Home | Newsletters & Shorts | Digital Watch newsletter – Issue 96 – February 2025

Digital Watch newsletter – Issue 96 – February 2025

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Snapshot: The developments that made waves

AI governance

Several prominent tech leaders, including Alphabet CEO Sundar Pichai and Apple CEO Tim Cook, attended US President-elect Donald Trump’s inauguration on Monday, according to sources familiar with the event’s planning. Their presence marked a significant moment as top executives from the tech industry, including Elon Musk, Jeff Bezos, and Mark Zuckerberg,  attended the celebration.

Technologies

DeepSeek, a Chinese AI company, is rapidly transforming the global AI landscape. The models’ standout feature is their open-source nature, which allows developers worldwide to access, modify, and build upon them.

Halliday, a wearables startup, has launched a pair of smart glasses at CES 2025 that project a tiny digital screen directly into the wearer’s eye. 

Meta’s new Ray-Ban smart glasses, featuring a Live AI assistant, promise a futuristic way to interact with the world.

Microsoft is setting its sights on a transformative leap in AI, announcing plans to allocate roughly $80 billion in fiscal 2025 for data centre expansion to support AI model training and cloud-based applications.

OpenAI CEO Sam Altman has stated that the company believes it knows how to build AGI and is now turning its focus towards developing superintelligence.

AI is revolutionising the legal field, offering solutions to improve fairness and reduce costs in the justice system.

Infrastructure

Apple’s iPhone devices are now eligible to test SpaceX’s Starlink’s direct-to-cell service, which offers satellite-based coverage, according to T-Mobile. 

Leonardo CEO Roberto Cingolani has spoken with Airbus to strengthen European collaboration in the satellite industry. The talks with Airbus and Thales aim to create alliances to better compete globally with major players like the USA and China.

Cybersecurity

US officials are evaluating the potential national security risks posed by the Chinese AI app DeepSeek. White House Press Secretary Karoline Leavitt confirmed the National Security Council is leading the review, highlighting concerns about American AI dominance.

The International Civil Aviation Organization (ICAO) is investigating a potential cybersecurity breach following claims that a hacker accessed thousands of its documents. The United Nations agency, which sets global aviation standards, confirmed it is reviewing reports of an incident allegedly linked to a known cybercriminal group.

The White House has unveiled a new label, the Cyber Trust Mark, for internet-connected devices like smart thermostats, baby monitors, and app-controlled lights.

Digital rights

The CEO of Japanese IT giant NTT DATA called for global standards in AI regulation to mitigate the risks posed by the rapidly advancing technology, speaking at the World Economic Forum in Davos.

The Italian Data Protection Authority (IDPA) has commenced an investigation into DeepSeek, an AI firm, raising concerns about privacy and the handling of personal data.

Microsoft and OpenAI are investigating whether a group linked to Chinese AI startup DeepSeek accessed OpenAI data without authorisation.

TikTok is under heightened scrutiny following newly unsealed allegations from a Utah lawsuit claiming the platform knowingly allowed harmful activities, including child exploitation and sexual misconduct, to persist on its livestreaming feature, TikTok Live.

Legal

Donald Trump approved a 75-day delay in banning TikTok in the USA in an executive order signed on Monday, 20 January 2025.

Google has appealed to the EU’s top court to overturn a record 4.3-billion-euro antitrust fine imposed seven years ago, arguing that the penalty punished the company for its innovation.

The US Securities and Exchange Commission has formed a task force to establish clearer regulations for cryptocurrencies.

The European Commission has intensified its investigation into X, formerly known as Twitter, focusing on the platform’s algorithm changes and content moderation practices.

US President Donald Trump signed an executive order on Monday aimed at safeguarding free speech and ending online censorship.

Telegram, the popular messaging app, has fulfilled 900 requests from US authorities for personal information about its users in 2024, with a significant rise in inquiries following the arrest of CEO Pavel Durov in France.

Oklahoma State Senator Dusty Deevers has introduced the Bitcoin Freedom Act, paving the way for residents and businesses to opt for Bitcoin as a means of payment.

