888-384-7144 info@insidequantumtechnology.com

Inside Quantum Technology’s Inside Scoop: Quantum Computing, Cryptocurrencies, and Blockchain

Blockchain platforms, like cryptocurrencies, may be under threat from quantum computing.
By Kenna Hughes-Castleberry posted 18 Oct 2022

You can find out more about quantum computing and cryptocurrencies at the fall IQT conference on quantum computing and cybersecurity.

When developing innovative technology, there is always a reality that different types of technologies will threaten each other. This seems to be the case with quantum computing and blockchain, as many quantum algorithms are poised to threaten blockchain’s extra secure system. According to a 2022 study by Deloitte, very few current cryptocurrencies, or blockchain-based companies, have made any effort toward becoming quantum secure. “Most cryptocurrencies do not even identify this problem [quantum computing] in their roadmaps,” the study stated. While quantum computing may not currently threaten blockchain platforms, it will, at some point, become developed enough to do so, leading to possibly a decrease in cryptocurrency usage.

Defining Blockchain and Quantum Algorithms

For those who are unfamiliar with blockchain, the platform is designed as a digital ledger run on multiple machines within a peer-to-peer network. Blockchain uses random number generators along with the data itself (stored inside blocks) to create a hash or label of each block. Each hash is based in part on the previous block’s hash, making it harder to hack. If a block gets hacked, its hash immediately changes, and the blockchain breaks. A hacker would have to successfully change all the following hashes in the chain, along with all hashes in every computer in the network in order to produce a successful hack. This is one reason why blockchain is a more secure digital platform.

Mark Webber, lead Quantum Architect at Universal Quantum discusses quantum computing and cryptocurrencies

Mark Webber, lead Quantum Architect at Universal Quantum discusses quantum computing and cryptocurrencies as well as blockchain (PC Universal Quantum)

However, most experts see the capabilities of quantum computing, specifically quantum algorithms, being a viable threat to the blockchain system. The most threatening of these algorithms is Shor’s and Grover’s algorithms. Shor’s algorithm was established in the mid-1990s as a way to find prime factors of a given integer. “In a lot of ways, it did kickstart the field with this excitement of an application paired with an exponential advantage using quantum computers,” explained Mark Webber, lead Quantum Architect at Universal Quantum, a company focused on building the next generation of quantum computers. Webber studied the interactions between quantum computing and blockchain, specifically in the case of cryptocurrencies. As many encrypted communications, like blockchain, use public and private keys for secure channels algorithms, like Shor’s could threaten to reveal private keys through processing the public key. “While these keys are believed to be secure in the classical world, when we have a sufficiently powerful enough quantum computer, we will be able to crack these encryption techniques,” Webber added.

Similarly, Grover’s algorithm may be a threat to blockchain due to its ability to optimize search capabilities and find important values among large pools of random data. As a 2022 Forbes article states: “The difference between Grover’s and Shor’s algorithms is that Grover’s is more of a threat to cryptographic hashing and stored data, whereas Shor’s is a threat to the communication channel where data between the [cryptocurrency] wallet and the blockchain nodes reside.” Because of these two algorithms, many experts are predicting that quantum computing could eventually threaten the entire cryptocurrency platform, making it worthless.

For now, there is a time lag, as quantum technology continues to develop.  And many organizations and quantum companies are using this time lag to understand more of the benefits and threats of quantum technology. As a quantum architect, Webber is not only working to build the next generation of quantum computers but is also trying to understand the timeline of quantum impact. He often asks: “How quickly do we need to solve this problem for it to be a relevant quantum advantage? For some problems, you might be happy to wait days for your answer. Whereas for some cases, like breaking some particular aspects of encryption, there is a vulnerability time window. That means you have to solve it very quickly, such as maybe under 10 minutes, and that desired runtime goes on to define the requirements on the quantum hardware.”

When it comes to encryption and blockchain, quantum effects can also play a positive role. “The random number generators for these encryption methods can come from a quantum source,” Webber said. “We can use a small number of qubits as an essentially true random number source. Now we’re not talking about large-scale quantum computers here, but we are talking about qubits being used to strengthen the degree of encryption we have.” Yet these qubits may become a double-edged sword, also allowing for an easier way to hack into a potential cryptocurrency system.

Hacking into Cryptocurrencies Using Quantum Computing

Many cryptocurrencies, like Bitcoin, use a technique called elliptic curve (EC) cryptography to ensure encrypted transactions. EC uses pairs of public and private keys for both decryption and encryption. “It has its own time window element as well,” Webber added. “This leads to the important question: if we can break these keys, what percentage of the Bitcoin network would be vulnerable? Other research has shown that there’s a certain percentage of the total bitcoins right now that would be vulnerable to a slow attack, and that’s around 25%.” Webber, and other experts, believe that the quantum hardware required for such a slow attack is still some years from where we are right now, but cryptocurrencies continue to make little effort to quantum-proof their systems. “If there was no change, there will be two phases of disruption,” explained Webber. “The first 25% or so of all Bitcoin would be vulnerable, and that would be a big confidence hit to the system, but perhaps not completely catastrophic. But the second phase, where we are able to break the encryption within the smaller time window, that would make all transactions vulnerable and ultimately would be the end of Bitcoin.”

Quantum computers able to break this style of encryption are for now estimated to require over a million physical qubits, which is a long way from the 100 or so leading organizations now possess. Webber explains that this is what drives Universal Quantum “We have always been focused on the scaling question, making design decisions now that will enable us as quickly as possible to grow to the device sizes necessary for broad quantum advantage.”

Webber hopes Bitcoin companies and other cryptocurrencies will take advantage of the time lag to quantum-proof their platforms. According to Webber: “There should, in theory, be enough time for Bitcoin to make such a switch. A point one of my collaborators brings up is the challenges with the governance process, which is how you would get enough agreement in the community to say ‘okay we should all change, this is something that shouldn’t be ignored.'” With a consensus possibly needed, and the ability to make blockchain quantum resistant in development, it becomes a race against time for the future of bitcoin and other cryptocurrencies.

But, as Webber also explains, quantum computing isn’t all bad for blockchain, as it can give important solutions to decentralized finance and autonomous banks. “All the applications that we’re excited about for quantum computing in finance, so many of these problems will also need to be solved in the decentralized versions of these systems,” Webber said. “So, could a decentralized finance system also seek out a quantum computer on the cloud to solve certain problems? Possibly…”

Kenna Hughes-Castleberry is a staff writer at Inside Quantum Technology and the Science Communicator at JILA (a partnership between the University of Colorado Boulder and NIST). Her writing beats include deep tech, the metaverse, and quantum technology.

Categories: quantum computing

Subscribe to Our Email Newsletter

Stay up-to-date on all the latest news from the Quantum Technology industry and receive information and offers from third party vendors.