum account model. Very often you expose the public key. Solana, for example, which is an ecosystem we've done some work with there, the address is just the raw public key. So there's no, like everything, 100% of Solana is vulnerable theoretically, right now. On the cultural side, there's an advantage in the Solana ecosystem that I guess, theoretically there's a foundation. People kind of look to them. What do we do? There's fewer nodes. You could argue it's less decentralized, although I'm sure that's like a big rabbit hole. We may not want to get down on this podcast, but anyway, the point being is probably it's a little bit simpler for them to at least coordinate. It doesn't mean it's going to be simpler to fix, but it does mean it's potentially easier to coordinate a fix. Whereas I think with Bitcoin, it's probably easier to fix technically, but much harder to coordinate. And even in the cases where I say easy to coordinate, I want to, I want to make sure. I'm like, I just want to. It's important to clarify here any of these ecosystems that go through this change, which, by the way, they will all have to, to be worth anything. And you know, at the end of the day, this is by far the biggest effort, the, the most significant upgrade any of these things will ever undergo. And I want to explain why. This is not a situation where E1 goes to Eth2, where I, you know, as an Eth holder, I basically just went to bed and I woke up one day and I'm like, oh, okay, proof of stake is happening and this all seems great. I still have my eth. It's in the same place. I didn't have to wor it in this case. Protocols all have to add support for new post quantum cryptography. And there's consequences to that. These algorithms are very different than what we have. We can come back to that. But the protocols have to do a fix a then all the value, everything has to move. So your. Wherever you're holding your bitcoin currently, you will send it somewhere you have to. Your. Your ETH account has to move. By the way, all smart contracts, if there's any kind of verification logic that uses old ECC keys, which you should read that as stablecoin contracts with admin keys, they all have to get. So this is the way I like we like to term this is full lift and shift. Every protocol must migrate to new cryptography. Every smart contract must get redeployed. Every single asset across every single chain must move from where it currently is to where it's going. So that's why like people are like, oh, E1 to eat two or taproot. You know, honestly, those are bad comps like this, that's maybe half of the work in the best case scenario.

Laura Shin (21:42)

Oh my gosh. Oh my gosh. Just hearing that and thinking about how, you know, when defi contracts get upgraded or even. Yeah. Looking at things like, you know, back in Ethereum's history, the dao just so much money gets left behind. So. Okay, wow.

Alex Pruden (21:59)

All right. This is, you know, by the way, just quickly on the, on the bitcoin side, this is why. What. This is one of the cultural issues that's very hard. And we can come back. Maybe, maybe I'll just mention this, like, what do you do with the coins that are left behind? It's fascinating. I mean all of these ecosystems, it's a huge deal. So now I guess you can tell why I got into this problem. Because you're like quantum, how far is away? But then you realize the scale of this and you're like, oh my God, it might already be too late if we're starting now.

Laura Shin (22:23)

Yes, yes. Which is what Nick Carter was saying. And a lot of people were kind of dismissing the urgency, but I was convinced. Not that I did a ton of research, but I just understanding the bitcoin community and how it works and just the nature of, you know, how quickly this, this technology is progressing. And in like a leap sort of fashion, all of those factors, I just Thought. Wow. Okay, so we haven't talked about your company at Project 11. Congratulations. You just announced that you raised $20 million from Nick Castle's. Sorry, Nick Carter's Castle Island Ventures, as well as Coinbase Ventures, Variant Fund, Biologies for New Boston, a host of other funds. And you are focused on building quantum resilient cryptographic infrastructure that helps blockchains migrate before the threat is real. So explain what that means and how you're doing that.

Alex Pruden (23:15)

