Quantum Computing Could Eat Bitcoin For Lunch But Regulation Can Save It

Backers of cryptocurrencies tout the digital tokens as the next evolution of currencies, pointing to the security features they offer.

But experts say advances in quantum computing, which is poised to increase computing power by more than a thousandfold, could make light work of the security features of cryptocurrencies, upending the technology that many believe will disrupt finance.

Cryptocurrencies enable quick and secure transactions through a technology that uses cryptography to create tamper-proof records.

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This technology, known as blockchain, works on a decentralised register – with millions of computers coming together to validate transactions.

The process of validation, also called mining, uses immense power as computers rely on brute force to make complex calculations.

But quantum computers, which use concepts from physics to process problems at a speed exponentially faster than conventional computers, could change the way cryptocurrencies work – for better or for worse.

Here’s the worst-case scenario: a user with a quantum computer could easily break the encryption associated with cryptocurrency transactions allowing them to impersonate someone else on the network.

“When the cryptography is broken, users could be losing their funds and the whole system will break,” Dawn Song, an entrepreneur and professor at the University of California, Berkeley, told the Collective

In 2019, Google created Sycamore, a 54-qubit quantum computer. (A qubit is the unit of power on a quantum computer.) Sycamore took 200 seconds to solve a series of complex calculations that would have taken 10,000 years for the most powerful conventional supercomputer to crack.

It is not that the cryptocurrency industry is not aware of the threat posed by quantum computing.

The rapid advances in quantum computing – the computing industry says mainstream quantum computers are less than a decade away – means regulation will be needed to protect cryptocurrencies such as bitcoin.

For instance, makers of Ethereum, the world’s second-largest cryptocurrency, are working on developing what is called “post-quantum computing technology”.

Post-quantum computing technology is an upgrade spearheaded by the US government’s National Institute of Standards and Technology (NIST). Experts say the upgrade is as massive as fixing the Y2K problem or upgrading the Internet from IPv4 to IPv6.

Regulation for cryptocurrency is still being firmed up in many countries, including India.

But as it is with technology, it will have to keep pace with evolving scenarios.

For instance, as a CNET article points out, the very decentralised nature of cryptocurrencies could work against them when it comes to quantum computing.

Major changes to any crypto blockchain require the permission of more than half of the users on the network.

This means that decentralised cryptocurrencies could be at a disadvantage when it comes to evolving with the changing times.

In fact, as the CNET article says, cryptocurrencies that have more centralised decisionmakers, such as the upcoming “central bank digital currencies” could move swiftly through upgrades such as post-quantum computing technology.

(Edited by : Vijay Anand)

First Published: Dec 07, 2021, 08:29 PM IST