Internet economy

Poland has expanded its Bitcoin ATM network to 219 machines, surpassing El Salvador to become the fifth-largest network globally, just behind the USA, Canada, Australia, and Spain. 

The launch of the TRUMP meme coin has drawn massive attention, reaching a $72 billion market cap in just two days.

Eurozone banks should embrace a digital euro to counter US President Donald Trump’s new push to promote dollar-backed stablecoins globally, European Central Bank (ECB) board member Piero Cipollone stated on Friday.

The launch of DeepSeek’s cost-efficient AI model has sent shockwaves through Australian tech markets, with shares in AI-related companies experiencing steep declines.

President Donald Trump has dismissed criticism from Elon Musk regarding a $500 billion AI project with the Stargate venture, announced earlier this week.

Global technology stocks experienced a sharp decline on Tuesday, with a second day of losses triggered by the emergence of a low-cost Chinese AI model – DeepSeek.

US President Donald Trump has revealed that Microsoft is in discussions to acquire TikTok, expressing his desire for a bidding war over the popular app.

Donald Trump’s newly launched meme coin, $TRUMP, has seen explosive growth, reaching a market cap of approximately $9 billion after peaking at over $15 billion.

Melania Trump has unveiled her cryptocurrency, $MELANIA, just ahead of her husband Donald Trump’s inauguration as the US president.

Bitcoin has achieved a new all-time high, reaching $109,300 and nearing the $110,000 milestone.

Donald Trump has expressed openness to Elon Musk acquiring TikTok, should the Tesla CEO choose to pursue the purchase.

Development

Ericsson and Bahrain Telecommunications Company (Batelco) have partnered to expand and modernise Batelco’s mobile broadband network in Bahrain, enhancing 4G and 5G capabilities, coverage, and capacity.

Sociocultural

British universities are increasingly distancing themselves from Elon Musk’s X platform, citing its role in spreading misinformation and inciting racial unrest.

The TikTok ban in Albania follows a tragic incident in November where a 14-year-old boy was fatally stabbed, reportedly after an online clash with a peer. Prime Minister Edi Rama said the decision, announced on 21 December, was to protect young people, but critics argue it threatens free speech and commerce ahead of the May elections.



Will TikTok find a US saviour or face the ultimate ban?

In December 2024, the landscape for TikTok in the USA was fraught with uncertainty as the clock ticked down to a pivotal deadline set by the ‘Protecting Americans from Foreign Adversary Controlled Applications Act’, signed into law by President Joe Biden earlier that year. The legislation mandated that ByteDance, TikTok’s Chinese parent company, must divest its US operations or face a ban by 19 January 2025. The tension was palpable as the Supreme Court was poised to rule on TikTok’s last-ditch effort to challenge the law on free speech grounds.

On 19 January 2025, the Supreme Court upheld the divest-or-ban law, signalling a potential end to TikTok’s presence in the USA unless a sale could be swiftly executed or an extension granted. This ruling came just as Donald Trump was inaugurated for his second term. Trump, who had initially been a vocal critic of TikTok during his first term, citing national security risks, now took a surprisingly different stance. In a pretty expected turn, Trump endorsed a stay of execution for TikTok, signalling his intent to ‘resolve the dispute through political means’ and proposing a financial structure where the USA could have a 50% ownership in the app under any deal.

Trump’s reversal was influenced by several factors. First, his campaign effectively leveraged TikTok to connect with younger voters, leading to a ‘warm spot’ for the app. Second, his relationships with tech moguls like Elon Musk, who had become an ally, and Larry Ellison of Oracle played a significant role. Trump openly expressed support for Musk or Ellison to acquire TikTok, suggesting a strategic move to keep the app under American oversight while potentially benefiting from its economic value.

Earlier in 2020, Microsoft expressed interest in buying TikTok, but negotiations fell through. With the new developments, there was speculation about Microsoft re-entering the fray, though no formal offer was reported in this period. Microsoft’s involvement could offer a stable, well-established tech giant’s oversight, potentially alleviating security concerns.

Trump’s endorsement of Musk sparked significant media buzz. Musk, who already owned X (formerly Twitter), was seen as a potential buyer due to his interest in expanding his digital empire and his relationship with Trump. However, Musk’s public statements remained non-committal, leaving room for speculation about his intentions. 

