Is Quantum Computing an Existential Threat to the Blockchain?
“Crypto will be useless because it will be made obsolete by the advent of Quantum Computing.”
This is the sort of counterargument to Crypto investing that I am sure we in the digital assets sector have all heard numerous times by now: the narrative runs that the sheer computational power of quantum computers represents a very real existential threat to the entire blockchain ecosystem.
Of course, there is no doubt that quantum computers pose a significant and unprecedented security challenge. However, the reality is that the threat to existing encryption methods extends far beyond just the blockchain sector: in fact, if we are saying that quantum computers end up having the power to obliterate blockchain security, by the same token, quantum computing would have also likely killed off our entire internet security infrastructure in every single industry!
Today I would like to explain exactly why this outcome is highly unlikely. In short, this is because Quantum Computing is probably the most misunderstood technology right now. In order that we can properly assess to what extent quantum computers actually represent a real danger to our Crypto investments, I would like to explain in simple terms how quantum computing works and how the potential threat it may represent to the digital assets sector in the future is already being addressed.
What Exactly is Quantum Computing Anyway?
Quantum computing is a rapidly emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers.
Source: IBM
Put very simply, quantum computers work completely differently from the computers developed over the past century. In theory, they could eventually become many, many times faster than today’s machines. That means that faced with an incredibly complex and time-consuming problem — like trying to decrypt data, where there are multiple permutations running into the billions — a normal computer would take hundreds of years to break those encryptions, if they even could, while a quantum computer may well be up to the task. This comes with obvious far-reaching consequences, not only for digital assets but for all critical infrastructure.
Why Do We need Quantum Computers?
Ordinary computers store and send information in the form of bit sequences, a bit being the smallest unit of information possible in a computer. We use bits because the computer’s processing hardware is formed by a transistor, which is a switch that enables current to pass through it, or not. Consequently, a bit is an ‘abstract’ way of interpreting when current passes through the transistor as a ‘1’, and when no current is going through, as a ‘0’.
Sadly, we are reaching the limits to how powerful computers can actually get because transistors are reaching sizes close to that of an atom. This is a problem because at these sizes things start to behave “differently”, according to the rules of quantum physics. For instance, at those levels, the ‘block passage’ that the transistor creates when it wants to close the current is useless because electrons can bypass it through what is called ‘quantum tunnelling’.
Thus, scientists have begun to create computers that work according to the rules that dictate how those small elements (photons, electrons, etc.) behave. That is, computers ruled by the laws of quantum mechanics.
From Bits to Qubits
Quantum computers need ‘Quantum bits’, or Qubits to work. These are the equivalent of a ‘bit’ in a classical computer. While bits can only take two values, ‘0’, and ‘1’, qubits can take those two, and an infinite number in between them proportionally at the same time, something known as ‘superposition’.
Very few people on this planet — including me — can claim to fully understand exactly how all this works. But, for the sake of this discussion, all that is important to understand is that, mathematically speaking, while for example three bits can contain three pieces of information, three qubits can take two to the power of three pieces of classical information, which is eight. Four bits can take four pieces of information, four qubits, sixteen, and so on….
The upshot of all this is that much of the current security system will need to evolve or else be vulnerable to attack when these supercomputers become a reality.
Quantum Computers can — in theory — break not just Crypto but the Entire Internet!
In Crypto, if you know someone’s private key, you can essentially own anything they have secured within this ecosystem. In blockchain terms, you now have access to anything of value in their wallet — i.e. all their cryptocurrencies, NFTs, etc.
How we secure the internet is also based on this ‘key system’. The current approach to Internet security was first developed in 1979 and works with a two-key system, called RSA encryption which essentially still secures almost all of the internet today. In simple terms, each member of the system owns two keys: a public one, visible to the whole network, and a private one, only known by themselves. The two keys are ‘linked’ by what is known as the factorisation problem.
If you want to send a message in a blockchain or to a website, you use the public key of the recipient to encrypt your message. Hence, only the owner of the private key (the recipient) linked to the public key you used to encrypt the message can decrypt it. One great analogy here is thinking about the public key as a key lock. You use the recipient’s lock to lock your message, so that only him/her can decrypt it with the key that opens that lock (the associated private key).
The only way someone without the private key can decrypt the message is by guessing the underlying sequence of prime numbers, which can literally take hundreds of years for a normal computer to do. But the danger is these extraordinarily powerful new computers could bypass this entire security infrastructure ….
Shor’s Algorithm: a Hacker’s Dream!
What if you could guess someone’s private key in a small amount of time? Well, that’s exactly the great danger we are facing from quantum computing. Officially known as Shor’s Algorithm, the theory is that quantum computers will be capable of running this algorithm to break much of our existing (and well-functioning) approach to encryption.
A great deal of today’s internet, including blockchains, is secured using RSA encryption, also known as public-key encryption. Shor’s Algorithm claims it can considerably reduce the amount of time required to find the prime numbers of a big number. In other words, it can find the private key associated with a public key. In this scenario, many aspects of blockchains, the Internet, and cryptography, would all be at risk.
A Benefit to Mankind?
Given the security risks, the question remains, why is so much interest and investment going into quantum computing? The answer is that quantum computers could — again in theory — solve all sorts of problems for humanity and that is why most governments like the UK are investing heavily in the technology, hoping to leverage the positive power of quantum computers.
