Bitcoin vs Ethereum vs Quantum Computing | What does Google’s Quantum Breakthrough Mean for Blockchain?
Is the Google’s breakthrough in Quantum Computing a lot of hype? Maybe, but its coming sometime soon regardless. What does that mean for blockchain technologies like Bitcoin and Ethereum?
I’m not an expert in Quantum Computing, but operating under the basic assumption that a single Quantum Computer could potentially outperform our most powerful computers by orders of magnitude, and understanding the different mechanisms that keep Bitcoin and Ethereum secure, we can extrapolate.
Two Ways to Break the System
As I understand it, there are two places of vulnerability in blockchains: the wallet level, and the chain level.
On the wallet level, there is the cryptography in place to keep someone else from spending your coins. One the chain level, there is the mechanism that makes sure new transactions recorded to the chain are legit.
Quantum computing raises questions about the security of both.
Chain Level
Both blockchains are fundementally secure as long as no one controls greater than half of the system. This is one of those things in crypto that strikes me as just magical and ingenious. Imagine a bank where the only way to rob the bank was to first take ownership of more than half of the bank! By the time you have the capability of cheating the bank, you are the bank! So you might as well just play it straight.
Consensus Algorithms
However, Bitcoin and Ethereum define what ownership of the system means in fundamentally different ways. Or to put it another way, they put a check on the system using different criteria. This is because Bitcoin and Ethereum use two very different mechanisms for consensus.
Consensus is how the blockchain verifies that new blocks, or groups of transactions, actually represent real, legit transactions, and not malicious ones. Another way to say this is that using an algorithm, all of the computers that are running the system agree “Yes, this new block is legit, we can treat it as gospel from this moment onwards.”
Bitcoin and Proof of Work
Bitcoin uses something called Proof of Work to achieve consensus. Basically, they make all of the computers running the network (also known as full Bitcoin nodes) do a difficult math problem before they are allowed to say “Yes, this new block is legit.” They can try to fool the system by saying “this new block is legit” about a malicious block that sends everyone’s money to themselves. But the other computers on the system will say “No, this is the right new block.” and so the malicious block won’t be added, and meanwhile the attacker spent some serious compute power in their failed attack.
However, if an attacker controlled more than half of the Bitcoin nodes, it could have those nodes all say “YES! This new block is totes legit, promise.” on a malicious block and add it. What is stopping anyone from doing that? Well, getting enough machines online with enough computing power to overwhealm Bitcoin, a system of over 10,000 full nodes capable of over 100,000 x 1 trillion operations a second is very expensive.
How expensive? Shopping for the best equipment, you could by .00001 of the Bitcoin’s total power for about $3,000. Based on some back of the napkin calculations, it would cost about $200 million dollars. The market cap of Bitcoin is about 100x that, so it might seem like a smart investment for a zillionaire pirate to make. However in hacking the system, which you now own more than half of, you probably will cause the market cap to dramatically fall as people flee in fear of their money being stolen. Congratulations, you just spent $200 million to rob, and cause a bank run, on the bank you own!
Pretty neat how the incentives are designed to keep people honest. This is where that whole “trustless” part of blockchain comes from. You don’t need to trust that people will play by the rules because it simply is more advantageous to people to play by them than try to break them. That is a good system. Well, it’s pretty good.
This consensus algorithm we’ve been discussing that Bitcoin uses is called Proof of Work. Its called that because of the extra work every computer needs to do to say “this block is totes legit.”
We’ve demonstrated that is would be very expensive and unwise.
Until quantum computing.
OK, so quantum computers are ridiculously expensive to build right now. But about half the cost of enough traditional computers to overwhelm bitcoin, at $100 million. But what if you are Google, and you already have one? (Imagining they get this thing to really work in the next several years.) What if simply by having access to this machine, you could own half the power of Bitcoin and add malicious blocks?
You still would be robbing a bank you own and causing a bank run, but could you make out huge before you crashed the system? Well, you could try. And if you have a quantum computer you could try for free, rather than for $200 million dollars.
So could Quantum computing hack Bitcoin? Yes it could. Would that be a smart investment? I think its hard to tell because its not easy to predict how the market, and the bitcoin community, would respond to such a hack.
The way you would want to hack blockchain would be to create a new “block” that incorrectly put tons of money from other people’s accounts into your own, and then fool the system into thinking that this new block was the “real” next block, and that all those people really did send you that much money.
The only way to do this in the Bitcoin model is to acheive over 50% of the entire computing power. If quantum computing was a million times better at doing the hash algorithm required for Bitcoin consensus, the owner of that computer could potentially hack the system in that way.
Ethereum and Proof of Stake
For Ethereum, it consensus works differently. Instead of making it take a lot of compute power to submit a new block, mines simply bet their own money that they are submitting a legit new block.
You say “this new block is totes legit, and I’ll bet all my coins that this is so.” If you were telling a big fib, the other nodes will be putting forward a different block, and you’ll lose all of your coins. If you were telling the truth, you get rewarded a small amount of Ether for being a good citizen.
So instead of needing a majority of the compute power to hack the system, like in Bitcoin, you would need a majority of the Ether currency, or nearly $10 Billion. Yes, that means it would be about 50x more expensive to hack Ethereum than Bitcoin!
It also means that Quantum contraption doesn’t do jack squat for you when it comes to hacking Ethereum. Extra compute power is not helpful.
All that being said, what IS entirely hackable are Crypto Exchanges, which accounts for most of the money stolen, and also smart contract code, which I have been learning to write. Since smart contracts are written in a generalized computer language, it is quite easy to write code vulnderable to hacks. But this is evolving, and being tightened up and better and better understood.
Wallet Level
The consensus isn’t the only vulnerability point of crypto, however. There is also the algorithm that makes it so only you can send money from your account.
For that, both Ethereum and Bitcoin uses elliptic curve cryptography, which is not quantum resistant. For Ethereum, an upcoming update will fix that, and we have seen Ethereum successfully make updates like this before.
As far as I can find, Bitcoin is still just talking about a similar upgrade. Given that Bitcoin is still using the antiquated Proof of Work, in the event of faster-than-expected Quantum development, I’m not sure they are ready.
TLDR
Ethereum is heading quickly towards quantum-proof. Bitcoin isn’t. This is because Bitcoin is stuck on “consensus algorithm 1.0”, which was just the best idea at the time Bitcoin was created. Ethereum has a more agile team and has adapted, implementing a new, better idea, which is more secure, faster, and far more energy-efficient. An additional upgrade to Ethereum is still needed to ensure this, but it is on the way.
If you have any questions, I’d love to hear them.
If you are a technologist and I got anything here wrong, please let me know!
If you enjoyed this article please follow me, and if you’d like to buy me a coffee, you can send it here: paypal.me/alexwhite5d
