Can Bitcoin Go to Zero? The Quantum Threat to Cryptocurrency
Technological development could mean the end for Bitcoin
Bitcoin has revolutionized financial technology beyond imagination.
Considered by many as the most secure monetary network, Bitcoin takes pride in its reliability and immutability.
However, there is a scenario where all of Bitcoin’s security mechanisms and protocols become obsolete and inefficient. Indeed, the emergence of quantum computing threatens to undermine the very foundations of Bitcoin.
To understand this looming threat, we must first examine how Bitcoin mining works and what quantum computing entails.
Bitcoin Mining: The Backbone of Cryptocurrency
Bitcoin mining is the process by which new bitcoins are created and transactions are verified and added to the blockchain.
This process relies on the SHA-256 cryptographic hash function. Miners compete to find a specific hash that meets the network’s difficulty standards, a task that requires immense computational power.
Interested in learning more about the basics of Bitcoin mining? Give this article a read!
To achieve this, miners use specialized hardware called Application-Specific Integrated Circuits (ASICs).
These devices are designed solely for the purpose of Bitcoin mining, offering unparalleled efficiency in performing the necessary calculations. The amount of calculations per second these machines can do is what we call hashrate.
Here’s where it gets tricky: as ASICs are constantly become more efficient and powerful, it’s important to maintain the network’s hashrate decentralized.
If one entity takes control of more than half the total hashrate, they could manipulate and attack the entire network. This is what we call a 51% attack.
But what does quantum computing have to do with this?
Quantum Computing: A Paradigm Shift
Quantum computing represents a radical departure from classical computing.
Simply put, while traditional computers use bits that exist in binary states (0 or 1), quantum computers employ quantum bits, or qubits. These qubits can exist in multiple states simultaneously, a phenomenon known as superposition.
This property, along with other quantum mechanical effects like entanglement, allows quantum computers to perform certain calculations exponentially faster than classical computers.
For some problems, quantum computers could potentially solve in seconds what might take classical computers millions of years.
The Quantum Threat to Bitcoin
The immense computing power of quantum computers could pose a significant threat to Bitcoin’s security model.
The primary concern lies in the ability of quantum computers to break the cryptographic algorithms that underpin Bitcoin’s security.
For example, a sufficiently powerful quantum computer could factor large numbers exponentially faster than classical computers. This capability could be used to break the Elliptic Curve Digital Signature Algorithm (ECDSA) used in Bitcoin, allowing an attacker to derive private keys from public keys. In other words, a bad actor in posession of a quantum computer could guess anyone’s private keys within a few minutes.
Furthermore, quantum computers could also speed up the process of finding hash collisions. This means a quantum-equipped miner could solve the proof-of-work puzzles much faster than the rest of the network, gaining control over the blockchain as they would always be the first to find the next block’s hash.
Essentially, the computing power of quantum computers would effectively brute force Bitcoin’s cryptographic security based on SHA-256.
This would undermine the entire system, as the security of transactions and the network’s censorship resistance rely on the difficulty of these cryptographic puzzles.
In this hypothetical scenario, Bitcoin would lose all its security and reliance features, likely leading to its price plummeting to zero.
Beyond Bitcoin: A Quantum Revolution
While the potential destruction of Bitcoin by quantum computing is alarming, it would be the least of our problems if it ever becomes a reality.
The reason is that most of our current security and information systems are not quantum resistant, and therefore could be vulnerable to quantum attacks.
So, the advent of powerful quantum computers that are strong enough to “break” Bitcoin would could break most of the encryption methods used to secure internet communications, financial transactions, and sensitive government and military information, among other things.
This would have far-reaching consequences, potentially compromising everything from personal privacy to national security.
Moreover, the impact of quantum computing extends beyond security concerns. It could revolutionize fields such as drug discovery, materials science, and artificial intelligence, leading to breakthroughs that could transform society in profound ways.
All things considered, quantum computing represents a transformative technology with the potential to not only end most of our informatic systems — including Bitcoin — but to reshape our world completely.
Therefore, it’s crucial that just as we develop quantum computing, we also create quantum-resistant cryptographic algorithms and begin the process of migrating our critical systems to these new standards.
Only then we can ensure that this technology’s disruptive potential is used for the benefit of humanity.
