Crypto enthusiasts have long-held fears of the future that quantum computing might bring. But are those fears overblown?
Quantum computers are a near-perfect embodiment of Arthur C. Clarke’s third law, “Any sufficiently advanced technology is indistinguishable from magic.” A fully functional quantum computer would be orders of magnitude more powerful than any conventional supercomputer in existence.
The positive applications are numerous and include accelerating discovery of cures to diseases to revolutionizing investment management and presenting better and lower-cost trading opportunities.
This could provide a huge boost to the sciences but it also represents a threat to existing cryptographic algorithms. Many crypto enthusiasts are concerned that this could compromise the blockchain and render cryptocurrency worthless. The question is, how real are these fears?
What Is Quantum Computing?
Traditional computers use bits, or 1s and 0s, in order to represent data. Everything you’re seeing on your screen right now can be broken down into a string of binary digits. Quantum computers are based on the qubit, a two-state quantum system.
As a result, they are able to perform processes significantly faster than any conventional computer could. This involves quantum physics so we’ll focus on the broad strokes here. For those interested in a deep dive, there is a great series of articles on this at the MIT Technical Review.
A quantum computer is one that is designed to capture and contain qubits in a stable state. They are then able to take advantage of two key mechanics in order to process large amounts of data:
- Superposition: Qubits are able to hold a number of possible combinations of 1 and 0 simultaneously. This enables a quantum computer with several qubits to calculate a vast number of potential outcomes simultaneously. The final calculation emerges once qubits are measured, collapsing their quantum state to either 1 or 0.
- Entanglement: It is possible to generate a pair of qubits that are entangled. That means that if you change the state of one qubit you can change the state of another in a predictable way. Quantum computers can create a daisy chain of entangled qubits to significantly increase processing power.
The downside of quantum computers is that they require a significant amount of energy to run and are error-prone because of decoherence. Even slight vibrations or temperature changes can cause a quantum computer to cease functioning.
This had prevented quantum computers from achieving quantum supremacy, which is the ability to outperform traditional computers. But that changed in September 2019 when Google claimed that it had succeeded in reaching quantum supremacy, sending a shockwave through the cryptography world.
Why Are People Scared of Quantum Computers?
The big fear with quantum computers is that they would render all real-world uses of cryptography obsolete overnight. This would make online banking, messaging, and e-commerce completely unsafe and cripple the internet as we know it. It would also render cryptocurrencies inoperable.
Most of the major blockchains, including Bitcoin, rely upon ECDSA (Elliptical Curve Digital Signature Algorithm). This allows blockchains to create a random 256-bit private key and a linked public key that can be shared with third parties without revealing that private key.
Quantum computers could unravel the relationship between these keys thus allowing cryptocurrency wallets to be hacked and a holder’s funds to be liquidated.
Should Cryptocurrency Investors Be Concerned About Quantum Computers?
The short answer: “Maybe, but not yet.” The truth is that, as Peter Todd confirmed, we still don’t know how close we are to a viable, scalable quantum computer. It could be 6 months from now, or it could be never.
Another point is that if users follow the standard practice of only using Bitcoin addresses one time, it limits the amount of time a quantum computer has to break the key.
But the threat is still present, if a little distant. The good news is that some projects are actively working to counter it. The Quantum Resistant Ledger (QRL) is the first industrial implementation of the eXtended Merkle Signature Scheme (XMSS). This hash-based signature scheme is significantly more advanced than ECDSA and should be harder for a quantum computer to crack.
In general, cryptocurrency investors shouldn’t be too concerned about quantum computing in the short-term. But it would still be prudent to keep an eye on the quantum computing world and projects like QRL.
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