BusinessIs Quantum Computing a Threat to Digital Currencies?

It is believed that “quantum computing” will represent one of the century’s biggest technological breakthroughs
Daniel DobNovember 23, 20187 min
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Alongside today’s most popular technology buzzwords – such as “blockchain”, “big data” and “artificial intelligence”, it is believed that “quantum computing” will represent one of the century’s biggest technological breakthroughs. There’s no doubt that computers have advanced so much that even the Apple watch today can perform more tasks than the early day computation machine that filled an entire room.

The question is, will these quantum computers be able to pose a great threat to digital currencies and blockchain security?

 

How quantum computers work

Photo by: Jeff Desjardins/visualcapitalist

To put things into perspective, quantum computers are based on the principles of quantum mechanics. As such, a traditional computer works via binary switches that can be either 0 or 1. Quantum computers on the other hand, can leverage superpositions, meaning that switches can co-exist as both on and off at the same time. In return, this allows supercomputers to reach unimaginable speeds.

The quantum revolution is bound to improve numerous aspects of our daily lives, while also answering some of science and nature’s biggest questions. Infact, it might even answer the age-old question of “creation” and “god”. However, because of its massive processing power, it might threaten traditional cyber security and digital currencies. Cryptography that were thought to be unbreakable might be breakable after all.

 

Is the blockchain quantum-safe?

For the most part, most cryptocurrency’s blockchain design allows data to be stored in a decentralized manner, meaning that data is stored simultaneously, and replicated across a large number of computing nodes. Modifying data or falsely generating extra coins would require the consensus of the network, where only the when a majority is formed, a decision will move forward.

As such, an attack meant to modify data stored on the chain is highly-improbable for popular cryptocurrencies such as Bitcoin or Ethereum – given that the blockchain is being secured by tens of thousands of computer nodes. Despite future advancements in quantum computers, security experts believe that the blockchain is resistant to the advances of quantum mechanics. Smaller public or private blockchains, that are centralized, or having fewer nodes running may be at a higher risk if the attack if properly orchestrated.

 

The threat lays in individual digital currency wallets

So, while quantum computing can’t bring the entire system down, it can be used to target specific users, in an effort to steal their coins. When making bitcoin transactions, a private key is used to access the address and sign for the coins being sent. Private keys are generally a 64-character string consisting of both numbers and letters.

Theoretically, a quantum computer that is advanced enough could easily crack the code, granted the fact that it can make trillions of calculations per minute. However, it is important to keep in mind that at this time, leveraging this vulnerability is unfeasible for two reasons: quantum computers are not available to the public, and the technology isn’t fully-developed or stable. Additionally, it is ultra-expensive to own and run due to massive power consumption.

That said, it is quite likely to take a full decade before quantum computers can fully become a part of our daily lives. During this time, blockchain technology will continue to progress, and digital currency developers will implement more advanced protocols for user authentication and transaction signing. Quantum-resistant solutions are already being tested out, and will soon be part of the token and blockchain infrastructure.

 

The future

Based on these aspects, quantum computing can theoretically pose a big threat to individual digital currency accounts, and more centralized tokens. However, we doubt that it might affect your investments in Bitcoin, Ethereum and other more decentralized cryptocurrencies. We can be quite assured that these major cryptocurrencies are well supported by well-funded organisations who have hundreds, if not thousands of developers in their network; working day after day on scaling and security solutions.

Cover photo by: Jonat Harris/sanvada

Daniel Dob

Daniel is a digital currency expert, writer, investor and ICO consultant. He writes for several top cryptocurrency publications, and will soon kick-start his entrepreneurial career in fintech, where he hopes to innovate. In his free time, Daniel enjoys travelling and collecting all sorts of thrilling experiences.

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