Another Trump ally, Ellison, had been linked to previous attempts to secure TikTok’s US operations. Trump’s preference for Ellison was clear, suggesting a scenario in which Oracle could manage the data aspects of TikTok, addressing national security issues. Reports circulated about various other potential buyers, including YouTube star MrBeast teaming up with tech entrepreneur Jesse Tinsley and billionaires like Kevin O’Leary and Frank McCourt showing interest. These offers ranged from all-cash bids to partnerships aimed at integrating TikTok into broader tech ecosystems, yet none had been officially confirmed or acted upon by ByteDance or the US government.

As of late January 2025, following Trump’s executive order, TikTok was given a 75-day reprieve from the ban enforcement, providing a window for negotiations or divestiture. Trump’s move has placed TikTok in legal limbo, with the app still unavailable for download in US app stores but accessible for current users. The legal complexities involve not only the sale but also how data privacy and security can be guaranteed under new ownership or partnership structures. 

The ongoing dispute has broader implications for international tech policy, data sovereignty, and US-China relations. The narrative around TikTok has shifted from a security threat to a battleground for economic and political influence, with Trump’s involvement adding layers of unpredictability to the outcome. Whether TikTok will find a new American home or face a ban remains uncertain, with the next steps critically depending on negotiations, legal interpretations, and the evolving geopolitical landscape.

The TikTok play depicts the intricate relationship between technology, politics, and international relations, where a social media platform becomes a symbol of much larger dialogues about control, security, and freedom in the digital age.



Donald Trump’s crypto revolution: from Bitcoin critic to blockchain leader

These days, the entire crypto world seems to be pinning its hopes on one man, Donald Trump, as his inauguration marks a new chapter for blockchain innovation, a stark departure from his earlier scepticism. Not so long ago, Donald Trump was one of cryptocurrency’s most vocal critics. In 2019, he took to X (formerly Twitter) to denounce Bitcoin and other digital assets, branding them as ‘not money’ and ‘based on thin air’. To Trump, cryptocurrencies represented instability, risk, and a lack of regulation, starkly contrasting the economic stability he valued. His disdain extended to Central Bank Digital Currencies (CBDCs), which he criticised as potential tools for governmental overreach. At the time, his views resonated with sceptics who feared crypto’s disruptive potential. 

Fast forward to recent months, Trump’s stance on cryptocurrency has undergone a radical transformation. Once a vocal detractor, he has emerged as a prominent figure in the crypto world. The turning point came when he posted on X again, but this time with a strikingly different tone: ‘Bitcoin mining may be our last line of defence against a CBDC. We want all the remaining Bitcoin to be made in the USA!’ The statement marked a complete reversal, signalling a shift in opinion and a strategic embrace of Bitcoin to bolster US dominance. For someone who once dismissed crypto, it marked the dawn of a bold new chapter—where everything changes from this moment forward.

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Trump’s journey into crypto reached its climax on his inauguration day as the 47th president of the USA. Hours before taking the oath of office, Bitcoin soared to an all-time high of $109,036, a historic moment for the market. The crypto community was optimistic because of the record-breaking price and because Trump’s presidency heralded a new era of blockchain innovation. Speculation mounted that his administration would establish a strategic Bitcoin reserve within its first 100 days. For many, this signalled a shift from crypto being a fringe movement to becoming a cornerstone of US economic policy.

Adding fuel to the excitement, Trump unveiled his cryptocurrency: the $TRUMP meme coin, launched on the Solana blockchain. With its eye-catching name and ambitious goals, the token quickly amassed a market cap of $9 billion. Although developers insisted it was not a serious investment vehicle, critics within the crypto community labelled it a potential ‘rug pull’. Yet, the buzz was undeniable. The launch cemented Trump’s position as an active participant in the crypto world, showcasing his ability to blend digital innovation with his signature showmanship.

The Trump family’s involvement in cryptocurrency did not end there. Melania Trump also debuted in the space, launching her token, $MELANIA, on the Solana blockchain. Her token debuted with a market cap of $1.7 billion, complementing her husband’s initiatives and highlighting their shared vision for a robust digital economy. Together, the Trumps have become a formidable force in the crypto sphere, driving enthusiasm and innovation alike.

