Is Quantum Computing a Threat to Bitcoin?

Bitcoin is considered to have the most secure encryption algorithm which is SHA-256. Quantum computers will eventually crack much of today's cryptography, including Bitcoin and other cryptocurrencies' signing algorithms. According to Deloitte research, around one-quarter of the Bitcoin ($168 billion) in circulation in 2022 is vulnerable to quantum attacks.

Itan Barmes, a cybersecurity specialist, lead the Bitcoin blockchain vulnerability investigation. He discovered that the level of exposure that a sufficiently massive quantum computer would have on the Bitcoin blockchain poses a systemic risk. "If 4 million coins are finally taken in this manner, trust in the system will be shattered, and the value of Bitcoin would very certainly go to zero," he argues.

Let’s see what is Quantum computing and how it could become a threat to Bitcoin.

What is Quantum Computing?

A quantum computer is one that makes use of quantum mechanical processes. Physical matter exhibits traits of both particles and waves at small scales, and quantum computing exploits this property with specialized gear. 

The operation of these quantum devices cannot be explained by classical physics, and a scalable quantum computer might execute certain tasks tenfold faster than any existing "classical" computer. 

A large-scale quantum computer, in particular, would be capable of breaking widely used encryption systems and assisting physicists in completing physical simulations, however, the current state of the art is primarily experimental and unrealistic.

Bitcoin’s Weakness

Storage Attack

The majority of encryption is based on the interaction between public and private keys, which is known as asymmetric cryptography. Quantum-vulnerable Bitcoins are those created before 2010 when public keys were not hashed into a more secure state.

Bitcoin addresses that have previously been used and hence become visible on the blockchain are also in danger. A quantum computer large enough to generate the associated private key to unlock and transfer the currency to another address could theoretically hack four million Bitcoin addresses. This is referred to as a storage attack.

Transit Attack

The second type of attack, known as a transit attack, targets Bitcoin transactions in transit. Unlike storage attacks, which only affect a subset of addresses, all transactions are vulnerable.

In January 2022, a team from the Sussex University spin-off company Universal Quantum published research on transit attacks, estimating that it would take a quantum computer with 1.9 billion qubits to crack Bitcoin's encryption in the required ten-minute window (this is the time taken for a Bitcoin to be mined). 

Even at 317 million qubits, it would take an hour to complete and 13 million qubits to complete in a day. To put things in perspective, IBM's superconducting quantum computer currently has a 127-qubit processor.

Bitcoin vs Quantum Computing

The next wave of computing will most likely be led by quantum-centric supercomputers that blend classical and quantum operations before pure quantum computing machines hit the market.

These devices could have anything from 50 to 1,000 qubits of processing capability, especially with the release of the 433-qubit IBM Quantum Osprey on Nov. 9, 2022, less than a year after the 127-qubit Eagle processor.

Given how powerful quantum computers are presently and their limited availability, it is easy to conclude that quantum computers will pose a danger to cryptography for a long time.

Despite the enormous potential, the quantum advantage will not be attainable unless better methods of error suppression are developed and processing performance grows without any associated issues.

Even if we contemplate the prospect of quantum computing breaking the cryptography employed in Bitcoin, massive amounts of processing power would be required to conduct a storage attack, in which wallet addresses with a public key are targeted in order to steal funds existing in them. A storage attack on a blockchain like the Ethereum Network would require more than 10 million qubits of computer power.

The scope of a transit attack, in which a bad actor would use vast quantities of quantum computing power to gain control of transactions inside the block time, is substantially larger because it would include assaulting all nodes. However, because the attack must be carried out before a new block is uploaded to the blockchain network, malevolent entities have only a few minutes for Bitcoin and tens of seconds for Ethereum to accomplish a transit attack.

With billions of qubits of quantum computing power required to properly execute such an assault, blockchain developers have plenty of time to design new quantum-resistant cryptographic signing algorithms.

Conclusion

Quantum computers are posing a severe threat to the Bitcoin blockchain's security. At the moment, around 25% of Bitcoins in circulation are vulnerable to a quantum attack.

Even if everyone takes the same precautions, quantum computers may one day become so fast that they disrupt the Bitcoin transaction process. In this event, the Bitcoin blockchain's security will be fundamentally compromised. In this instance, the only answer is to switch to a new sort of encryption known as 'post-quantum cryptography,' which is thought to be fundamentally resistant to quantum attacks.

FAQs

Will quantum computers break Bitcoin?

The encryption technique used to secure the Bitcoin network is unbreakable even by today's most powerful computers. However, quantum computing will most likely be able to defeat present encryption systems within a decade.

Can a quantum computer be hacked?

Researchers have cautioned that hackers could acquire critical data from a quantum computer even if the data was securely deleted.

How expensive is a quantum computer?

Commercial quantum computers with 50 qubits, such as the D-Wave One, cost $10,000,000. The cost of D-2000-qubit Wave's quantum computer is $15 million. $10,000 for each additional qubit of processing power. SpinQ's portable quantum computer has two qubits and costs $5,000.