The Case for a Quantum Resistant Ledger
The Quantum Resistant Ledger provides a clear value proposition to crypto-asset traders, enthusiasts and users. Aside from a strong and diverse team, this blockchain network has an intrinsic value that merits the potential for immense value within the next 10 years. Given the near arrival of quantum computing, the current algorithms and network designs of blockchain technology are vulnerable to quantum computing attack vectors. Therefore, the quantum resistant ledger serves as a ultra-secure vault and store of value with a specialized roadmap around its design.
It is my hope that this high level analysis will provide information about the potential loss and impact of not preparing for quantum computing attacks immediately.
It is a known fact that Shor’s Algorithm, formulated by Peter Shor, can solve large integers and discrete logarithms on a quantum computer¹. This means a number with over 200 digits could be solved in minutes when hundreds of classical computers running in parallel took two years.
So why does this matter?
“recognizing this technology’s [Quantum computing] potential, defense contractors, leading technology companies and government institutions have invested billions in quantum research and devices.”²
This matters because one of the very common approaches to encryption (elliptic curve digital signatures) is at the foundation of current blockchain security and vulnerable to Shor’s algorithm. “ It is even more important to recognize because the conceptual core of blockchain technology is a peer-peer ledger of transactions and/or accounts that is secured through cryptographic proofs and validation by multiple sources. While money and many transactions depend on trust alone, blockchains rely on security as a foundation of trust. Thus, the entire value of digital assets on the blockchain is trust.
So, where does that leave us. The crypto-asset space was forged with the launching of Bitcoin in January 2009. Since then, over 740 crypto-assets have launched with the top 10 representing $26 Billion in value. Bitcoin represents over 75% of this value with over 8 years of growth. Ethereum the 2nd largest crypto-asset, has quickly made gains with the introduction of smart contracts and a virtual machine to support its network. Assuming market traction, then it is easy to imagine the value of the top 10 blockchain technologies reaching $40 billion in value over the next ten years easily.
However, this is not the assumption most enthusiasts, cryptotraders, financial tech innovators and visionaries hold. They foresee blockchain technology supporting an internet of value. They recognize the ability of blockchain technology to support a new layer of cornerstone services and applications for society. They see a platform to upgrade the web from an internet of data to one that honors the value of that information. Therefore, the pre-eminent blockchains are being traded with a valuation based on this optimal future³. Nick Tomaino imagines a world where Ethereum becomes the backbone of this new network of value in his probability weighted evaluation of Ethereum’s value. With this type of perspective, it is conceivable for blockchain technology to reach a point of value order of magnitudes greater than we see today.
The first assumption in our perspective is that blockchain technology can exceed the valuation of current content and service providers on the internet. While the “One Ring” hypothesis of blockchains is proving to be less likely, they definitely have the ability to replace, modify or update a number of industries. Therefore, for this analysis, we assumed the valuation for a blockchain technology in the most optimal scenario. In this optimal scenario, the valuation is equivalent to the market cap of the top 10 technology companies with significant value overlap.
So, taking this valuation, you would have a blockchain network being valued at 1.3 Trillion dollars.
This is an incredible number and makes a prime target for a number of nation-state actors and rogue actors. This represents a target because blockchain technology is largely unregulated. Thus, it is not backed by any regulatory and enforcement bodies. Thus, depending on the development it could be a target for destabilization because of the participants or because of the access to potentially “dark funds”. Regardless, this provides a lucrative target that is more than the GDP of some countries. However, the question is, is quantum computing a real threat to consider.
If the movement of more established institutions is an indicator, then I would wager that it is. Billions are being invested in Quantum Computing technology and more money is going to go in. Financial institutions are implementing post quantum crypotographic measures.
According to Greta Bossenmaier⁴, the head of Canada’s electronic spy agency,
“…Cryptologists at the CSE [Communications Security Establishment] and around the world are racing to find new cryptographic standards before Y2Q — years to quantum — predicted for 2026.”
The Global Risk Institute submitted a report where they estimated that there is nearly a 15% chance this point is reached within the next 10 years and 50% in the next 15. Therefore, for the estimated potential loss to blockchain technology, we will use 15% as the basis. We will also provides two scenarios, one with the optimal scenario and the more conservative approach with the current valuation of the top 10 blockchain networks only doubling.
For these scenarios it is vital to remember that even a vulnerability of 5% of the addresses is sufficient to have an impact on value and the core cryptographic based trust in the system. The immediate increase in risk perception could foster panic and mass exodus into safer stores of value. This has been seen in the current history of crypto-assets. In addition, a hard fork would put many assets and transactions in limbo. Thus, once quantum supremacy is met, the assumption is that vulnerable assets will lose 50% of their value and if an attack occurs, up to 70% could be affected. This seems reasonable given Bitcoin’s recent loss of value of over 30% because the ETF in the United States failed.
This shows a potential loss of between $3-$107 Billion with the onset of Quantum Computing within the blockchain net. However, the Quantum Resistant Ledger can provide a hedge or insurance against this outcome. Not only would it provide a safe haven in the case of an attack, but it provides retroactive security. This is not possible with the current blockchain implementations. Therefore, regardless of the level of risk tolerance, there is a sound basis for the Quantum Resistant Ledger having a valuation at 300 Million if being extremely conservative and $10.7 billion in the optimal scenario.
This would be fine if this was all the Quantum Resistant Ledger was prepared to provide. However, the roadmap envisioned by the QRL team exceeds being a vault. It is striving to become part of the post quantum ecosystem. Therefore, its probabilistic valuation should be in line with the current market competitors. Therefore, using the top 10 crypto-asset networks and the top 10 technology companies with significant overlap, a Net Present Value for the tokens intrinsic value can be assessed. Given the current parameters of emission, nearly 72 millions tokens will be minted over 10 years.
- Shor, Peter W. (1997), “Polynomial-Time Algorithms for Prime Factorization and Discrete Logarithms on a Quantum Computer”, SIAM J. Comput., 26 (5): 1484–1509,
- https://about.bgov.com/blog/quantum-computing-emerging-technology-bound-disrupt-government-contracts-market/
- https://thecontrol.co/the-investment-case-for-eth-b9082cabdbab
- http://news.nationalpost.com/news/canada/canadian-politics/quantum-computers-will-cripple-encryption-methods-within-decade-spy-agency-chief-warns
- http://globalriskinstitute.org/quantum-computing-new-threat-cybersecurity/