Trump’s evolution from crypto sceptic to advocate reflects a broader shift in the perception of digital currencies. His support has propelled Bitcoin into the mainstream, energised the market, and ignited a focus on US blockchain innovation. As the crypto community awaits his promised national Bitcoin reserve strategy, confidence remains high in his ability to deliver. Trump’s transformation is the story of a visionary businessman who recognised the potential of digital assets. From volatility to validation, the rise of Bitcoin adoption reflects the faith of those like Donald, who see its power to reshape the future.



IGF 2024 and the future of AI, digital divides, and internet governance

The Digital Watch Observatory dig.watch had a very busy week last December, as the Internet Governance Forum (IGF) 2024 was at the centre of Diplo’s attention and that of the entire digital governance realm, addressing the most pressing digital issues of our time: the rapid evolution of AI, the digital divide, and the delicate balance of governance framework processes revolutionising the world. On 15 – 19 December, Diplo was closely involved in IGF 2024, this time in Riyadh, Saudi Arabia, reporting and contributing its knowledge to shape a human-centred digital future.

The forum brought together experts, policymakers, and stakeholders from around the globe, and discussions highlighted three dominant themes: AI governance, bridging the digital divide, and enhancing cybersecurity, underscoring the need for inclusive solutions and forward-thinking strategies.

AI governance

AI took centre stage, as expected, with debates on governance, ethics, and its societal impact. Discussions explored a multifaceted approach, combining international regulatory frameworks, voluntary industry commitments, and bottom-up governance models sensitive to local contexts. The Council of Europe’s Framework Convention on AI and the G7 Hiroshima AI Process were spotlighted as global initiatives striving to balance innovation and the protection of human rights.

The potential of AI to deepen inequalities was another focal point, with calls to address AI divides between developed and developing nations. Discussions stressed the importance of building local AI ecosystems, promoting capacity development in the Global South, and ensuring equitable access to AI infrastructure. As concerns about AI transparency and accountability grew, frameworks like the ethical principles of the Digital Cooperation Organization (DCO)  offered pathways to mitigate AI’s societal risks.

Diplo’s contribution to IGF 2024

Dr Jovan Kurbalija, Director of Diplo, approached the IGF in Riyadh with a historical perspective on AI’s roots in the Islamic Golden Age. He underscored the contribution of the Islamic mathematicians and the Islamic culture, which is at the foundation of the digital world.

In the ‘Intelligent machines and society: An open-ended conversation’ session led by Diplo experts, attendees had the opportunity to explore AI’s profound philosophical, ethical, and practical implications, focusing on its impact on human identity, agency, and communication. Kurbalija introduced the concept of the ‘right to human imperfection’, urging the preservation of human flaws and agency amid AI-driven optimisation. 

Another leading expert and Director of Knowledge at Diplo, Sorina Teleanu, warned against the anthropomorphisation of AI and highlighted the risks surrounding brain data processing and questions of AI personhood, particularly with the emergence of artificial general intelligence (AGI).

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Diplo ‘Unpacking the Global Digital Compact’

Sorina’s recent publication, Unpacking the Global Digital Compact: Actors, Issues and Processes, presented at the IGF, provides a detailed account of the GDC negotiations over an 18-month process, tracking and analysing changes across different versions of GDC drafts. The publication presents a unique interplay between zooming in on specific provisions, sometimes on the edge of linguistic pedantry, and zooming out to provide a broader perspective on digital governance and cooperation. The publication also places the GDC in the broader context of global digital governance and cooperation mechanisms. It offers a set of questions to reflect on as stakeholders explore the interplay between the processes, implementation, and follow-up of the GDC, WSIS, and Agenda 2030.

The panel also addressed AI governance, with Kurbalija advocating for decentralised development to prevent power centralisation, while Henri-Jean Pollet from ISPA Belgium stressed open-source models to ensure reliability. The evolving human-AI dynamic was discussed, including changes in communication and the need for AI ethics education, as raised by Mohammad Abdul Haque Anu. Kurbalija underscored Diplo’s focus on AI tools that augment human knowledge without replacing decision-making, ending the session with a call for continued exploration of the role of AI in shaping the future of humanity.

