Computing is about to get a lot more advanced. Quantum computers that store information on particles are set to tear up cryptography and with it, internet security. How will this impact Bitcoin?
Quantum computing is emerging quickly, with more research and information poured into it each day. It is believed the industry will be worth $1.3 trillion by 2035. However, it is quite likely that it will be able to access every corner of the internet, tearing up existing security protocols. One sector it is threatening is cryptocurrency, with many speculating it could destroy the price of Bitcoin. But what can be done to avoid this, or is it already too late?
What is Quantum Computing?
Quantum computing is the process of using subatomic particles on which to store information. Standard computers are built using bits. They store information in zero and one configurations. Quantum bits, known as Qubits, can store both ones and zeros together, in a state known as superposition. When a variable change occurs in standard computers, it means that a path is followed to a single conclusion. By using Qubits, quantum computers can explore many different possibilities and paths at once.
This makes them able to solve very complex scenarios, often involving statistics. Inevitably, it involves cryptographic problems, which are intrinsically linked to Bitcoin and other blockchain technologies. The current Bitcoin price stands at $106,583, and it has hovered around this price for the past few days. However, over the past 6 months, it has become increasingly volatile, but with higher peaks. This saw it reach a new high of over $111,000. But what happens to the price when computers can solve the cryptographic conundrums that create Bitcoin instantly?
The Arrival of Quantum Computing
The great leap forward came in the form of the Majorana Chip. Created by Microsoft, it has sped up the timeline for quantum computer creation to within the next few years.
At the start of May, Google quietly released a research blog on quantum computing. It focused on RSA Encryption, which is used for many online security measures. It showed how fewer Qubits are needed to attack the RSA-2048 system. While not used by Bitcoin directly, this same technology could be used to crack private keys on Bitcoin cryptocurrency wallets. This is undermining trust in the networks once touted as secure.
Bitcoin has now been around for 16 years, and in that time, it has never been hacked. There are now predictions that it could be breached as soon as next year, if not within the next five. The main worries stem from its own security protocol, known as the Elliptic Curve Digital Signature Algorithm. This is because a lot of Bitcoin is in old wallets, which have very little quantum security. This means that 25% of the Bitcoin supply could be compromised. Around 6.2 million BTC, worth around $648 billion, is stored in addresses that could be accessible.
Can Bitcoin Prevent This?
Government agencies have already begun to protect themselves against this. The NSA, along with the US National Institute of Standards and Technology, have implemented quantum security protocols which will be in place by 2030. Yet Bitcoin decentralisation is now becoming its biggest drawback: With no one guiding the ship, no one has made a decision on how best to secure the network.
The name given to the day when quantum computers can break Bitcoin has already been dubbed “Q-Day”. There are even worries that those with ill intent are harvesting data from verified transactions now, so that it can be decrypted and stolen when Q-Day arrives.
Bitcoin has two options. The first is a hard fork, creating a quantum-safe Bitcoin variant. A fork is a change in the protocol which splits the blockchain, creating a new variation of a cryptocurrency. This would essentially be a new form of Bitcoin, which may in itself devalue Bitcoin. However, forks are something not looked upon favourably by the crypto community, and this will undoubtedly face opposition.
Another solution would be some kind of shielding solution. This would protect legacy keys. However, this would be problematic in itself, especially if the owners ever decided that they did want to reopen them.
Like many things in the world of technology, the future is becoming increasingly hard to predict. Action is needed to protect Bitcoin, and it may come from the most unlikely places. With further institutional adoption, a crash now would impact wider markets outside the crypto bubble. This is something the global financial markets will want to avoid at all costs, and they make a move to take control.
If anything, it shows that Bitcoin is further away from its initial concept than ever before. This was a way in which people could pay for everyday transactions outside of conventional banking. Yet quantum computing could be the moment Bitcoin toughens up and shields itself under the wing of the financial systems it was created to rally against.