Unlike gold (the granddaddy of asset classes) bitcoin is nothing more than an entry in an electronic ledger. It cannot be touched, handled and placed under the mattress.
What holds all of bitcoin and its underlying blockchain together is the concept of the private key, the only thing keeping your wallet safe. Anybody who gets hold of your private key also gets full control of your wallet.
Reverse Engineering Private Key from Public
The private key is nothing more than a random number, with its associated public key derived mathematically from the private value. To create a public bitcoin address, the public key is hashed (another mathematical derivation).
Deriving the public key from the private is a relatively easy operation on traditional computers, using an algorithm called the “elliptic curve discrete logarithm problem”. The security of the blockchain, however, depended on the fact that doing the inverse: deriving private from public, would take roughly 0.65 billion billion years with today’s super computers, a practical impossibility.
The Rise of Super Computers
Quantum computers are able to solve equations and puzzles at a rate exponentially faster than that of other computers. Last year, Sycamore, a quantum computer from Google, took 200 seconds to complete a puzzle. It would have taken other supercomputers 10,000 years to solve. Such statistics make many people nervous. In the wrong hands, quantum computers can get into any account and wipe out or steal data faster than ever imagined. It begs the question of whether or not the encryption routines cryptocurrencies are based on is safe.
Unfortunately all technologies get disrupted eventually; as discussed, a later generation quantum computer will be able to reverse engineer a private key in mere minutes. Quantum computers use subatomic bits called qubits. The thing about subatomic particles is that as soon as you go smaller than the atom, you’ll find the particles start to act weird. Where normal computers have transistors that work on the basis that bits can only have a value of 1 or 0 (true or false), qubits go into the realm where the value could be both 0 and 1 at the same time, in other words, Schrodinger’s cat could be both dead and alive.
Today’s fastest quantum computers can handle about 72 qubits. Miruna Rosca, a PhD student in post-quantum cryptography is of the opinion a quantum computer of about 4000 qubits would be muscular enough to crack bitcoin’s security.
Does Moore’s law also apply to qubits? It states the number of transistors that can fit onto a chip in a traditional computer doubles on average every 18 month.
How Far are 4000 Qubits Away?
Andersen Cheng, CEO of London-based cryptography company Post-Quantum, predicts a date as soon as 2022. The impact not only on bitcoin, but on many aspects of our current technologies could be huge. Many of our payment, communication and security systems are built around the integrity of encryption routines. Quantum computers in the wrong hands, capable of breaking into these systems could have catastrophic consequences for the world.
Window of Opportunity for Hackers
Back to the blockchain. When a new wallet is created, the public key is left unencrypted in the +- 10 minute window it takes for the network to finish confirming the block. During this time, a hacker, utilizing a strong enough quantum computer, could theoretically get hold of the public key, derive the private key and replace it with his own.
Some Algorithms More Vulnerable Than Others
Some encryption algorithms based on public keys like RSA and Diffie-Hellman rely on the intractability of integer factorization. These algorithms are hard for traditional computers to solve but are a piece of cake for quantum computers, making them very vulnerable.
Resistant Algorithms – There Is Hope
However quantum-resistant PKC algorithms also exist, for example: Lattice-based, code-based, hash-based, and isogeny-based. Standards organizations like the IEEE and the ANSI X9 committee are already compiling lists of quantum-resistant PKC families for better utilization in future.
In coming years, expect some preventative updates to your favorite crypto currency, but it is not as if algorithm updates have not happened before. SHA-1, MD-5 and RSA-1024 are all examples of algorithms that were replaced in past with more secure versions.
It appears as if this quantum disruption is one that clever people have foreseen and can take care of.
It is the unforeseen disruptions we really need to worry about.