Digital divides: meaningful connectivity and inclusion

The persistent digital divide remained a complex challenge, with one-third of the global population still offline. IGF discussions moved beyond simple access, championing the concept of ‘meaningful connectivity’, which ensures a safe, productive, and enriching online experience. Targeted investments in rural infrastructure, unlicensed spectrum use, and satellite technology like low Earth orbit (LEO) satellites were proposed as solutions to connect underserved communities.

Gender disparities also took the spotlight. Statistics revealed stark inequalities, with women representing just 10% of executive roles in tech. Speakers called for mentorship programmes, cultural sensitivity, and capacity development to increase women’s participation in digital spaces. Examples like India’s Unified Payments Interface and Brazil’s PIX system showcased how the digital public infrastructure (DPI) can bridge economic gaps, provided they include robust consumer protections and digital literacy programmes.

Cybersecurity: resilience in a complex landscape

Cybersecurity sessions underscored the growing sophistication of cyber threats and the need for resilient digital infrastructure. Discussions called for universal cybersecurity standards flexible enough to adapt to diverse local contexts, while AI was recognised as both a solution and a risk for cybersecurity. AI enhances threat detection and automates responses, yet its vulnerabilities—like adversarial attacks and data poisoning—pose significant challenges.

Developing countries’ struggles to build cyber resilience were a recurring concern. Panellists emphasised capacity development, existing framework implementation, and tailored strategies. Cyber diplomacy emerged as a crucial tool, particularly in regions like Africa and the Middle East, where greater participation in global negotiations is needed to shape cyber norms and ensure equitable protections.

Content governance and environmental sustainability

The complexities of content moderation in diverse cultural contexts raised critical questions. While AI offers potential solutions for content moderation, its ethical implications and biases remain unresolved. Disinformation was another urgent issue, with experts advocating for digital literacy, fact-checking initiatives, and multistakeholder collaborations to preserve democratic integrity.

Sustainability intertwined with digital policy discussions, as the environmental impact of AI, e-waste, and data infrastructure came into focus. The digital sector’s 4% contribution to global emissions sparked calls for sustainable IT procurement, circular economy strategies, and greener AI standards. Harnessing AI to achieve sustainable development goals (SDGs) was also discussed, with its potential to accelerate progress through real-time data analysis and climate prediction.

Looking ahead: local realities and global cooperation

IGF expertise offered some advice for the future with discussions that stressed the importance of multistakeholder cooperation in translating global frameworks like the WSIS+20 and the Global Digital Compact into actionable local policies. In Riyadh, IGF 2024 reinforced that tackling digital challenges—from AI ethics to digital divides—requires a nuanced, multifaceted, holistic, and inclusive approach. The forum served as a sounding board for innovative ideas and a call to action: to build an equitable, sustainable, secure digital future for all.See you in Norway for IGF 2025!



DeepSeek: Speeding up the planet or levelling with ChatGPT?

Although the company’s name somewhat overlaps with Google DeepMind, which was launched earlier, the new player in the market has sparked a leap in attention and public interest, becoming one of the biggest AI surprises on the planet upon its launch.

DeepSeek, a company headquartered in China, enjoys significant popularity primarily because its most sought-after features keep pace with giants like OpenAI and Google, as well as due to notable stock market changes that are far from negligible.

In the following points, we will explore these factors and what the future holds for this young company, particularly in the context of the dynamics between China and the USA.

How did it start? Origins of DeepSeek

DeepSeek is an AI company from China based in Hangzhou, Zhejiang, founded by entrepreneur and businessman Liang Wenfeng. The company develops open-source LLMs and is owned by a Chinese hedge fund, High-Flyer.

It all started back in 2015 when Liang Wenfeng co-founded High-Flyer. At first, it was a startup, but in 2019, it grew into a hedge fund focused on developing and using AI trading algorithms. For the first two years, they used AI only for trading.

In 2023, High-Flyer founded a startup called DeepSeek, and Liang Wenfeng was appointed CEO. Two years later, on 10 January 2025, DeepSeek announced the release of its first free-to-use chatbot app. The app surpassed its main competitor, ChatGPT, as the most downloaded free app in the USA in just 17 days, causing an unprecedented stir on the market.

