Nic Carter: Quantum, Satoshi's Coins and Bitcoin's Governance Problem

Nic Carter tells Natalie Brunell that quantum computers will threaten Bitcoin within 10 years and that Satoshi’s coins need a lawful rescue before an attacker takes them. The Castle Island Ventures partner returned to Coin Stories after four years to cover California’s billionaire wealth tax, why AI could defund the welfare state, how he holds his own Bitcoin after the recent hardware wallet scares, and the governance problem he worries about more than quantum itself.

TLDW

Carter argues that AI shifts income from labor to capital, which squeezes tax bases built on wages and makes wealth taxes on assets like Bitcoin more likely over the next decade. On security, he expects quantum computers to break Bitcoin’s cryptography within 10 years, says no one can price the risk of AI cracking it directly, and has not sold any Bitcoin over either worry. The fix he wants is a post-quantum soft fork, but he fears Bitcoin has forgotten how to upgrade, and he proposes a US government salvage trust for Satoshi’s unmovable coins. He closes on Castle Island’s stablecoin bets, his heavy use of AI agents, his refusal to let AI write a word, and the MNPI hiding inside AI models.

Thoughts

Bitcoin’s biggest risk in this conversation is not a machine but a skill that has wasted away. Carter’s case is simple. The network last changed its rules in 2021 with Taproot, the upgrades before that were bruising, and many of the people who know how to ship a soft fork have stepped back. He says the fight over BIP 110 “poisoned the well” and that Craig Wright’s lawsuits pushed core developers out of public view, so the ones still working on Bitcoin do it quietly and stay out of governance. That leaves the project in “relative stasis” just as it may need its largest coordinated change ever: a new signature scheme, a soft fork, then millions of holders moving coins to new addresses. He expects that to take years and says it cannot be rushed, because some owners are in prison or out of reach for months at a time. A decade-long quantum timeline sounds comfortable until you subtract the years of argument, activation and migration. The uncomfortable part is what fills the vacuum. Carter expects corporate Bitcoin holders to step in if they see a preventable threat, not to seize the protocol but to lean on developers, because they owe it to their clients. For a community that defines itself against institutions, that is the scenario to watch.

His answer for Satoshi’s roughly one million coins is the most provocative idea here, and he knows it. Coins in old addresses with exposed public keys cannot be upgraded by an owner who may be dead or gone, so once a large quantum computer exists, someone will take them. Carter wants the US government to authorize a quantum lab to recover them under a lawful salvage regime, hold them in a court-administered trust, and let Satoshi or any early miner claim them back with proof. He opens by admitting that any sentence starting “the government should” is the worst sentence ever, and many Bitcoiners will reject it for exactly that reason. But the alternatives are worse on their own terms. Freezing the coins by consensus means the network deciding who owns what, which he does not expect to happen. Doing nothing means a quantum attacker, possibly a hostile state, dumping a million coins on the market. Framed that way, salvage is the least bad option, and it borrows from a body of maritime law that has handled abandoned property for centuries.

The sharpest technical point comes near the end: AI is speeding up quantum computing itself. Carter does not think an AI model will break Bitcoin’s elliptic curve cryptography on its own. Earlier he says nobody can put a probability on that, and he compares it to a gamma ray burst. But he says AI is already helping engineers build scaled quantum computers faster, which pulls a known threat closer rather than inventing an unknown one. Add his view that Google is self-censoring about its quantum progress, partly to avoid handing secrets to attackers, and the public timeline looks more like a floor than a forecast. This is also why he tells ordinary holders that moving coins to fresh addresses, as Ethereum researcher Justin Drake has urged, does not really help. If a large exchange cold wallet is drained, the price collapses wherever your own coins sit. Individual precautions are weak. Only the protocol upgrade matters.

His argument that AI defunds the welfare state is more rigorous than it first sounds. US income splits roughly 70% to labor and 30% to capital, and the tax system leans on labor in about the same proportion. If AI pushes labor’s share toward 60%, governments must tax capital more, and capital is the factor that moves. California’s proposed billionaire tax is his case study: a one-time 5% levy pitched as a $100 billion windfall, after which he says at least 35% of the taxable base left before the residency deadline, and a Stanford paper estimated the tax’s net value is probably negative even if voters pass it. Europe has it worse, since it hosts few of the GPUs, data centers or model labs while its white-collar tax base is exposed. Its remaining tools, fining American tech firms and banning AI in medicine or law, make it poorer still. The model holds together, though it waves away the case that AI-driven growth could outrun government spending with a single line about governments always finding ways to spend.

