Will quantum computing put an end to crypto?

For years, crypto proponents have praised the blockchain's decentralization and immutability. However, a sufficiently large quantum computer could crack its advanced encryption technology.

Quantum computing is a potential breakthrough technology that may completely transform our reality, quickly performing calculations that would take conventional supercomputers hundreds of years to solve. For that reason, quantum computers are indispensable in the fields that require processing large amounts of data, including financial modeling, climate prediction, drug and materials development, and artificial intelligence.

But perhaps the most exciting and worrying application of quantum computing is the field of cryptography. Scientists estimate that a powerful enough quantum computer would crack open the most encrypted systems, from government defense to bank accounts. But what about cryptocurrencies? And when should we expect the quantum apocalypse, if there will be any?

How does a quantum computer work?

To understand how quantum computers perform such complex calculations, we should first examine what makes them different from today’s supercomputers. The basis of all electronic systems is binary logic with only two valid values representing either a logic “0” or a logic “1.” Quantum computers, on the other hand, can take values of one or zero simultaneously through a fundamental phenomenon called superposition.

The unit for data processing in quantum computing is called a qubit, as opposed to traditional bits representing either one or zero. Unfortunately, the quantum state of superposition doesn’t last long enough, as it quickly turns into a classical bit once it interacts with the environment in a process called decoherence. To shield qubits from decoherence, scientists keep them very cold, just a tad above absolute zero (-273.15 Celsius, or -459.67 Fahrenheit).

Full wafer of Intel quantum computers.
A closeup of a full wafer of Intel quantum computers. Photo by Steve Jurvetson from Menlo Park, USA under the Creative Commons Attribution 2.0

At such extreme temperatures, atoms and molecules simply move around less, making qubits more stable. The complex cooling systems needed for the proper functioning of quantum computers currently prevent this technology’s true value from being realized. However, experimental quantum circuits can function at room temperature, but the technology is still far from perfect.

What risks does quantum computing pose to crypto?

Let’s consider Bitcoin as an example of a cryptocurrency secured with a proof-of-work algorithm. You probably know that Bitcoin encryption relies on the relationship between the private and public keys. The public key can be easily derived from the private one, but not vice versa, which is called asymmetric cryptography. Well, it is possible, but it would take an enormous amount of time and computational power for regular computers. The quantum ones, though, would be able to solve the task.

The addresses on the Bitcoin blockchain can be divided into two distinct categories, each having a different degree of vulnerability to a quantum computer. The first type is a public key directly serving as the Bitcoin address, and the transaction to it is known as p2pk (pay to public key).

The second type of Bitcoin address is a public key hash (p2pkh). The public key, in this case, remains unknown, being revealed only at the moment of transaction. However, once the address was used, it too becomes vulnerable to the quantum computer that would have just a ten-minute window of block time to get the private key. In theory, all existing Bitcoin addresses are susceptible to such attacks.

So Bitcoin is doomed?

Perhaps, but not so fast. The ones vulnerable to the quantum computers are p2pk and used p2pkh addresses. According to Deloitte, such addresses currently hold 4 million bitcoins, one-fifth of its total supply. The rest are safe, at least for now.

In January 2022, Sussex University calculated that it would require a quantum computer with 1.9 billion qubits to break Bitcoin’s encryption in the required ten minutes. At 317 million qubits, it would take an hour, and 13 million qubits would solve it in a day. In contrast, IBM’s quantum-computing chip presented in November 2021 boasted 127 qubits, being the first to reach the three-digit milestone. By 2023, IBM promised to deliver a 1000-qubit quantum computer.

It looks like Bitcoin holders can breathe in relief – quantum computers are unlikely to become a serious threat in the nearest years. And when they will eventually become fast enough to crack Bitcoin’s encryption, the cryptographers will develop protection from it. Cybersecurity specialist Itan Barmes believes that the transition to post-quantum cryptography is possible.

“It is not too late to migrate, but such a migration takes time, so waiting until the last moment might turn out to be too late,” he said. “The exact moment when it becomes too late is, of course, unknown.”