Risk of a quantum hack is threat to bitcoin
The potential for a quantum hack poses a significant threat to bitcoin. The recent surge in Bitcoin’s value encounters a potential threat that remains largely overlooked by the majority of cryptocurrency investors: the advent of quantum computing. The emerging technology, which garnered significant attention this month following Google’s announcement of a breakthrough with its new Willow quantum-computing chip, has the potential to empower hackers to compromise the encryption safeguarding bitcoin. A breach of this nature could undermine bitcoin’s value, enabling criminals to illicitly extract funds from ostensibly secure digital wallets.
Experts indicate that a quantum device capable of breaking bitcoin encryption is probably at least ten years from realization. Nonetheless, technological advancements present a long-term risk, unless the contentious community of bitcoin developers enhances its infrastructure through a protracted upgrade process. Analysts caution that a quantum-powered assault on bitcoin may yield detrimental repercussions for conventional financial markets.
“What we have here is a precarious situation poised for disruption, should an individual acquire the capability to exploit quantum-computer hacking and choose to direct that power towards cryptocurrencies,” remarked Arthur Herman, a senior fellow at the Hudson Institute, a Washington, D.C.-based think tank. A study conducted by the Hudson Institute in 2022 projected that a quantum breach of bitcoin could result in losses exceeding $3 trillion across cryptocurrency and other financial markets, potentially leading to a severe recession. Herman noted that the anticipated expenses associated with a quantum hack have escalated since the publication of the study, coinciding with bitcoin’s ascent towards $100,000 and its evolution into a more widely accepted investment asset.
President-elect Donald Trump has committed to establishing a strategic reserve for the government’s bitcoin assets, akin to a digital Fort Knox. Quantum computing has the potential to enable sophisticated breaches of even the most secure vaults, such as Fort Knox. In contrast to conventional computers, where data is strictly encoded in binary form—zeros and ones—quantum computers leverage the peculiar characteristics of subatomic particles to utilize “qubits.” These qubits can inhabit a spectrum of states, embodying combinations of zeros and ones.
Such capabilities enable quantum computers to swiftly tackle problems that would require conventional computers an impractically long duration, extending beyond a human lifetime, to resolve. Such endeavors may encompass the identification of novel pharmaceuticals, the prediction of meteorological patterns, or the decryption of codes safeguarding confidential information. One prevalent encryption technique utilizes substantial numerical values known as public keys, which are derived from the product of two significant prime numbers. The combination of the two prime numbers yields what is referred to as the private key. Information may be encrypted using the public key and subsequently decrypted with the private key. As indicated by their nomenclature, users maintain the confidentiality of their private keys, while public keys are subject to dissemination.
This method’s efficacy lies in the considerable time required for a conventional computer to extract the private key from the public key, attributable to the inherent challenge of factoring—identifying the prime numbers that, when multiplied, produce the public key. Quantum computing significantly simplifies the process of factoring. A 1994 algorithm developed by a U.S. mathematician enables the rapid factorization of large numbers within minutes, contingent upon access to a sufficiently advanced quantum computer.
A development of this nature would pose a significant risk not only to bitcoin but also to conventional financial systems, given that numerous online banking infrastructures rely on adaptations of public-key cryptography. Security experts caution that bitcoin may present an especially alluring target for quantum thieves. “Bitcoin is poised to face intense scrutiny,” remarked Skip Sanzeri, co-founder of QuSecure, a startup focused on quantum-safe cybersecurity. “Banks operate under a framework of regulation, equipped with defense mechanisms and the capacity to safeguard their clients, in stark contrast to the unregulated nature of bitcoin, which resembles the Wild West.” Your wallet will not provide compensation in the event of bitcoin theft.
Although there have been instances of bitcoin theft, such incidents typically involved the illicit infiltration of cryptocurrency exchanges. A quantum attack would prove particularly insidious, as it would undermine the security of the entire bitcoin network rather than merely exposing vulnerabilities in a handful of poorly secured crypto exchanges. Certain caches of bitcoin exhibit heightened vulnerability to quantum theft. In the nascent phase of bitcoin, it was stored in addresses featuring exposed public keys, encompassing approximately one million coins thought to be associated with Satoshi Nakamoto, the enigmatic figure behind bitcoin’s inception. Approximately 1.72 million bitcoins, currently valued at over $160 billion, are retained in addresses that have since been discontinued, as reported by Galaxy Digital.
In the end, the security of all bitcoins hangs in the balance as quantum computing technology advances to a formidable level. Hackers may exploit the 10-minute interval required for the bitcoin network to validate transfers, potentially allowing them to intercept coins as they are transferred between addresses. According to seasoned figures in the cryptocurrency realm, there remains ample opportunity for bitcoin to address its inherent weaknesses.
“A quantum apocalypse is indeed looming on the horizon, but it remains distant enough that there is no cause for alarm,” stated Emin Gün Sirer, founder of the Avalanche cryptocurrency. Crypto executives suggest that securing Bitcoin may require the adoption of advanced encryption methods resistant to quantum computing threats; however, they caution that such a transformation could span several years. The decentralized nature of bitcoin necessitates a widespread consensus among the global community of network maintainers for any technological modifications. Previous enhancements have been characterized by a sluggish pace and considerable debate. Once the community reaches a consensus on how to quantum-proof bitcoin, a further challenge arises: the necessity to transfer existing bitcoins into quantum-resistant addresses. Every individual or enterprise in possession of bitcoins must undertake this transfer, lest they face the peril of losing their assets to quantum adversaries.