Unprecedented impact on the market

Few missed the launch of the DeepSeek model, which is why the stock market felt the impact, as did some of the biggest giants.

For instance, the value of Nvidia shares dropped by as much as 18%. Similar declines were experienced by giants like OpenAI, Google, and other AI companies focused on small and medium-sized enterprises.

On top of that, there is justified concern among investors, who could quickly shift focus and redirect their investments. However, this could lead to an even more significant drop in the shares of the largest companies.

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Open-source approach

DeepSeek embraces an open-source philosophy, making its AI algorithms, models, and training details freely accessible to the public. The company has stated that it is committed to transparency and fosters collaboration among developers and researchers worldwide. They also advocate for a more inclusive and innovative AI ecosystem.

Their strategy has the potential to reshape the AI landscape, as it empowers individuals and organisations to contribute to the evolution of AI technology. DeepSeek’s initiative highlights the importance of open collaboration in driving progress and solving complex challenges in the tech industry.

With the growing demand for ethical and transparent AI development, DeepSeek’s open-source model sets a precedent for the industry. The company paves the way for a future where AI breakthroughs are driven by collective effort rather than proprietary control.

Cheaper AI model that shook the market

By being cheaper than the competition, DeepSeek has opened the door to the AI market for many other companies that do not have as much financial power. As Dr Jovan Kurbalija, Executive Director of Diplo, says in his blog post titled ‘How David outwits Goliath in the age of AI?‘, ‘the age of David challenging Goliath has arrived in AI’.

For individuals, this means monthly costs are reduced by 30% to 50%, which can be, and often is, the biggest incentive for users looking to save.

Privileges once enjoyed by those with greater financial resources are now available to those who are looking to advance their small and medium-sized businesses.

Cyber threats and challenges faced by DeepSeek

Shortly after its launch, DeepSeek faced a significant setback when it was revealed that an error had exposed sensitive information to the public.

This raised alarms for many, especially as the immense popularity led to the AI Assistant being removed from the AppStore more times than OpenAI’s offering, and a large amount of data became accessible.

Experts have expressed concerns that others may have accessed the leaked data. The company has not yet commented on the incident, while the system’s vulnerability provides a foundation for hacking groups to exploit.

DeepSeek for the top spot, ChatGPT defends the throne

The AI race is heating up as DeepSeek challenges industry leader ChatGPT, aiming to claim the top spot in AI. With its open-source approach, DeepSeek is rapidly gaining attention by publicly making its models and training methods available, fostering innovation and collaboration across the AI community.

The race was further spiced up by DeepSeek’s claim that it built an AI model on par with OpenAI’s ChatGPT for under $6 million (£4.8 million). In comparison, Microsoft, OpenAI’s main partner, plans to invest around $80 billion in AI infrastructure this year.

As DeepSeek pushes forward with its transparent and accessible model, the battle for AI supremacy intensifies. Whether openness will outmatch ChatGPT’s established presence remains to be seen, but one thing is sure—the AI landscape is evolving faster than ever.

Why is DeepSeek gaining popularity in 2025?

DeepSeek has emerged as a major player in AI by embracing an open-source philosophy, making its models and training data freely available to developers. This transparency has fueled rapid innovation, allowing researchers and businesses to build upon its technology and contribute to advancements in AI.

Unlike closed systems controlled by major tech giants, DeepSeek’s approach promotes accessibility and collaboration, attracting a growing community of AI enthusiasts. Its cost-effective development, reportedly achieving results comparable to top-tier models with significantly lower investment, has also drawn attention.

As demand for more open and adaptable AI solutions grows, DeepSeek’s commitment to shared knowledge positions it as a strong contender in the industry. Whether this strategy will redefine the AI landscape remains to be seen, but its growing influence in 2025 is undeniable.

DeepSeek in the future: Development, features, and strategies

Now that it has experienced ‘overnight success’, the Chinese company aims to push DeepSeek to the top and position it among the most powerful AI firms in the world.

