The Impact Of Quantum Computing On Cryptocurrency Security

Quantum Supremacy’s Potential Impact on Cryptocurrencies

From dramatic price swings to regulatory uncertainties, headlines concerning cryptocurrency make it easy to forget that, despite the technological milestones that blockchains and cryptocurrencies have achieved, fundamental technical loopholes remain open to exploitation by future technologies, such as quantum computers.

Even though quantum computers will not wipe out blockchains and cryptocurrencies entirely, experts agree that quantum computing will bring significant security risks to cryptocurrencies as a whole.

Google’s Quantum Leap

In 2019, Google presented its Sycamore quantum computer as the world’s first 54-qubit chip computer. Google reported that Sycamore had the capacity to compute a mathematical equation in 200 seconds that would otherwise take a supercomputer 10,000 years to compute.

Experts agree that this technology is the start of an arms race to develop powerful quantum computers and that quantum supremacy may arrive sooner than originally expected, prompting some further questions: Will quantum computers eventually crack the code of cryptographic algorithms, such as SHA256 and elliptic-curve cryptography? If so, what is the future of cryptocurrencies?

Quantum Computers and Quantum Supremacy

Quantum supremacy is the end goal of all developments in the quantum computing space. It is the point at which quantum computers will transcend their laboratory confines and begin solving previously impossible mathematical equations. In doing so, quantum computing will most likely replace classical computers in the long run.

But what exactly is a quantum computer? Referring to quantum computers as “computers” is somewhat misleading, since quantum computers operate on a principle that fundamentally differs from that of classical computers.

More specifically, while classical computers process data using bits that store data in binary form—that is, 0s and 1s—quantum computers process data using the principles of quantum mechanics. Similarly, while the binary bit is the basic unit of information for classical computers, a qubit or quantum bit is the basic unit of information for quantum computers. Therefore, while classical computers can only store information either as 0s or 1s, a quantum computer can store information in superpositions, meaning they can be both 0 and 1 at the same time. Put simply, a bit can only store one piece of data at a time, while a qubit can hold two bits worth of data at the same time. Development and Capabilities of Quantum Computers Today

Currently, most quantum computing developments are experimental. In fact, top researchers in the quantum computing space continue to argue about whether quantum supremacy has been achieved, even after the release of Sycamore.

IBM also developed a quantum computer and pushed back against Google’s claims that it had achieved quantum supremacy through Sycamore. IBM researchers claimed that classical computers were able to process that same mathematical equation in just 2.5 days. It would not take 10,000 years, as Google had previously suggested.

Nonetheless, while the development of quantum computing will certainly affect modern technologies such as blockchains and cryptocurrencies, such development is still at an early stage. In 2016 the United States National Security Agency estimated that it would take decades for quantum computers to become any kind of threat to encrypted information. Some experts, however, believe that the threat of quantum computing may rear its head much sooner. Meanwhile, renowned theoretical physicist Dr. Michio Kaku has proposed that people take a “wait-and-see” approach, given the many false alarms in the past.

Security of Cryptocurrencies in an Era of Quantum Computers

Although quantum computers are largely theoretical, some studies show that developments in the quantum computing space double every eighteen months. Therefore, it is imperative that the blockchain and cryptocurrency community start preparing for a quantum-supremacy future.

Notably, quantum computing will impact how information is stored and manipulated. Quantum computing will particularly affect those technologies that depend on cryptographic digital signatures for data security, including cryptocurrencies.

For example, experts agree that users whose jobs are to protect the cryptocurrency algorithms will have to modify their public and private keys once quantum computing becomes more prevalent. Currently, public keys on blockchain transactions rely on elliptic-curve cryptography (ECC) for protection.

Elliptic-Curve Cryptography (EEC)

ECC is a method of data encryption based on the mathematical elliptic curve. It is used worldwide to protect files in a way that only specified individuals can decode and read them. In addition to encrypting public keys on a blockchain, ECC is also used to encrypt user data online. However, experts agree that ECC is not quantum-safe because the complexity and difficulty of implementing ECC often increase the likelihood of errors. More specifically, quantum computers can decrypt an ECC public key while generating the wallet’s private key, rendering that wallet vulnerable.

Since no single piece of data can be altered without affecting all of the other blocks, a quantum computer would not be able to change any records on the blockchain directly. Instead, the quantum computer can access a wallet’s private key by decrypting the public key, since all wallets used to spend cryptocurrencies are automatically linked to public keys made available to the rest of the blockchain community. In other words, a capable decryption program on a quantum computer could more easily hack cryptocurrency wallets.

Secure Hashing Algorithm 256 (SHA-256)

A hashing algorithm is a mathematical function that truncates data into fixed sizes. Likewise, the hashing process is a one-way method of data encryption, meaning that every hash produced is both irreversible and unique. Therefore, it is impossible for an individual to figure out the original data in a cryptocurrency transaction using just the hash.

If a quantum computer can crack the ECC algorithm using the public address left behind by a user spending cryptocurrency from their wallet, can a secure hashing algorithm such as SHA-256 be hacked as well? According to Bitcoin enthusiast Andreas Antonopoulos, while a public key is the digital signature of a wallet’s address, the wallet’s address results from a double hash produced by the SHA-256 algorithm, making it more difficult to hack.

Cryptocurrencies, like Bitcoin, use two security protocols: ECC and SHA-256. On one hand, ECC public keys are easily accessible by the public. On the other hand, SHA-256 involves directly mining cryptocurrencies without spending cryptocurrencies and, therefore, does not produce a public key. For this reason, it has a better chance of withstanding any attacks, even from quantum computers.

Hashing algorithms such as SHA-256 aim to produce a unique hash for each wallet’s address. The more unique hashes a hashing algorithm produces, the more secure the system becomes since the hacking algorithm would have to compute trillions of different possibilities in order to collide with a match.

Experts conjecture that SHA-256 is collision-resistant, which means that an exceedingly large number of trials would be necessary to land on a matching hash. However, all hashing algorithms, including SHA-256, technically produce a collision, and the real question is whether an existing algorithm is capable of finding that specific collision.

Quantum-Safe Cryptography

Currently, no classical computers have the computing power required to hack cryptocurrencies. However, recent developments in the quantum computing space seem to hint that fundamental changes will need to be made in order to maintain the security of cryptocurrency wallets in the future.

Several researchers are already working on finding quantum-safe cryptography and have offered suggestions such as lattice-based cryptography and multivariate public-key cryptography. However, as much as quantum-computing capabilities may vastly affect sectors such as blockchains and cryptocurrencies, it is also possible that the current security concerns are also vastly overstated as well. Google’s quantum computer, for instance, is still largely primitive in nature and can only perform one highly technical calculation at this point in time. Therefore, achieving quantum supremacy is still likely to be years away.