Quantum computing to run economic models on crypto adoption

Many believe quantum computing (QC) is growing at an exponential pace. It uses atomic spin instead of an electric charge to represent binary 1’s or 0’s. It could prove to be a boon to human society if QC can ever be realized on a large scale. This would allow for better crop yields, safer medicines, and safer aircrafts.

The crypto sector could also benefit. For instance, last week, a Bank of Canada-commissioned study simulated cryptocurrency adoption by Canadian financial institutions using quantum computing.

Maryam Haghighi (Director of Data Science at the Bank of Canada), stated in a press release, “We wanted to try the power of quantum computing for a research problem that is difficult to solve using traditional computing techniques.”

Others worry that quantum computing could crack the cryptographic structure of Bitcoin (BTC), which has been so successful since its inception. Some believe that quantum computers will soon be able identify the huge prime numbers that make up a BTC private keys, provided no countermeasures are found.

According to the University of Sussex, the authors of the paper have calculated how much quantum power is required to duplicate a BTC public key.

This will not be an easy task, it is certain. The Bitcoin algorithm that converts private keys to public keys is called “one way.” This means it is simple to generate a key public from a private one, but nearly impossible to obtain a key private from a key public using current-day computers.

This would also mean that it would take approximately 10 minutes to complete, which is the time in which a public key can be exposed or made vulnerable on the Bitcoin network. This assumes that the publickey is identical to the BTC adress, which was common in Bitcoin’s early days. Before it was popular to use the KECCAK algorithm for “hashing” public keys to generate BTC addresses, most people used the KECCAK algorithm. About 25% of Bitcoin currently in existence uses unhacked public keys.

These constraints mean that it would take 1.9 billion qubits to crack a single Bitcoin key private key in just 10 minutes, according to the authors. Qubits (or quantum bits) are the equivalent to classical computing’s “bits”. Compared to this, proto-QC computers can summon up 50-100 qubits. IBM’s Eagle quantum processor, however, can handle 127 qubits.

IBM Q System One is the first commercial circuit-based quantum computer. Source: IBM Research

That’s 127 qubits to the 1.9 billion required to crack Bitcoin’s security with a large-scale trapped electron quantum computer. This is the AVS Quantum Science paper.

Mark Webber is the quantum architect at Universal Quantum. A University of Sussex spin-out, Mark Webber was the paper’s main author. He stated, “Our estimate […] suggests Bitcoin should not be considered safe from quantum attacks for now, but quantum computing technology are scaling rapidly with regular breakthroughs affecting such estimations and making them very possible within the next ten years.”

Is this a real threat?

Is Bitcoin’s security possible to crack? “I believe that quantum computers can break cryptocurrency,” Takaya Miyano of Japan’s Ritsumeikan university, said to Cointelegraph. “Thought, not in a few decades time, but in 10-20 year time.”

Miyano was recently the leader of a team that created a chaos-based stream encryption algorithm to resist attacks by large-scale quantum computers.

David Chaum, who wrote last year for Cointelegraph also raised the alarm — not just for crypto, but for society in general.

Quantum-level computing is the most dangerous for a society that relies on the internet. It puts all our digital infrastructures in danger. Cryptography is the use of codes or keys to protect data storage and communication. It is the foundation of modern internet.

Nevertheless, for cryptocurrencies such as Bitcoin and Ether, “for whom this idea is fundamental, one sufficiently powerful quant computer could mean either the theft of billions or the destruction an entire blockchain altogether,” stated Chaum.

Consulting firm Deloitte estimates that there are over 4 million bitcoin “that are potentially susceptible to a quantum attack”. This number includes owners who use un-hashed keys or reusing BTC addresses. Another unwise practice is the use of un-hashed public key. This amounts to $171 billion at current market prices.

Recent: Are wild price swings in crypto caused by asymmetric information?

Itan Barmes (quantum security lead at Deloitte Netherlands, project fellow at World Economic Forum) said that “Personally, we are unable at this moment to make an accurate estimation” of how long it will take for quantum computers to break BTC’s encryption. He said that experts now estimate it will take between 10 and 15 years. These estimates are also for breaking encryption without any time limitations. It will be much more difficult to do it all in 10 minutes.