Users can definitely expect many advanced features that will fuel a fierce battle with giants like DeepMind and ChatGPT.

Strategically, DeepSeek will attempt to break into the American market and offer more financially accessible solutions, forcing the key players to make significant cuts.

DeepSeek is undoubtedly a real hit in the market, but it remains to be seen whether the price is the only measure of its success.

Whether it will make a leap in its own technology and completely outpace the competition or remain shoulder to shoulder with the giants—or even falter—will be revealed in the near future.

One thing is certain: the Chinese company has seriously shaken up the market, which will need considerable time to recover.



Can quantum computing break the cryptocurrency’s code?

The digital revolution has brought in remarkable innovations, and quantum computing is emerging as one of its brightest stars. As this technology begins to showcase its immense potential, questions are being raised about its impact on blockchain and cryptocurrency. With its ability to tackle problems thought to be unsolvable, quantum computing is redefining the limits of computational power.

At the same time, its rapid advancements leave many wondering whether it will bolster the crypto ecosystem or undermine its security and decentralised nature. Can this computing breakthrough empower crypto, or does it pose a threat to its very foundations? Let’s dive deeper. 

What is quantum computing? 

Quantum computing represents a groundbreaking leap in technology. Unlike classical computers that process data in binary (0s and 1s), quantum computers use qubits, capable of existing in multiple states simultaneously due to quantum phenomena such as superposition and entanglement.

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For example, Google’s new chip, Willow, is claimed to solve a problem in just five minutes—a task that would take the world’s fastest supercomputers approximately ten septillion years—highlighting the extraordinary power of quantum computing and fuelling further debate about its implications. 

These advancements enable quantum machines to handle problems with countless variables, benefiting fields such as electric vehicles, climate research, and logistics optimisation. While quantum computing promises faster, more efficient processing, its intersection with blockchain technology adds a layer of complexity, so the story takes an interesting twist. 

How does quantum computing relate to blockchain?

Blockchain technology relies on cryptographic protocols to secure transactions and ensure decentralisation. Cryptocurrencies like Bitcoin and Ethereum use elliptic curve cryptography (ECC) to safeguard wallets and transactions through mathematical puzzles that classical computers cannot solve quickly. 

Quantum computers pose a significant challenge to these cryptographic foundations. Their advanced processing power could potentially expose private keys or alter transaction records, threatening the trustless environment that blockchain depends upon.

Opportunities: Can crypto benefit from quantum computing? 

While the risks are concerning, quantum computing offers several opportunities to revolutionise blockchain: 

  • Faster transactions: Quantum algorithms could significantly accelerate transaction validation, addressing scalability challenges. 
  • Enhanced security: Developers can leverage quantum principles to create stronger, quantum-secure algorithms. 
  • Smarter decentralisation: Quantum-powered computations could enhance the functionality of smart contracts and decentralised apps (DApps). 

By embracing quantum advancements, the blockchain industry could evolve to become more robust and scalable— hopefully great news for the crypto community, which is optimistic about the potential for progress. 

How does quantum computing threaten cryptocurrency? 

Despite its potential benefits, quantum computing poses significant risks to the cryptocurrency ecosystem, depending on how it is used and who controls it: 

  1. Breaking public key cryptography

Quantum computers equipped with Shor’s algorithm can decrypt ECC and RSA encryption. Tasks that would take classical computers millennia could be accomplished by a quantum computer in mere hours. This capability threatens to expose private keys, allowing hackers to access wallets and steal funds. 

  1. Mining oligopoly 

The mining process, vital for cryptocurrency creation and transaction validation, depends on computational difficulty. Quantum computers could dominate mining activities, disrupting the decentralisation and fairness fundamental to blockchain systems.

  1. Dormant wallet risks

Wallets with exposed public keys, particularly older ones, are at heightened risk. A quantum attack could compromise these funds before users can adopt protective measures.

With projections suggesting that quantum computers capable of breaking current encryption standards could emerge within 10–20 years—or perhaps even sooner—the urgency to address these threats is intensifying.

