[Quick & Dirty] Quantum Computing: A Threat To Cryptocurrencies?

[Quick & Dirty] Quantum Computing: A Threat To Cryptocurrencies?

'Quantum computer' — a term that comes up often if you are technically inclined and especially if you deal with cryptography and cryptocurrencies.

Quantum computers will fundamentally change the world of IT and possibly also of science. The way of doing calculations is revolutionary. But there is also a flip side to the coin: could quantum computers be used to crack cryptographic systems like Bitcoin? And if so, what possibilities are there to protect the system from this?

In this article I want to get to the bottom of these questions and give you a short introduction to this topic.

What Are Quantum Computers?

Many people have heard of a “quantum computer” and some of them may have a rough idea of how this technology works. But only a few have really understood the concept of a quantum computer.

Quantum computers are capable of processing far more data per second than would ever be possible with conventional technology. While normal computers, like this one I am writing the article on, only know ‘1’ and ‘0’ (bits) as signals for their operations, quantum computers exploit quantum state, so-called “qubits” (quantum bits).

These qubits have a unique property that a normal bit (1 or 0) cannot have, namely that a qubit can be 0 and 1 at the same time, or could take on endless states in between. A good analogy is a coin toss. If you toss a coin in the air that is spinning rapidly around its own axis, you cannot tell what state it is in when it is in the air.

A qubit can therefore contain more information than a bit. This is what makes it so interesting for computer technology, because it allows you to create completely different applications and computing operations.

Potential areas of application are:

  • Simulations for natural sciences and engineering (e.g. physics, materials research, etc.)
  • Business calculations and optimisation
  • Artificial Intelligence
  • Cryptography

In recent years, this sector has developed enormously and many large companies are researching this technology to work with it. It could become one of the most significant achievements of this century.

It becomes particularly interesting when you think about quantum computing in the context of Bitcoin. The question that arises is: would a powerful quantum computer be able to crack the Bitcoin blockchain? Would it be the end for all cryptocurrencies?

Quantum Computers & Bitcoin: What if?

It is important to differentiate between the blockchain as a technological concept and projects like Bitcoin that use it. Quantum computers are currently not a threat to the Bitcoin blockchain, as today’s quantum computers are not capable of cracking the Bitcoin blockchain. However, this is not true until eternity and progress is unstoppable.

Bitcoin uses two security mechanisms, the hashing function when a new block is created and the ECDSA algorithm for signatures. For a powerful quantum computer, the ECDSA algorithm would probably not be a big problem, so it needs to be better protected in the future.

ECDSA stands for “Elliptic Curve Digital Signature Algorithm” and is considered the absolute standard for creating keys in cryptographic systems. The algorithm is used to sign transactions on the blockchain. This system also allows us to create a private key and from it a public key with 256-bit encryption.

Guessing the private key of a public key would be impossible, and calculating it would take longer than many thousands of human lifetimes. However, a quantum computer could be able to attack the ECDSA in the future and thus obtain the private key to a Bitcoin wallet.

Experts from the National University of Singapore investigated the potential dangers of quantum computing on Bitcoin and expect that a quantum computer could be able to crack the algorithm as early as 2027.

What Quantum Computers Are Currently Available?

When it comes to quantum computers, we are mostly still in theory and dealing with various concepts that could potentially be used to realise an actual quantum computer in the future. Currently there are the following:

Google Sycamore and Google Bristlecone with 53 and 72 qubits respectively.
Virtual quantum simulators from Microsoft, which practically realise a quantum computer on a conventional (super) computer.

IBM offers online access to the quantum processor Q Experience, which has a power of 20 qubits. The processor is based on superconductors and in the laboratory version it even manages 50 qubits. The Fraunhofer-Gesellschaft was also involved in the research.

But it is not only private companies that are dedicated to quantum technology. Many governments and state research organisations are also showing interest.

In June 2020, for example, the German government decided on a 130 billion euro economic stimulus programme. A whole 2 billion euros will be spent on financing research into quantum technology. In the end, at least two prototypes of a fully functional quantum computer should be ready.

Quantum-Resistant Cryptocurrencies

How can a cryptocurrency be protected against potential quantum computer attacks? There are basically two approaches: 1. implement a quantum-resistant layer on an existing blockchain, or develop a new blockchain from scratch. The term “post-quantum cryptography” is often used here, a subfield of cryptography research that deals with new types of algorithms.

An example of the second approach is, for example, Quantum Resistant Ledger (QRL), which is operated by a non-profit foundation in Switzerland. The QRL blockchain was designed so that no quantum computer has a chance of cracking it.

Extended Merkle Signature Schemes (XMSS) are used. This is a signature concept based on hashes that, unlike ECDSA, is not vulnerable to attacks by quantum computers.

However, overall there are not many organisations dedicated to this research in the context of blockchain technology. But one can expect that with the growing progress on the side of quantum computing, the efforts towards quantum-resistant blockchains will also increase.

Conclusion: Bitcoin Can be Upgraded

The future is uncertain at the moment, but in the present, quantum computers pose no threat to Bitcoin and other cryptocurrencies.

Only when the SHA-256 hash algorithm used for mining can be cracked will things get dicey. However, there is a solution and that is a simple upgrade to a stronger hash algo, such as SHA-512, or else from the even higher SHA-3 group. Furthermore, building and operating a quantum computer is very complex and expensive.

One can assume that governments and private companies will be the only entities with access to their own quantum computer for a long time.