Blockchain and Quantum Computing: A Looming Collision Course
Quantum computing’s rapid advancement presents a serious threat to blockchain technology and cryptocurrencies, according to experts. The potential of quantum computers to break existing cryptographic systems, including those that secure blockchain networks, is a cause for concern, with billions of dollars in cryptocurrency assets potentially at risk.
Arthur Herman, Senior Fellow at the Hudson Institute and Director of the Quantum Alliance Initiative, recently highlighted these risks in an op-ed in the Korea Herald. He and other experts are warning that quantum computing’s immense computational capabilities could render existing cryptographic systems vulnerable, including those safeguarding blockchain networks. This potential vulnerability should be a major wake-up call for the cryptocurrency industry and those relying on blockchain technology.
Blockchain technology, at its core, relies on Distributed Ledger Technology (DLT). This form of decentralized encryption enables secure, anonymous transactions. “Cryptocurrencies prefer to use blockchain or DLT because it allows all parties to track, verify, and agree upon transactions, even as individual participants remain anonymous,” Herman explains.
While some dismiss cryptocurrencies and blockchain as mere tools for speculation, others see the potential to create novel economic and business models. Chris Dixon, a General Partner at Andreessen Horowitz, leading a16z crypto that invests in web3 technologies, notes the duality of blockchain: “Two distinct cultures are interested in blockchains. The first sees blockchains as a way to build new networks… The other culture is mainly interested in speculation and money-making.”
Large corporations are showing increasing interest in blockchain technology. Microsoft, Walmart, and JPMorgan are already utilizing private blockchain networks, delivering thousands of transactions per second, according to Herman. However, conventional cryptographic methods like Elliptic Curve Cryptography (ECC) face the threat of quantum attacks. Quantum algorithms, such as Shor’s algorithm, could potentially crack these methods.
“In short, blockchains that use the same cryptographic building blocks as other forms of DLT will be just as much at risk to the quantum computer threat as other digital technologies,” Herman writes. A successful quantum attack on Bitcoin alone could instigate a financial crisis, potentially resulting in a loss of at least $3 trillion, according to a study conducted by the Quantum Alliance Initiative.
The real danger regarding the future of blockchain is that it’s used to build critical digital infrastructures before this serious security vulnerability has been fully investigated. Imagine a major insurance company putting at great expense all its customers into a blockchain-based network, and then three years later having to rip it all out to install a quantum-secure network, in its place.
Fortunately, solutions are emerging, ironically, from the field of quantum technology itself. Quantum cryptography, including quantum random-number generators and quantum-resistant algorithms, can provide necessary safeguards. “Quantum random-number generators are already being implemented today by banks, governments, and private cloud carriers. Adding quantum keys to blockchain software, and to all encrypted data, will provide unhackable security against both a classical computer and a quantum computer,” Herman notes.
Additionally, the U.S. National Institute of Standards and Technology (NIST) has released standards for post-quantum cryptography. These quantum-resistant algorithms are designed to withstand attacks from quantum computers. “Just as asymmetric encryption uses difficult math problems to stump classical computers, post-quantum cryptography uses difficult math problems to stump a quantum computer,” Herman explains.
Companies such as Quantum Resistant Ledger are actively developing DLT systems designed to be resilient against quantum attacks. Herman suggests that integrating crypto, blockchain, and quantum technologies could lead to a new era in finance and digital security.
