Brief overview
- Quantum computers could potentially break current blockchain encryption, putting billions in cryptocurrency assets at risk, according to a quantum policy expert.
- Quantum-resistant cryptography and quantum random number generators are emerging as vital solutions to protect blockchain networks from quantum attacks.
- Companies are already developing quantum-secure blockchain technologies to counter these future threats.
Cryptocurrencies are coming of age.
Quantum computing is maturing.
Cryptocurrencies and quantum technologies are attracting the attention of presidential candidates and global policymakers, eager to harness both the power of these new technologies and the vast communities of advocates for these technologies.
Professionals in both fields may be excited about these developments separately. However, the two deep technologies are on a collision course.
Quantum computing is poised to disrupt a wide range of industries, and the world of cryptocurrencies is no exception, Arthur Herman points out in a recent op-ed in The Korea Herald. Herman, a senior fellow at the Hudson Institute and director of the Quantum Alliance Initiative, writes that the same technology that could unleash immense computing power could also make existing cryptographic systems, including those that secure blockchain networks, vulnerable to attack.
This alarming possibility, he argues, should be a wake-up call for the cryptocurrency industry and anyone who relies on blockchain technology.
Herman’s analysis highlights the inherent risks of quantum computing for blockchain and cryptocurrencies. Currently, blockchain relies on distributed ledger technology (DLT), a form of decentralized encryption that allows for secure and anonymous transactions.
“Cryptocurrencies prefer to use blockchain or DLT because they allow all parties to track, verify, and agree on transactions, even if individual participants remain anonymous,” Herman explains in the article.
While critics like to reduce cryptocurrency and blockchain to mere tools of speculation, other experts disagree that the technology could give rise to entirely new economies and business models.
Chris Dixon, general partner at Andreessen Horowitz, who runs a16z crypto, which invests in web3 technologies, writes that blockchain has spawned two cultures: the computer and the casino.
Dixon writes: “There are two distinct cultures interested in blockchains. One culture sees blockchains as a way to build new networks. I call this culture the computer because at its core, it’s about blockchains powering a new computer movement. The other culture is primarily interested in speculation and money creation. Those with this mindset see blockchains solely as a way to create new tokens to trade. I call this culture the casino because at its core, it’s really just about gambling.”
Herman points out that large companies are among the advocates of IT culture.
“Microsoft, Walmart and JPMorgan are already starting to deploy their own private blockchain networks in which only partners, suppliers or customers are allowed to participate, while delivering thousands of transactions per second,” he writes.
However, as quantum computers become more sophisticated, the encryption methods that protect these transactions could become obsolete. Herman points out that traditional cryptographic methods, including widely used elliptic curve cryptography (ECC), could be easily cracked by quantum algorithms like Shor’s.
“In short, blockchains that use the same cryptographic building blocks as other forms of DLT will be just as exposed to the quantum computing threat as other digital technologies,” Herman writes.
The consequences of such a scenario could be catastrophic. According to a study conducted by the Quantum Alliance Initiative, a successful quantum attack on Bitcoin could result in a loss of at least $3 trillion, a blow that would send shockwaves through the global economy.
Herman warns: “The real danger for the future of blockchain is that it will be used to build critical digital infrastructure before this serious security vulnerability has been fully studied. Imagine a large insurance company investing heavily in a blockchain-based network, and then three years later having to tear it all down to install a network secured by quantum technologies instead.”
Despite these bleak prospects, Herman proposes a solution that relies on the very technology that poses the threat. Quantum cryptography, specifically quantum random number generators and quantum-resistant algorithms, could provide the necessary safeguards to protect blockchain networks from quantum attacks.
“Quantum random number generators are already being implemented today by banks, governments, and private cloud operators. Adding quantum keys to the blockchain software and all encrypted data will provide unbreakable security against both a classical and a quantum computer,” he notes.
Additionally, the US National Institute of Standards and Technology (NIST) has taken steps to address this issue by publishing standards for post-quantum cryptography. These quantum-resistant algorithms are designed to withstand attacks from quantum computers, making them a crucial part of the next generation of blockchain security.
“Just as asymmetric encryption uses hard math problems to defeat classical computers, post-quantum cryptography uses hard math problems to defeat a quantum computer,” Herman says.
The shift to quantum-resistant blockchain systems has already begun. Herman cites the example of Quantum Resistant Ledger, a British company led by Dr. Peter Waterland, which is working to develop quantum-resistant DLT systems. Efforts like this suggest a broader shift toward securing digital assets against the looming quantum threat.
Looking ahead, Herman suggests that a coordinated approach integrating cryptographic, blockchain and quantum technologies could usher in a new era in digital finance and security.