Great. Yeah. So as hopefully your listeners have kind of been able to put together over the course of this, of this stream, there's a lot of aspects of this, like there's a protocol layer thing, but there's importantly, I think this user assets all need to move. Right. And so for us, one of the big things that we see no one tackling at all is figuring out, hey, basically everybody is currently on an island. It's classical cryptography secured, and there needs to be a new island we all go to. So there needs to. Someone needs to like have. This island needs to exist and there needs to be a bridge to it. Right. And so this is the analogy I like to use a lot. Like we're building the place where you put your assets that is secure. Post Q day, we use the term Q day for the day that a cryptographically relevant quantum here becomes real. And there needs to be a bridge or a path or a migration protocol to get you there. So we've actually shipped part of the bridge for Bitcoin, at least we have a product called Yellow Pages. So Yellow Pages XYZ people can check it out. What that is, is basically it's tool that lets you generate a new post quantum key pair. Now, these key pairs are not recognized within Bitcoin yet. And you know, we hope at some point that standard will be recognized. But the key piece is you sign a digital signature using your new post quantum key pair and then you sign another message using your Bitcoin public key. And what you have is an attestation that today at this point, you are the owner of said Bitcoin. Right. So you're attesting that you own this asset in a way that could not be forged by a crypt by a quantum computer. Right. So Yellow Pages was a proof of concept that we shipped, but I think it demonstrates effectively what everyone is going to have to do for a migration. So that's the bridge piece. Right. The next step, what we're focusing on with the money we raised from Nick and other folks who participated in the Series A, is building effectively Infrastructure, wallet type infrastructure, where you're able to secure assets today independent of protocol migration timelines, but secure those assets in a way, your assets in a way that this post quantum secure. So applying post quantum cryptography at the wallet level effectively. And then hopefully when enough people start doing that, we'll be able to start integrating that cryptography into various protocols. Right, but the protocol migration process has to be measured and deliberate. And of course, like take Bitcoin for example. It's very, I say disorganized, decentralized, we'll say. Right, so that's a slow burner. You don't want to rush that either. Right. Because there's a lot of consequences. You mentioned the Dow hack. That was a hack. I guess someone made a mistake is maybe the better way to put it. Right. And, and that's, that's a huge risk here. And Justin Thaler from A16Z, we've gone back and forth on this and he sees the bigger risk of people applying post quantum cryptography wrong. And then that's the real threat. And I, and he's, I think that's, he's not wrong in highlighting that as a problem. So that's the order in which we, we kind of aim to do it is figure out a migration tool or protocol, get people to place where their assets can be saved, and then ultimately work with the various protocols and providers out there to make their protocol, you know, make them post quantum secure.

Laura Shin (26:09)

Okay. But yeah, I guess the risk is, you know, so people, people can, can do this, you know, to try to hedge against the risk. But then there is still the risk that for instance, Bitcoin doesn't end up adopting whatever technology scheme is behind Yellow Pages to protect against quantum. So it's like they can do all they want to try to prevent it, but ultimately some portion of it is out of the hands of your company and. Okay, got it.

Alex Pruden (26:38)

Yeah, definitely. I mean, I wish that weren't true, but I also am happy that it is true. Right. Because we're building decentralized. I'm a big believer in the importance of decentralization. Like we could just ship everything. I mean, this is why Google is not really a problem for Google. Right. They can just ship all this stuff and it's over. That said, I think I want to differentiate between Bitcoin and some other ecosystems, specifically smart contract blockchains. It's actually possible to implement post quantum cryptography at the wallet or smart contract level in blockchain like Ethereum or Solana or any of these kind of More smart contract chains because they're just more expressive. You're absolutely right, though in Bitcoin's case, Bitcoin as a protocol kind of has to adopt this. So this is why when you ask me technically versus, you know, culturally, which is easier, there are many facets. It's very hard to really kind of unpack all of them. But I would just say, like for us, an area that we're focused on is the blockchains that have smart contract functionality. You can actually, it's possible to secure assets today even if a post, even if a quantum computer existed. So that's a big focus.

Laura Shin (27:37)

Okay. And so one thing that I am not sure I fully understand is once the true quantum threat is here, as far as I understand, and maybe I'm wrong, the way that that happens, there's kind of multiple avenues. So how is it that solutions created today, before that threat exists, can be tested and be known to be secure before that happens?

Alex Pruden (28:03)

You just asked like one of the, like the deepest philosophical questions about cryptography generally. Right. Like how do we know any of this is secure? I mean, the answer is we kind of don't really. Right. You know, I won't get into theoretical computer science or anything. But the point being is generally speaking, so first off, what is true? We know that Shor's algorithm breaks elliptic curves, digital signatures and RSA and things like it. So things that are based on similar sums, because we know that is broken now, that doesn't preclude a quantum computer from being able to break what we think is post quantum secure. So there's post quantum algorithms that are based on like a subset of problems called lattices. For example, there's also post quantum signature algorithms are based on hash functions. I mentioned Grovers as an attack on hash functions. There's no guarantee that someone in 10 years won't do discover a new attack. And by the way, this is actually an important point to mention a philosophy for when we're designing these new systems that people are putting their assets in, we should not be satisfied with having a new cryptographic standard that we just assume is going to be set for all time. It will certainly, if you just look at the history of cybersecurity, it will certainly be the case that one or more of all of our assumptions, or our assumptions will be wrong and people will need to migrate. Potentially, people will need to migrate again. Right. So imagine lattices I referenced a second ago. Imagine we build a wallet based on lattices. Lattices end up being broken maybe classically not Even quantumly, people have to move to hash base. The infrastructure that we build to truly be future proofed needs to be what is termed agile. Right. So you need to be able to switch quickly and we need to build in these pathways. I gave this analogy of the bridge, that bridge, you should think of it as emergency exit for your wallets. There needs to be an emergency exit. But in the case of a hack or some big thing that no one expected, a black swan call it, people can make their phone safe quickly. No one has built that way up to this point. But I think going forward it will be critical that the whole space, to the extent we take ourselves seriously and actually want to be the future of finance, we build those systems that way and that would be future proof.