The last idea is small, but it may be the one readers remember. Carter notes that people routinely paste M&A documents and pending deals into chatbots without turning off training, so the models are full of material non-public information. His untested legal read is that asking a model which companies will be acquired soon is not insider trading, because you never spoke to the person who leaked it, and he expects funds to trade this way. Whether regulators agree is an open question. The practical risk sits with companies today: any deal team using consumer AI accounts should assume its secrets can surface in the next model.

Key Takeaways

California’s proposed billionaire tax is a one-time 5% levy on about 250 billionaires holding roughly $2.5 trillion, pitched as a $100 billion windfall for healthcare. Carter says at least 35% of the taxable base left before the January 1, 2026 residency date.
A Stanford paper Carter cites found that once lost future income tax is counted, the wealth tax’s net present value is probably negative even if it passes.
He expects taxes on unrealized gains or wealth to reach Bitcoin within the next decade, driven by AI shrinking the labor share of income from about 70% toward 60%.
Carter calls Trump Accounts a covert privatization of Social Security that would have helped had it started 40 years ago, but says it cannot fix a trust fund projected to run short in the early 2030s.
He owns none of the AI model companies and expects them to stop releasing their best models, moving from selling tokens to selling discoveries in math, physics and biotech.
The next 6 to 12 months are a “danger zone” as AI agents find and exploit software bugs. Carter took his own website offline over the PHP vulnerability.
He is confident quantum computers will threaten Bitcoin within 10 years, because Shor’s algorithm already exists and only the hardware is missing. The risk of AI breaking elliptic curves without quantum hardware, he says, cannot be priced.
Despite publicly pushing for a quantum fix, Carter has not sold any Bitcoin over the threat.
After the Ledger and Coldcard scares, he still trusts multi-vendor multisig and says holding through Coinbase or an ETF is a valid choice, since professional custodians specialize in it.
Carter sees collateral as a bigger goal for Bitcoin than payments, and wants Bitcoin-backed stablecoins that pair Bitcoin as collateral with dollars for spending.
He calls most digital asset treasury companies a waste of time and Taproot underrated, since it lets post-quantum signatures be added without an abrupt hard fork, though its exposed public keys were a mistake.
For Satoshi’s coins he proposes a US government lawful salvage operation feeding a court-administered trust that rightful owners can claim from.
Castle Island, founded in 2018, still invests only in digital assets and is most bullish on stablecoins now that the GENIUS Act is being implemented.
Carter runs Codex agents nonstop on admin tasks, including phone calls, but uses AI only for research in his writing.
The two numbers he watches most are oil flowing through the Strait of Hormuz during the war in Iran and the price of a B300 GPU inference hour.

Chapters

0:52 California’s Billionaire Tax and Capital Flight

Carter explains the viral tweet behind his return to the show: a Stanford paper that was scathing about California’s proposed 5% retroactive wealth tax on billionaires. Announced in October 2025, it gave billionaires until January 1, 2026 to leave, and he says at least 35% of the taxable base did. Counting the income taxes those residents would have paid for years, the paper estimated the tax likely leaves the state worse off. He says Bitcoin is capital and will be swept in if the West normalizes taxing assets at rest.

4:48 AI, Labor and the Coming Welfare Reckoning

France spends about 57% of GDP through the state, much of it on pensions, and young people feel they will never receive the same benefits. Carter says AI makes this worse by empowering capital over labor, and that something in the welfare state has to give. Trump Accounts may be a covert privatization of Social Security, but the bill still comes due. He argues that a shrinking labor share leaves governments chasing mobile capital, while Europe, which owns little of the AI supply chain, falls back on fines and local AI bans. He also rejects Norway as a model for the US.

17:09 AI Labs as Quasi State-Owned Enterprises

Carter sees AI as a strategic technology, so labs can fairly ask Washington for privileges in return, even if the fusion of state and industry is uncomfortable. Because models are easy to distill and Chinese open models compete hard, he owns none of the model companies. He does not think AI is a bubble, given single-digit household adoption. He expects labs to keep their best models internal and sell discoveries instead of tokens.

