Quantum computing is almost here. It has the power to hack bitcoin wallets in an instant, and warnings have been issued by experts. Is the community acting fast enough?
A top cybersecurity expert and hacker has issued a grave warning to the bitcoin community. He believes it needs to upgrade its security to better handle the arrival of quantum computing, in what is being dubbed ‘Q-Day’. This is the moment supercomputer will be able to crack the cryptographic codes in an instant.
CEO and Hacker Issues Q Day Warnings
Naoris Protocol is a company specialising in post-quantum infrastructure. Its CEO, a veteran named David Carvalho, began hacking at the age of 13. He then moved into cybersecurity, and quickly became one of the foremost experts in computer hacking. His company builds systems that will be able to navigate quantum computing upgrades, and he believes that the cryptographic processes guarding blockchains and cryptocurrencies are already dangerously outdated. In fact, he described it as “Quantum is coming for it all, like meteors came for the dinosaurs.”
Bitcoin has experienced a rapid rise in value over the last year. Once believed to be a fad, it has embedded itself in institutional and traditional finance. The bitcoin price history shows how far it has come in the last 12 months, moving from $53,857 last September to a recent high of over $122,000. It is now part of a US Strategic Reserve, with even companies acquiring it as an asset. While it has helped buoy the value, it also suggest security failures would have far reaching implications.
The response from blockchain developers is often that there is still plenty of time to do this. However, Carvalho believes the window has now closed. He also believes that the quantum-resistant signatures required are not widespread or treated with the urgency required.
There has already been a rise in the ‘Harvest now, decrypt later’ approach. This is where tech companies are already looking for encrypted data, which they will later have opened by quantum computing. Roughly 6-7 million bitcoin, which is 30% of the supply, sits in older addresses with keys that are open to quantum attack.
What is Quantum Computing?
With traditional computing, information is processed in binary code, which uses sequences of 0s and 1s. Quantum computers use qubits, which can exist in various states at any one time. This allows them to explore multiple outcomes and solve various problems at once, in a method known as superposition.
A standard computer would take hundreds of years to crack the cryptographic codes used in bitcoin. Yet as quantum computers can exploit multiple possibilities at once, they can solve these problems much quicker.
Several companies have been working on quantum computers, with the most famous currently being Google’s Willow chip. At the moment, this contains 105 qubits. It would take a quantum computer with 13 million qubits to decrypt a blockchain in a 24-hour period. However, these chips are advancing rapidly. Microsoft is also developing its Majorana chip. Experts have warned that these computers could arrive as quickly as 2027 to 2030.
Can Bitcoin Protect Itself?
While much of the community is not worried about the threat, there have been proposals put forward to safeguard it. This includes the Bitcoin Improvement Proposal (BIP), which has proposed the lengthily titled “Post Quantum Migration and Legacy Signature Sunset.” It discusses the threat by stating, “A successful quantum attack on Bitcoin would result in significant economic disruption and damage across the entire ecosystem. Beyond its impact on price, the ability of miners to provide network security may be significantly impacted.”
A staged approach, entering in phases, is what is suggested. Firstly, it would involve a measure to stop people sending Bitcoin to older, more vulnerable addresses. The next phase, designated to happen around five years later, would freeze the coins in those old wallets, essentially taking them out of circulation. Further research could allow people to claim these coins if they can prove their identity in relation to the wallet’s backup phrase.
There is even a prize for anyone who can manage to make bitcoin quantum-resistant. Known as the “Q-Day” prize, it was offered by Project 11, a quantum computing company. Contestants must break a toy version of Bitcoin’s cryptography using a quantum computer by April 20926. Those that do receive 1 bitcoin. While it seems counterproductive, they assure the public it is a measure that will help them understand how to safeguard the network.
Quantum Computing Threats to Wider Finance
It is not only bitcoin that will suffer. If these computers can hack into cryptographic processes, then standard banking is also at risk. The International Monetary Fund has issued a warning about how it could impact mobile banking. The Institute for Quantum Computing has also spoken about the risk posed by centralised data, which is being harvested for decryption later.
Quantum computing is coming, and it will have a huge, rapid impact on our lives. For the everyday person, it is hard to see how much their future will change. In some cases, it could even mean a return to traditional methods and a closure of many digital channels, such as online banking.
Breaches would be catastrophic to the cryptocurrency community. It would mean no bitcoin wallet is safe, and it would soon be plundered by those wielding the power of quantum computers. Essentially, it could collapse the entire crypto ecosystem. In the words of Carvalho, quantum computing is not the real threat, but the “community’s delay in acting decisively”.