Other cryptocurrencies could also be vulnerable, beyond Bitcoin. Bitcoin is a proof of work (PoW), protocol. Cointelegraph was told by Marek Narozniak (a physicist who is part of Tim Byrnes’ quantum research group at New York University) that if blockchain protocol exposes public key for a sufficient time, it automatically becomes susceptible to quantum attacks. It could be used to impersonate block producers or forge transactions.

It’s time to get ready

The crypto industry may have approximately a decade to prepare for a possible QC onslaught. This is critical. Narozniak noted:

“It is possible to create quantum-safe cryptography standards, and to work out the appropriate forks for current blockchain protocols. There is plenty of time.”

When Deloitte’s Barmes was asked if he is confident that post-quantum cryptography can be developed in the time needed to stop hackers breaking the 10-minute barrier, he referred to a paper he co-authored about quantum risks to Ethereum. It describes two types attacks: a storage attack or a transit attack. He said that the first is easier to execute but you can defend against it without having to replace the cryptography algorithm.

“The transit attack is more difficult to execute, and more difficult to defend against. Some candidate algorithms are thought to be resistant against quantum attacks. They all have performance limitations that could be detrimental to the application and scalability of the blockchain.
Is there a race for an arm?

This area is witness to an arms race. As computers become more powerful, defense algorithms will be required to deal with the threat.

Narozniak said that the overall pattern was not new. “We also see this in other industries,” Narozniak said.

“Quantum-safe cryptography is different because the quantum algorithms impose more drastic changes. Narozniak added that these devices are based upon different physics and offer different computational complexity for specific problems.

QC uses quantum mechanics to allow an electron or atomic particle to be in two states simultaneously. Classic computing defines information as either a 0 or 1 and that is fixed. However, quantum computing allows an atomic particle to be in multiple states at once. This unique property can be harnessed to increase computing power. QC’s and Shor’s algorithms — first described in 1994 as a theoretical possibility but soon becoming a widespread reality, many believe — threaten to destroy RSA encryption which is used in many websites, email, and other internet-related applications.

Miyano stated that it was a “very tough and exciting weapon race.” Due to advances in computers and mathematical algorithms, attacks against cryptosystems (including side-channel attacks) are becoming more sophisticated. An incredibly powerful algorithm can suddenly break any cryptosystem.

Simulating financial relationships

However, one shouldn’t assume that quantum computing will have a negative impact on crypto. Samuel Mugel, chief tech officer at Multiverse Computing (the firm that ran the program at Bank of Canada), explained to Cointelegraph that they were able simulate a network of financial relationships where the decisions made by one firm were heavily dependent on those of other firms.

“Game theory networks such as this can be very difficult for normal supercomputers because it is possible to overlook more optimal behavior. Quantum computers can solve this problem better than normal supercomputers.

Other unique possibilities are possible with devices based on quantum mechanics, Narozniak said. “For example, unlike classical state, quantum states can’t be copied.” The no-cloning theory would automatically protect digital tokens from double-spending if they were represented using quantum states.

Recent: Crypto is being referred to as the “future money” in inflation-mired nations

Narozniak stated that quantum entanglement could be used to protect quantum smart contracts. “Tokens could become entangled in the execution of the contract, making both parties vulnerable for loss if it is not executed as agreed.”

Developing post-quantum cryptography

The threat to cryptoverse from quantum computing seems real. However, it would take a lot of power to break crypto’s underlying cryptography. Hackers would also need to work within strict time limits — only 10 minutes to crack a BTC private keys, for example. It is still at least a decade before we can break Bitcoin’s elliptic curve encryption using quantum computing. However, it is imperative that the industry get moving on developing deterrents now. Barmes stated, “I think we should be prepared on time, but it is important that we get serious about it.”

Cointelegraph was told by Dawn Song, a professor at the University of California Berkeley’s computer science division, that a lot of research is being done in “post-quantum crypto”.

“It is crucial that we develop quantum-resistant or post-quantum cryptography to have the alternative available when quantum computers become powerful enough in real life.”

2021's Most Anticipated Growth & Wealth-Building Opportunity

Join Thousands of Early Adopters Just Like You Who Want to Grow Capital and Truly Understand Cryptocurrency Together

Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

Close Bitnami banner