20:49 AI Bug Hunting and the Quantum Threat

AI audits are surfacing vulnerabilities faster than they can be patched, and Carter expects a dangerous year before infrastructure hardens. On Bitcoin, he separates quantum, where Shor’s algorithm is known and only the machine is missing, from the unknowable chance that AI finds hidden structure in elliptic curves. He thinks quantum will get there within 10 years. He says that moving coins in response to Justin Drake’s warning is pointless, because a large theft would crash the price for everyone.

28:25 The Upgrade Bitcoin Needs and How Nic Holds His Coins

The fix means agreeing on a new signature scheme, activating a soft fork and having every holder rotate addresses, which will take years. Carter calls the recent spy chips in resold Ledger devices and the entropy flaw in single-sig Coldcards every paranoid Bitcoiner’s nightmare come true. He did not have coins on Coldcards at the time. He still recommends multi-vendor multisig and defends custodians and ETFs as reasonable choices.

31:43 Bitcoin as Collateral and Bitcoin-Backed Stablecoins

Carter wanted more programmability and layer 2s to drive fees, and admits Lightning and other L2s fell short. He was never persuaded Bitcoin needed to rival Visa, and sees collateral as the bigger prize. Pointing to Dai and Ethena, and to Michael Saylor’s idea of a Bitcoin-backed stablecoin paying 8%, he wants products that combine Bitcoin collateral with dollar spending. He calls most digital asset treasury companies pointless next to ETFs, and Taproot underrated.

37:37 Can Bitcoin Still Upgrade?

Infighting reflects a mature asset with millions of holders, Carter says, but the real worry is governance. The BIP 110 fight and Craig Wright’s lawfare drove many core developers out of public view, and the last upgrade was in 2021. With Bitcoin’s cryptography potentially under threat this decade, he says the network has to remember how to change. If corporate holders see a preventable threat, he expects them to push developers to act.

41:40 What to Do With Satoshi’s Coins

Carter says the outlook is bright if Bitcoin ships a quantum soft fork and solves the coins that cannot upgrade. He proposes a US lawful salvage operation that recovers them into a court-administered trust, open to claims from Satoshi or early miners, and says he does not expect Bitcoin to freeze them. With Bitcoin near $82,000 despite AI soaking up capital, he sees the developed world’s debt problems as positive for Bitcoin in the medium to long term.

44:21 Castle Island, AI Agents and Writing Without AI

Unlike most peers, Castle Island still invests only in digital assets, betting on Bitcoin companies and stablecoins while big VCs chase neolabs and neoclouds. Personally, Carter has Codex agents handle every dull administrative task, from phone calls to his fantasy football team, which is losing. He uses AI for research but will not let it write a word of his essays, calling writing, podcasting and art artisanal work.

48:48 Kids, Work and What Nic Is Watching

Carter worries the next generation will never learn to write or read deeply. He sees jobs as the defining problem of the next 50 years, with perhaps 1% of adults eventually doing highly productive work while others pursue creative work or depend on welfare. He watches GPU prices, the mix of open and closed models people query, oil through the Strait of Hormuz, the price of B300 compute, and Google’s quantum progress. He ends on the MNPI sitting inside AI models.

Notable Quotes

“I think quantum will get there in 10 years. In 10 years, for sure.”
Nic Carter, on when quantum computers will threaten Bitcoin

“I think that’s a small goal to aim at is payments. I think a much bigger goal to aim at is collateral, a monetary asset.”
Nic Carter, on what Bitcoin should become

“Taproot laid the groundwork for us to create postquantum signatures and embed them into Bitcoin in a way that doesn’t require a super abrupt hard fork.”
Nic Carter, on why Taproot is underrated

“We’re in a period of relative stasis from a governance and upgrade perspective when we actually need a lot of action.”
Nic Carter, on the Bitcoin problem he worries about most

“I think that the government should like institute a lawful salvage operation for those coins.”
Nic Carter, on Satoshi’s coins

“I use it for research but I won’t let AI write a word because otherwise it’s not my work.”
Nic Carter, on why his essays are his own

“These models are just chock full of MNPI.”
Nic Carter, on confidential deal documents uploaded to AI chatbots

Watch the full conversation here.

Nic Carter: Quantum, Satoshi’s Coins and Bitcoin’s Governance Problem