Also: Zcash token falls after developer quits, Smart Cashtags and BTC quantum computing defense

Jan 14, 2026, 4:29 p.m.

Margaux Nijkerk, reporter at CoinDesk

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What to know

Welcome to The Protocol, CoinDesk’s weekly wrap of the most important stories in cryptocurrency‑tech development.

In this issue:

• Ethereum co‑founder Vitalik Buterin says decentralized stablecoins still have deep flaws

• Top privacy token Zcash falls 14 % after key development team quits over governance clash

• Elon Musk’s X teases crypto‑aware “smart cashtags” just a day after community backlash

• Quantum computing threatens the $2 trillion Bitcoin network – BTQ Technologies says it has a defense

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Network News

BUTERIN SAYS STABLECOINS HAVE DEEP FLAWS

Ethereum co‑founder Vitalik Buterin said the crypto industry has yet to solve some of the most basic design problems behind truly decentralized stablecoins, arguing that many existing systems rely on fragile assumptions that could break down over time. In a post published on X, Buterin laid out three core challenges that remain unresolved. Rather than promoting a specific project or proposing a new stablecoin, he framed the post as a critique of how decentralized stablecoins are designed and why those designs may not hold up over the long term.

At the most basic level, stablecoins are cryptocurrencies designed to maintain a stable value, typically by pegging to the U.S. dollar. While some are issued by companies that hold dollars or dollar‑equivalent assets, decentralized stablecoins aim to maintain stability through code, collateral and market incentives.

• Reference‑point dependence – Most decentralized stablecoins still depend on the U.S. dollar as their reference point. Buterin argued that systems meant to be resilient to political or economic shocks should not be tied indefinitely to a single national currency; over long horizons even moderate inflation could erode the usefulness of a dollar peg. He suggested future stablecoins might instead track broader price indexes or measures of purchasing power.

• Oracle vulnerability – Oracles supply blockchains with real‑world data such as asset prices. Because blockchains cannot access external information directly, they rely on oracles to report prices used by smart contracts. If an oracle can be manipulated by someone with enough capital, the entire system becomes vulnerable.

• Governance and incentive design – (details omitted for brevity).

— Siamak Masnavi

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ZCASH DEVELOPER QUITS, TOKEN FALLS

Electric Coin Company (ECC), one of the main development firms behind the privacy‑focused crypto network Zcash, says its entire team has left following a dispute with Bootstrap, a nonprofit created to support the network. The token, ZEC, fell nearly 14 % in the 24 hours after the announcement.

Josh Swihart, CEO at ECC, wrote on X that a majority of Bootstrap’s board members — naming Zaki Manian, Christina Garman, Alan Fairless and Michelle Lai (ZCAM) — had moved into “clear misalignment” with what he described as Zcash’s mission. Swihart said ECC’s staff were “constructively discharged,” arguing that the terms of their employment had been changed in ways that made it impossible to do their jobs “effectively and with integrity.”

A constructive discharge is when employees quit because conditions are changed so severely that staying becomes unrealistic — even if they weren’t formally fired.

— Shaurya Malwa

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‘SMART CASHTAGS’ COMING TO X

Elon Musk’s social‑media platform X is developing a feature designed to make financial and crypto‑related discussions more precise on the platform, according to a post by its head of product that appeared a day after backlash from parts of the crypto community.

In a post on X, Nikita Bier said the platform is developing “Smart Cashtags,” a feature that will enable users to specify the exact asset or smart contract they are referring to when posting a ticker. Users will be able to tap those tags directly from their timeline to view real‑time price data and all related mentions of that asset.

“X is the best source for financial news — and hundreds of billions of dollars are deployed based on things people read here,” Bier wrote, adding that the company is collecting feedback as it iterates toward a potential public release next month.

Solana Labs highlighted the crypto implications shortly after Bier’s post, saying Smart Cashtags would allow users to tag Solana‑based tokens and view charts and related information directly on X. In a screenshot shared alongside that post, users typing a dollar sign appear to be prompted to select from a list of assets — including cryptocurrencies such as Bitcoin, BONK and Base — suggesting posts could be linked to asset‑specific pages showing prices and related discussion.

— Siamak Masnavi

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BTC’S DEFENSE AGAINST QUANTUM COMPUTING

Media coverage of the threat posed by quantum computing usually identifies cryptocurrencies as a key area of classical cryptography that will be effortlessly broken when the technology hits the mainstream, which, according to some estimates, may be less than a decade from now. Quantum chips can perform certain calculations exponentially faster than traditional processors, leaving much of existing cryptography — which relies on the difficulty of solving complex equations — under threat.

Among the efforts to develop quantum‑resistant algorithms is the replacement of today’s public‑key encryption with lattice‑based signing.

One approach to protecting the $2 trillion Bitcoin blockchain has been unveiled by post‑quantum cryptography specialist BTQ Technologies: Bitcoin Quantum, a permissionless Bitcoin fork that serves as a public, runnable testnet where miners, developers, researchers and users can stress‑test quantum‑resistant transactions and surface operational trade‑offs before any mainnet‑level migration becomes urgent.

The system includes a block explorer and a mining pool, providing immediate accessibility for experimentation.

— Ian Allison

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In Other News

• A collapse in the price of ether would damage the Ethereum ecosystem’s ability to function as a settlement infrastructure for financial activity, a Bank of Italy economist warned. The paper models how an extreme fall in ETH could reduce validator participation, slow block production and weaken Bitcoin’s resistance to certain attacks. — Shaurya Malwa

• Entrepreneur Bryan Johnson, who sold Braintree (and Venmo) to PayPal for $800 million, ties his interest in crypto to his broader “fountain of youth” mission, arguing that inflation and aging are analogous “invisible taxes.” — Sam Ewen