How Boeing, Toyota, Caterpillar, and other OEMs can double their current net profit by using smart contracts to become unmanned “virtual companies”, with or without cryptocurrency: Part 18

Bad auditing and quantum computers

In part 5, I discussed how a decentralized oracle (such as Chain Link) can eliminate much of the risk associated with compromised inputs. In part 10, I briefly touched on the importance of blockchain-specific IT security training. But corrupted inputs and careless employees are by no means the only security threats to a smart contract. Two other threats stand out as particularly nasty; poorly audited smart contracts and quantum computers.

Poorly audited smart contracts have resulted in quite a few embarrassments for the community:

• In June 2016, the DAO hack resulted in the loss of 3.6 million ether (over $800 million as of the writing of this paper and $4.3 billion at the peak)
• In November 2017, a junior developer at Parity Technologies accidentally froze 0.514 million ether ($116 million as of the writing of this paper and $617 million at the peak)

In fact, the industry often throws around “25% of all smart contracts have bugs” as a general benchmark.

Any OEM smart contract will need to be thoroughly audited with the best services available today; Hosho, Quantstamp, Zeppelin OS, etc.

Quantum computers are a completely different kind of threat, they can unravel the encryption underpinnings of blockchain itself.

A useful metaphor would be taking a helicopter to a foot race through the woods (where contestants on foot must trial-and-error each trail fork): http://fortune.com/2018/01/31/commentary-this-new-technology-will-crack-the-blockchain-like-an-egg/.

But it will still be a long time before quantum computers are developed. And the cryptocurrency community is already bracing for that day. A few projects, such as Quantum Resistant Ledger, base their whole existence around solving this problem.

Among smart contract-oriented cryptos, Cardano stands out. Their Ouroboros consensus algorithm is demonstrably quantum-proof. Worst case scenario, just migrate all the Ethereum smart contracts over to Cardano to hide from the quantum computer.

But it might not even come to that. Vitalik Buterin was a former math Olympiad kid. Before his Ethereum days, he unsuccessfully attempted to convince investors to back a project involving “simulating” a quantum computer: https://davidgerard.co.uk/blockchain/buterins-quantum-quest/. He has long been discussing ways to make Ethereum quantum-resistant: https://bitcoinmagazine.com/articles/bitcoin-is-not-quantum-safe-and-how-we-can-fix-1375242150/.

Finally, it’s worth noting that quantum computing won’t just open the door to new offensive capabilities for breaking (classic) blockchains. It will also open the door to new forms of encryption. New offensive capabilities and new defensive capabilities come hand-in-hand. In other words, a “quantum blockchain” is possible.

One of the better-known proposed implementations of a quantum blockchain comes from Matt Visser and Del Rajan. The MIT Technology Review summary is here and the original paper can be found in the Cornell University Library.

Continue to part 19….