The nightmare scenario however runs something like this: imagine a world where, as a direct result of quantum computing, any and all encrypted files are suddenly hacked — something known as “the quantum apocalypse”.
“Everything we do over the internet today, from buying things online, banking transactions, social media interactions, everything we do is encrypted. But once a functioning quantum computer appears that will be able to break that encryption… it can almost instantly create the ability for whoever’s developed it to clear bank accounts, to completely shut down government defence systems — Bitcoin wallets will be drained.”
Harri Owen, chief strategy officer at PostQuantum
Now the Good News
‘Quantum-Proofing’ is already Underway
It all sounds completely apocalyptic, and yes, OK, this would indeed be a frighteningly real possibility if no precautions were being put in place.
In practice, mitigation efforts are already in train and have been for some years. In the UK, all government data classified as “top secret” is already “post-quantum” — that is, using new forms of encryption which researchers claim will remain quantum-proof. In addition, tech giants like Google (Sycamore), Intel (Tangle Lake) and IBM (Eagle) are working on solutions, as are specialist companies like Quantinuum and Post-Quantum.
Most importantly, there is currently something of a post-quantum cryptography “beauty parade” taking place at the US National Institute for Science and Technology (NIST) just outside Washington DC. The aim is to establish a standardised defence strategy that will protect industry, government, academia, and critical national infrastructure against the perils of the quantum apocalypse.
The other important factor is that quantum computing is still far away from prime time and therefore doesn’t represent much of a threat…yet.
According to scientists from the University of Sussex, we would need a 1.9 billion qubit quantum computer to break Bitcoin’s SHA-256. Considering that the most advanced quantum computer due to be released in 2023 is IBMs ‘Condor’, at 1,121 Qubits, it’s safe to say we are far away from quantum computing being a threat to Bitcoin or other cryptocurrencies. And, by that time, they will have had enough time to make the blockchains quantum resistant. The same applies to the Internet.
Naturally Crypto is ahead in Mitigating against this Risk
I think it is important to note that the crypto industry is very much aware of these theoretical risks and is already instigating upgrades to avert the associated threats. Cryptography has always been a race against hackers and there have always been the need for solutions to new emerging threats along the way. Moreover, blockchain protocols are in the advantageous position of employing the best and the brightest cryptography minds in the world so I would argue they are better placed than many industries in mitigating against these security risks. For instance, hash functions, one of blockchain’s most critical cryptography methods, are widely considered to be quantum safe. Today ‘quantum safe’ blockchains are already a reality in some cases and on their way of being so in others.
This is a view reiterated by Charles Hayter, CEO and co-founder of CryptoCompare, who believes quantum computing cyber risk is not seen as insurmountable by the cryptocurrency investment community:
“Quantum-safe cryptocurrency will solve the problems that arise and that is the reason that the {investment} community is not worried,” he says. “It is considered by many in the industry as like having to replace the engine on your car — there is a solution.”
On another positive note, Duncan Jones, head of cybersecurity at Cambridge Quantum, says the conversation about risk should also focus on how quantum technologies can actually enhance digital asset security:
“The focus is often on the threat from quantum computers, and yet blockchains face complex and sophisticated threats every day,” he says. “We can strengthen blockchains against some of these risks if we integrate quantum technology into the core of these systems.”
According to Etherum founder Vitalik Buterin and crypto evangelist Andreas Antonopolous, there’s no real threat from quantum computers just yet. In theory, quantum computing could break the cryptography securing crypto assets like Bitcoin and Ethereum, but Buterin reasons that quantum computers like the latest one announced by Google are still more proofs of concepts (slated to be ‘useful’ by 2029) than fully realised technologies. The current cryptography used in major blockchains may also already be strong enough to resist even fully realised quantum computers meaning not all cryptography would be vulnerable. Antonopolous agrees that quantum computers are currently nowhere near powerful enough to break something like Bitcoin.
Overall, leading digital asset protocols like Ethereum are of course putting in place upgrades to resist quantum computers. But it is important to note that Quantum computers can not only be used to break cryptography — they could also help build more powerful encryption.
Even if we’re safe for now, the crypto world is not taking any chances, with every major blockchain looking to actively mitigate against this potential risk. We even have Quantum resistant blockchains under development — like Praxxis and QAN — for when quantum computing is ready for ‘prime time’.
Final Thoughts
So are quantum computers about to end the world as we know it?
Of course not.
Will everything be hacked?
Although evidence suggests quantum computers will be capable of running Shor’s Algorithm, the field of post-quantum cryptography is already years ahead. Therefore, the view of a quantum computer as an insurmountable hacking weapon capable of breaking the encryption found in the digital asset world is very unrealistic.
However, this doesn’t mean that blockchains mustn’t evolve to make sure that they are quantum-safe when the time comes. But in a sector under constant cyber-attack, this is ‘business as usual’, so the whole idea that protocols will not proactively look to mitigate against this new long-term threat is again highly unlikely.
Overall, the risks that quantum computing represent is in no way crypto specific. Against this backdrop, I would argue that — as we have seen to date — the blockchain industry is likely to remain far better prepared than many less tech-focused industries to counter this potential threat.
PTLIB is CIO of Dragonfly Asset Management.
DISCLAIMER: This content is for EDUCATIONAL AND ENTERTAINMENT PURPOSES ONLY and nothing contained in this blog should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
