The Bitcoin Boom and the Quantum Threat
(Forbes) Almost two and a half years ago, Arthur Herman, Senior Fellow at the Hudson Institute and Director of the Quantum Alliance Initiative ran a column here on the dangers a large-scale quantum computer would pose to blockchain.
In this update, Herman poses the question as to whether quantum computing poses a threat to the blockchain. Bitcoin is increasingly going mainstream—with PayPal PYPL, for example, adopting the high-flying cryptocurrency as a method of payment and Twitter’s TWTR Jack Dorsey endorsing its use—some commentators certainly think Bitcoin become the world’s new reserve currency. St. Louis Federal Reserve president Jim Bullard even issued a statement that Bitcoin poses no threat to the U.S. dollar in the global economy. The appeals of Bitcoin to investors and financial institutions are many.
Two years ago, Herman warned, “Quantum technology will be poised to decrypt the complex algorithms that asymmetric encryption systems use to secure almost all electronic data, including blockchain…. More specifically, blockchains rely on ECC – Elliptic Curve Cryptography – for authentication which can be broken by future quantum computers. So instead of the answer to all our cybersecurity vulnerabilities, blockchains could become just as vulnerable as web browsers, VPN’s, and other systems.”
Herman points out that others see no risk and that the quantum computer threat is hype. A December 2020 column at Forbes by Roger Huang confidently titled, “Here’s Why Quantum Computing Will Not Break Cryptocurrencies,” asserted that “quantum computers being added to the mix won’t suddenly render classical modes of encryption useless or mining trivial — ‘quantum supremacy’ now doesn’t mean that your encryption or the security of bitcoin is at risk right at this moment.”
Most of the commentary on Bitcoin and quantum computers, however, runs the other way. One month later an article in Cointelegraph pointed out that powerful quantum computers might become a threat to all blockchains that rely on the ECDSA (Elliptic Curve Digital Signature Algorithm), including Bitcoin and Ethereum.
Everything depends, then, on two factors. The first is how fast large-scale quantum computers evolve—the question being not if they are coming, but when. The second is, how much risk are Bitcoin investors willing to assume, and how long are the company’s founders—or even governments whose citizens are exposed to the quantum computer risk—willing to wait until they take the necessary steps to protect against quantum computer break-ins by using post-quantum cryptography; adopting post-quantum secure blockchains from companies like Quantum Resistant Ledger; and eventually turning to distributed ledger technology whose nodes actually rely on quantum computers.