New Delhi [India], January 16 (ANI): In its latest Greed & Fear report, Jefferies' global equity strategist Christopher Wood has announced that the strategy will remove its entire 10 per cent allocation to Bitcoin this week, citing long-term concerns linked to the rise of quantum computing.

According to the report released by Jefferies, the 10 per cent Bitcoin allocation will be reallocated equally, with 5 per cent going to gold and the remaining 5 per cent to gold-mining stocks.

The Greed & Fear note clarified that it does not believe the 'quantum issue' will cause a dramatic fall in Bitcoin prices in the near term.

However, it stressed that from the perspective of a long-term pension portfolio, the idea of Bitcoin as a reliable store of value is now on a less solid foundation. This has led to the decision to exit Bitcoin exposure.

It stated 'While GREED & fear does not believe that the quantum issue is about to hit the Bitcoin price dramatically in the near term, the store of value concept is clearly on less solid foundation from the standpoint of a long-term pension portfolio. For that reason, GREED & fear will remove the 10 per cent allocation to Bitcoin this week'.

Despite this move, the report acknowledged Bitcoin's strong past performance. Since the initial allocation on 17 December 2020, Bitcoin has risen by 325 per cent. In comparison, gold bullion has gained 145 per cent over the same period.

The renewed debate has been triggered by growing focus in recent months on the potential threat posed to Bitcoin by the arrival of quantum computing. There is increasing concern that powerful quantum computers may arrive within a few years, rather than a decade or more as earlier assumed.

To understand this risk, it is important to explain quantum computing in simple terms. Traditional computers process information step by step, while quantum computers use quantum bits, or qubits, which can process many possibilities at the same time.

This makes them far more powerful for certain calculations, including complex cryptographic problems.

Bitcoin relies on cryptography for security. While it is easy to generate a public key from a private key, reversing this process is practically impossible with today's computers and would take trillions of years.

However, with the arrival of cryptographically relevant quantum computers (CRQCs), this balance could collapse, potentially allowing private keys to be derived from public keys in hours or days.

The report also explained Bitcoin mining. Bitcoin mining is the process by which new Bitcoins are created and transactions are verified on the network using computing power.

The total supply is capped, with the last Bitcoin expected to be mined in 2140. Any threat to this structure is seen as potentially existential, as it weakens Bitcoin's role as a digital alternative to gold.

Greed & Fear noted that discussions are already underway within the Bitcoin community on how to respond, including whether to 'burn' quantum-vulnerable coins or risk them being stolen.

Citing studies, the report highlighted that 20-50 per cent of all Bitcoins in circulation, or 4-10 million BTC, could be vulnerable, especially exchange and institutional addresses due to address re-use. Lost coins, estimated at 2-3 million BTC in 2017 and possibly 4-5 million today, add to the risk. Another key vulnerability arises from address re-use, which exposes public keys.

These concerns have ultimately driven Greed & Fear's decision to shift away from Bitcoin toward gold and gold-mining stocks. (ANI)