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Solutions: Quantum-resistant tokens and cryptography

Where there is a challenge, there is a solution. The crypto industry is proactively addressing quantum threats with quantum-resistant tokens and post-quantum cryptography. Lattice-based cryptography, for example, creates puzzles too complex for quantum computers, with projects like CRYSTALS-Kyber leading the charge. Hash-based methods, such as QRL’s XMSS, ensure data integrity, while code-based cryptography, like the McEliece system, uses noisy signals to protect messages. Multivariate polynomial cryptography also adds robust defences through complex equations. 

As we can see, promising solutions are already actively working to uphold blockchain principles. These innovations are crucial not only for securing crypto assets but also for maintaining the integrity of blockchain networks. Quantum-resistant measures ensure that transaction records remain immutable, safeguarding the trust and transparency that decentralised systems are built upon.

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The quantum future for crypto 

Quantum computing holds tremendous promise for humanity, but it also brings challenges, particularly for blockchain and cryptocurrency. As its capabilities grow, the risks to existing cryptographic protocols become more apparent. However, the crypto community has shown remarkable resilience, with quantum-resistant technologies already being developed to secure the ecosystem. This cycle of threats and solutions is a perpetual motion—each technological advancement introduces new vulnerabilities, met with equally innovative defences. It is the inevitable price to pay for embracing the modern decentralised finance era and the transformative potential it brings. 

The future of crypto does not have to be at odds with quantum advancements. With proactive innovation, collaboration, and the implementation of quantum-safe solutions, blockchain can survive and thrive in the quantum era. So, is quantum computing a threat to cryptocurrency? The answer lies in our ability to adapt. After all, with great power comes great responsibility—and opportunity.



The global regulatory landscape of crypto: Between innovation and control

Blockchain technology and cryptocurrencies are reshaping modern economies through their decentralised and secure nature. Blockchain, a digital ledger, ensures transactions are immutable and transparent by distributing data across networks, preventing single-point control or tampering. Initially developed for Bitcoin in 2009, blockchain now underpins various applications, including smart contracts, supply chain management, and voting systems, eliminating intermediaries and enhancing security. Cryptocurrencies, like Bitcoin and Ethereum, operate on these networks, allowing secure, decentralised exchanges without relying on traditional banks or central authorities.

Despite their transformative potential, cryptocurrencies face challenges such as price volatility, regulatory uncertainties, and scalability issues. They are susceptible to misuse for money laundering or tax evasion due to their pseudonymous nature. Consequently, governments worldwide are advancing regulation to protect consumers, prevent illicit activities, and stabilise markets. Regulatory frameworks like Know Your Customer (KYC) and Anti-Money Laundering (AML) aim to curb these risks, with nations adopting diverse stances—from crypto-friendly hubs like Switzerland and Singapore to restrictive policies in China and India.

In the USA, cryptocurrency regulation has advanced gradually. Legislative efforts aim to define crypto assets as securities or commodities, creating clarity for businesses and investors. Under Donald Trump’s administration, a pro-crypto stance emerged, focusing on deregulation and innovation, alongside plans to develop a Bitcoin reserve and revitalise mining. Meanwhile, Russia has introduced stringent rules for crypto transactions in foreign trade, aiming for transparency and integration while imposing detailed compliance requirements.

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In Europe, the Markets in Crypto-Assets Act (MiCA) establishes a unified regulatory framework for crypto assets across the EU. It addresses governance, consumer protection, and anti-manipulation measures, with provisions for stablecoins and licensing requirements for service providers. MiCA reflects a global trend toward standardised regulation to foster trust and innovation in digital assets.

Globally, nations are adopting varied approaches to regulate cryptocurrencies. Japan is easing regulations for non-exchange intermediaries, Brazil is rolling out comprehensive crypto laws to attract investors, and Kenya is developing frameworks to foster innovation while ensuring security and transparency. These efforts underscore the growing recognition of cryptocurrency’s role in financial inclusion and economic development.

As cryptocurrencies gain prominence, international collaboration remains critical. Organisations like the Financial Stability Board and the World Economic Forum stress the need for unified regulatory standards to address cross-border risks and ensure innovation aligns with consumer protection. The ongoing evolution of regulatory frameworks highlights the delicate balance between fostering innovation and mitigating risks, paving the way for a stable and secure global financial ecosystem in the digital age.