Laura Shin (30:07)

Yeah, and I was curious, you know, we talked about the differences between the different chains, both on a technical side and the cultural side. But are there any chains that you feel are better positioned than others?

Alex Pruden (30:16)

Right now I think I would, you know, look, really no one has started I think is the. Is the answer to address this. That said, I think I would highlight the work is that's being done at the Ethereum foundation and people who've been following recently Vitalik's comments. I mean Vitalik's view is that hey, we need to make Ethereum decentralized and that's a bit orthogonal, but like that's. He also believes that like it needs to be a. We need to build for the 100 years. And 100 years in his mind is like post quantum cryptography, we need to build that in now. So their lean roadmap integrates this and you know, we work with Justin, some other folks there to kind of help them spec that. I mean the work is just beginning there. So I don't want to like overstate it, but I definitely think that they, in terms of their attitude and you know, what they've done so far to drive consensus among the community members and stakeholders there has very. Has been very impressive. Solana too. I mean we work with them. I think they're also starting to wake up to this. And increasingly I think people are starting to wake up to this. And it's great. You know, bitcoin's always one of those places where the best and worst thing about it is it's very decentralized. And I think there are many people that still don't take this threat as seriously as they should, in my opinion. But I will say it's been encouraging. In the last year we've gone from like quantum computing is not real to quantum computing is not to worry about now. So I do add as progress. I'm like okay, great, we're moving from here to here and maybe by next year we'll will, you know, be even one step further than that when we're building stuff. So I don't know.

Laura Shin (31:40)

And what, what other types of products are you thinking about building? And you know, do you have business models in mind for how you can make money from your products?

Alex Pruden (31:50)

Yeah, look, so at the very high level, the, the business question of Project 11, like the venture opportunity, we have an entire ecosystem that I haven't checked prices, but I don't know, $33.2 trillion worth of assets that is theoretically zero if this project is not, or this, if this problem is not solved. So Project 11's value I sort of see is somewhere between the 0 and 3.2 trillion. Obviously we're not the only ones who are going to do this etc. But that like, I think that's the total addressable market. Now there's many ways that we could potentially address this. Right? So I mean, and I guess I'll just say that we don't have. I mean I think in terms of how we make money, there's many possible ways we could. We haven't really decided which of those to go down, but I think the opportunities will be limitless. I mean again, like I said, going back to what I said earlier, it's full lift and shift. Every asset, every wallet, every smart contract, every custody solution, it all has to turn over. And so you know, for us our goal is to really build the fundamental standards that define the foundations of the digital financial rails of the future. I believe two things. I believe a blockchains will become the basis of all finance. I just think for a vari. I believe that for a variety of reasons and I think blockchains to be durable need post quantum cryptography applied. And by the way, this is important point to mention. Quantum computers also offer a lot of really cool primitives that we can apply to these blockchain based systems. I'll give one quick example, Quantum key distribution, which is a, is a concept where you and I can share a key or wallet without actually ever transmitting it over the Internet or a network. Right. We can use quantum, the quantum phenomenon of entanglement. That's a whole new paradigm. You can imagine that being a part of a future protocol or different, different types of randomness generation, etc. So again, our goal is to build the financial rails of the future blockchain based post quantum secure at you know starting with the user assets and working our way up. So I didn't ask your question very question but you know to us I think the opportunity is very big.

Laura Shin (33:50)

And how did you come to found the company?

Alex Pruden (33:53)

Yeah so I, I was at previously so previous previously. Well first I was in the army. I got interested in crypto in the army. Then I was an investor at a 60Z and then I was at another project called Alo in the privacy space left that and and then I was thinking about what to do and Google Willow happened and you know, because I'm passionate about this technology and I saw Willow and I started thinking, I started thinking along the lines of exactly this conversation. I'm like oh my God, someone needs to do something about this. You know because I'm passionate about blockchains and decentralized blockchains in particular and to me I just didn't think enough people or really anyone was paying attention to this problem and, and yeah that's led, that's what led me to get out of my chair end my, end my, my, my break between companies much to my wife's chagrin and and get back on my co founder train.

Rebecca Simons (34:36)

Alchemy is one of Walrus's many great partners. They're an advertising platform. Every click, every an impression is recorded on chain. They're live. They've got great clients. Coca Cola is one of them. They're already processing more than 25 million ad impressions a day. And by building on SU and Walrus Alchemy's clients get two really big advantages. So the first one is cost saving and the second one is full transparency over their spend the real time visibility. They allows their clients to make really fast decisions, do very effective A B testing and truly understand their ROI and anything that involves money like defi this auditability, not only is it super important but is actually a legal requirement in many places and being able to prove what happened and that what you're saying has happened hasn't been edited or massaged in any way. Well it's really important for data today but to be honest it's only going to become more and more important as this industry grows and more value is pushed through blockchains.

