Quantum Computers might be Used to Crack Cryptocurrency Encryption

Bitcoin's encryption could theoretically be cracked in seconds by a quantum computer. It might be just two years until a quantum computer cracks Bitcoin's encryption.

Breaking the mathematical difficulties underlying most currently used encryption is one of the most well-known uses of quantum computers. Bitcoin's encryption could theoretically be cracked in seconds by a 4,000-qubit quantum computer. The latest generation of quantum computers has a maximum qubit count of 54. It might be just two years until a quantum computer cracks Bitcoin's encryption.

You could hypothetically take control of the Bitcoin blockchain if you had a powerful enough computer. You might get free Bitcoin or block others from making transactions on your account. Because each wallet's private key can be deduced from its public key, you may gain access to anyone's Bitcoin wallet. You'd have the keys to the $163 billion castle—though, in that case, Bitcoin's valuation would undoubtedly drop as soon as its promises of invulnerability were proven to be false. While it would take even the most powerful supercomputer hundreds of years to break Bitcoin, there are technologies that could potentially do it in seconds. Quantum computing is the name for this super-fast technology.

What are Quantum computers?

Quantum physics is the study of structures that are smaller than atoms. When it comes to subatomic structures, the laws of physics are disregarded, and strange things start to happen. Quantum computers take advantage of these characteristics to do calculations far quicker than even the most powerful supercomputer. Traditional computers, such as the one you're using to read this, work with 1s and 0s. The transistor will register a 1 if anything is "true." The transistor will read 0 if it's "false." Each computer has billions of transistors; since the first one was built in 1947, an estimated 13 sections have been constructed, making it the most manufactured gadget ever. However, due to a phenomenon known as "quantum superposition," the transistors of quantum computers may simultaneously record both 1 and 0, making a quantum transistor considerably more powerful than a normal computer.

How may quantum computers be able to decode Bitcoin's code?

To sign digital signatures, Bitcoin employs the Elliptical Curve Digital Signature Algorithm (ECDSA), and to hash blocks on the chain, it uses the SHA-256 cryptography standard. To produce a public key in Bitcoin, a private key is chosen at random and processed through these algorithms. The hash value of this is used by the Bitcoin protocol to generate a public Bitcoin address. A quantum computer might reverse this process and generate a private key from a public key. And there you have it! The notion of Bitcoin's inviolability and un-hackability is no longer valid, and you may use whatever Bitcoin wallet you choose. Grover's and Shor's algorithms are two key quantum algorithms that have already been developed and pose a danger to the existing state of encryption.

According to Rob Campbell, President of Med Cybersecurity in Baltimore, Maryland, quantum computers utilising both Grover's and Shor's algorithms might "mine far quicker than everyone else, and so an enemy could introduce its own blocks and destabilise the entire blockchain."

Quantum hacking

Asymmetric cryptography, in which users utilise a private and public key combination to access things like email and crypto wallets, is currently used much around the globe. "Every single financial institution, every login on your phone," Thiel explained, "is all based on asymmetric cryptography, which can be hacked with a quantum computer." Thiel is a former director of Utimaco, one of Europe's leading cryptography firms, which has worked on post-quantum encryption alongside Microsoft, Google, and others.

Fortifying bitcoin wallets

For a variety of reasons, crypto specialists told CNBC that they aren't concerned about quantum hacking of bitcoin wallets. Nic Carter, a founding partner of Castle Island Ventures, pointed out that quantum breaches would be gradual rather than abrupt. "If quantum computing reached the degree of maturity and sophistication where it began to challenge our basic cryptographic primitives, we would have plenty of notice," he added. "It's not going to happen in a day or two."

There's also the fact that the community is aware of its impending arrival, and academics are already working on quantum-safe cryptography. "The National Institute of Science and Technology (NIST) has been working on a quantum-proof future encryption standard," Thiel stated. The selection process is now being carried out by NIST, which is selecting and standardising the best candidates.

According to Groetker, broad migration will occur once a new standardised post-quantum safe cryptography is implemented. "Everyone who owns bitcoin or Ethereum will shift funds from their old online identity to a new wallet, or personal account, that is secured with the new sort of key," he continued. A security upgrade of this nature, however, demands user engagement. When fiat money accounts are regulated by a bank, this approach may be easier than requesting a decentralised network of crypto holders to upgrade their devices individually.

So, when will the threat of quantum computing become a concern for Bitcoin? Depends on who you ask. Sundar Pichai, the CEO of Google's parent firm, Alphabet, was one of the first significant leaders to set a timeline for it at the World Economic Forum in Davos. "Quantum computing will defeat encryption as we know it today in a 5 to 10-year time period," he said.