With all the hype surrounding cryptocurrencies, it’s not often that you hear of the potential risks involved with emerging technologies. Bitcoin owners like to boast about the strength of the cryptocurrency and how it can withstand fraudulent behavior. And while there have been plenty of high-profile cryptocurrency exchange hacks, the blockchain ledgers involved with the leading cryptocurrencies have yet to be compromised.
There’s no doubt the technology behind Bitcoin and other cryptocurrencies is completely revolutionary – it’s changed the way the financial industry thinks about transactions and currency. But technology is evolving at a rapid pace, and it can sometimes be impossible to predict the impact of future developments.
Quantum computing is a future development that may impact the ability of Bitcoin to remain feasible. But if you don’t know much about technology or quantum computing, this might sound a bit complicated.
In this article, we’ll take a deeper look at the risks imposed on crypto by developments in quantum computing. We’ll also explore the potential impacts of this risk, as well as avenues that developers are taking to counteract potential issues.
The Status of Quantum Computing
At present, several companies are racing to build the first fully functional quantum computer. There are also plenty of reasons to believe that governments are in the search for their own quantum computing solutions.
A quantum computer will be able to crunch information at a vastly higher rate than current computers. This has both positive and negative implications. Cryptography and other forms of data security may become effectively obsolete should quantum computers enter the marketplace.
Many analysts believe that IBM or Google has the capability to obtain quantum computing supremacy in the next decade, but this could be much sooner if significant breakthroughs are made. Some even believe a government agency may already secretly possess a quantum computer – they may not want to release information detailing their capabilities.
The risk that quantum computing brings to cryptocurrency lies in two different forms: wallets and mining. It is thought that quantum computers would have enough computer power to effectively mine the rest of Bitcoin almost instantly, reducing the nature of the slow release of the assets and the incentive to verify transactions. In addition, it is thought that the wallets people use to store their Bitcoin will also be able to be hacked with ease. Meaning that cryptocurrencies no longer have the allure of security from external forces.
In addition, problems during transactions may arise as well. It is thought that quantum computers may be able to change transactions that have been broadcast to the Bitcoin network prior to confirmation – effectively allowing someone to steal a Bitcoin or crypto transaction.
Because of the secrecy surrounding some quantum computing projects, it’s not known if, or when, a quantum computer will finally be available. Some individuals hypothesize that we will know that quantum computing has arrived when Bitcoin is finally broken – it would be a key indicator that someone is in possession of quantum computing power.
As you can see, if cryptocurrencies remain in their present state, a change in their viability may occur overnight. The risk with quantum computing largely comes from the unknown variables involved.
Efforts to Combat Quantum Computing’s Potential Impact on Crypto
As you may already know, it’s possible to change a cryptocurrency’s algorithm through a hard fork. This means that the previous cryptocurrency algorithm can still exist, but there is also a new, updated version of the cryptocurrency in circulation. It would be in the interest of everyone on the network to agree with the hard fork, otherwise they might be end up being exposed to potential issues with their currency being hacked.
The only problem with a hard fork is that many people on the development side of these cryptocurrencies may not have the same opinion on how to best advance the currency in terms of quantum-proofing it. If individuals believe in different strategies, we may find ourselves in a situation in which conflicts of interest end up damaging the viability of the coin – regardless, it may cause radical change in the crypto community.
Leading ideas include creating quantum proof addresses, and then implementing a transaction method that hides the public key of the coins until they are in a suitable address.
There are also some cryptocurrencies already being produced with the aim to prevent quantum computers from being able to break them. One of the leading examples is Quantum Resistant Ledger (QRL).
This cryptocurrency takes a different approach to mining – it strays away from typical signatures and instead uses Proof of Stake with hash-chains and hash-stake random number functions. This is thought to be able to prevent a quantum computer from mining all the remaining QRL. In addition, a signature scheme titled XMSS will help prevent against quantum attacks on the blockchain.
Quantum computing has the potential to benefit society in multiple ways – added computing power will be able to ensure we have a better chance of solving complex problems in multiple disciplines. But it also has the potential to consolidate power into the hands of the few who possess such superior machines.
Many people believe that quantum-proofing will happen naturally once a quantum computer is obtained. But what the same people tend to forget is that current encryption will become obsolete. Meaning that communication and other information that you have encrypted in the past, will now most likely be accessible to those who have quantum computers.
For these reasons, ensuring that data, cryptocurrency, and other information is quantum resistant should be a priority for modern developers. The risks that quantum computing brings to cryptocurrency should be heavy factors in any investment decision – it’s important to remain aware of viable threats to your digital assets.
Considering how much money is already tied up in cryptocurrencies, it is important to be certain there are efforts that focus on ensuring that this portion of the market isn’t over-exposed. Having a catastrophic event without preparation could end up resulting in a loss of confidence in this revolutionary technology.
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