Laura Shin (35:50)

So I did want to circle back to the satoshis bitcoins question. So yeah, I'd love to end on that just hear kind of what the challenges are and you know what you think could be some of the scenarios of what could play out.

Alex Pruden (36:03)

Okay, yeah, I saved the best one for Last. The spicy one for last. Another question, right? Yeah. So let me just frame it so everyone understands the majority or all of satoshi's bitcoins. I mean, of course here we're, we're speculating, right? We assume, you know, satoshi was one person and satoshi is gone. But like, okay, the broad, you know, the broad notion of satoshi, they are the founder of bitcoin, who may or may not be alive. Many addresses associated with him, her or them are exposed. They were early mining rewards and the public key is exposed. And so people can assume those are lost. And I'm sure there's others that are lost too, right? But people often use this as the example. And so in total, I think, I don't remember the number off the top of my head, but I believe it's about $150 billion worth of assets that, that could be gotten by a quantum computer. And so there's a question. There's really only three options. What do you do? Right. So quantum computer comes along. What, what, what happens is 150 billion. Well, they don't. I mean, if, if it's true that satoshi is not alive, they are not alive, then you can't migrate them. They're there, right? So a quantum computer could just get them, right? So that's like, you know, maybe you add a new address, site, but you don't burn those. And then quantum computers gets them. And I guess they're a big, you know, they're the next microstrategy, whatever, right? They've got all social. So they say you can let the quantum computer get them. You can proactively decide to burn them. Like, the community could come together and be like, hey, these things should be destroyed. Because they, let's imagine, I don't know, we're getting. I just picked a random quantum computing company. They get these. And what are they going to do? Well, they're the public company. They're going to sell them all so they can make profits and that's bad for the price. So people maybe would say, hey, this isn't really good, we should burn this. The third thing you could do is figure out, okay, look, we're not going to burn them, but maybe we'll put them in the mining rewards in 2100. So that way, like, you know, I'll make it more. So you could. Reallocate is really the third option. So it's basically let quantum computer steal, burn or reallocate. Those are your only three options. And this is a massively divisive issue within the bitcoin community, as you can imagine, because people feel very passionately, I mean bitcoin was founded on this concept of no arbitrary seizure, right. Like you're not your keys, not your crypto. So this, this idea of burning or reallocating, I think it's very, very offensive to some people in that community. On the other hand, if you talk to some of the more, I would say markets oriented actors, microstrategy ETF issuers, people who are kind of exposed that the price tanks overnight, they I think have a, are incentivized to think differently. They're like, ah, is it really so bad if we just burn the ones we know are gone? This is going to be a very divisive issue. My personal belief is, I mean unless this is resolved, there will be a fork over these two things because I think these are very different views of what bitcoin should be. And when you have that in a blockchain based system, I mean a lot of times this is what you see. So it'll be very interesting.

Laura Shin (39:03)

Yeah, just hearing you say all this, I think about back in the day when I used to write about the, the block size wars and I would call it like bitcoin civil war or whatever, I'm just like, yeah, that will look like child's play compared to this because especially now when the market cap is so much higher and then you have like the Wall street people on the cypherpunks like it's, the community is even bigger and more diverse with people who have wildly different philosophies involved. So yeah, it's, it's going to be. Well, hopefully, hopefully it won't come to that. But yeah, I'm not really sure. We can't resolve.

Alex Pruden (39:40)

Yeah, and this is one more reason to prepare, right? Because the worst case scenario is much more likely if this comes and hits everyone in the face by surprise. And I think at the very least now, by framing the issues, thinking through the implications, having the conversation as painful and acrimonious as there are no doubt going to be, is better than just pretending it's not real. Because I just think that's a fantasy. And I think that because crypto has come so far, we've got, I mean, ETFs are issued, people use this, it's real now. People actually use this infrastructure every day. I don't think we can afford as an industry to, you know, to be blase with the threat.

Laura Shin (40:17)

So anyway, that, yeah, unfortunately I think some of the developers are being that way, but we'll we'll have to. We'll, I guess, agree with you. Yeah, we'll just follow how that progresses over time. Alex, it has been such a pleasure chatting with you. Thank you so much. And congratulations on your raise and, yeah, we'll have to see what happens.

Alex Pruden (40:39)

Yeah. Thank you so much for having me, Laura. This. This chat was great. And, yeah, we'll just keep an eye on what we're doing and we'll have a lot more coming soon.