Does quantum computing threaten cryptocurrencies?
Originally Posted On Publish0x
Cryptocurrencies are a form of digital money that has revolutionized the financial world in recent years. Their main attraction is that they are decentralized, so they do not depend on any central entity that controls or issues them, but are based on a network of distributed computers that validate transactions and keep a record of them. This gives them greater security, transparency and autonomy than traditional currencies. However, not everyone trusts cryptocurrencies or their future. Some skeptics argue that cryptocurrencies are a speculative bubble that will burst sooner or later, or that they are a means for money laundering and tax evasion. Others, more optimistic, including myself, while recognizing the potential of cryptocurrencies, are also concerned about the risks they could face as the technology advances.
One of these risks is, perhaps the one that worries me the most, is the advances in quantum computing, a new way of processing information that uses the properties of subatomic particles to perform much faster and more complex calculations than conventional computers. Quantum computing promises great benefits for science, medicine, artificial intelligence and many other fields, but it could also pose a threat to the security and stability of cryptocurrencies.
How true is it that quantum computing could kill cryptocurrencies? What implications would this have for the financial world and society in general? What can be done to prevent or mitigate this scenario? These are some of the topics I will dare to speculate on, drawing inspiration from a conversation I had some time ago with some skeptical friends about cryptocurrencies and their vulnerability to quantum computing.
One of the most important characteristics of cryptocurrencies is that they guarantee their security and operation through cryptography (the art of creating and deciphering secret codes that protect information). However, this advantage can also become a risk if technologies capable of breaking the cryptography that supports cryptocurrencies appear, I am referring to quantum computing.
From my point of view, this could threaten cryptocurrencies in two main ways: on the one hand, it could breach the security of transactions and digital wallets, and on the other hand, it could alter the balance of power among miners, who are in charge of validating transactions and creating new blocks in the blockchain.
To understand how this could happen (I will use Bitcoin as a reference), it should be noted that cryptocurrencies are based on two types of cryptographic algorithms: public key and private key algorithms. Public-key algorithms are used to generate and sign digital wallet addresses, which can be shared with anyone. Private key algorithms, known only to the owner, are used to generate and decrypt the keys of digital wallets. These algorithms are based on mathematical problems that are very difficult for traditional computers to solve, but could be solved by quantum computers in a much shorter time.
Very simply, it means that a quantum computer could obtain the private key from the public key of a digital wallet, and thus access the funds and perform fraudulent transactions. It could also forge the digital signature of a transaction and pass it off as valid, jeopardizing the integrity and trustworthiness of the system.
On the other hand, quantum computing could also affect the mining process, which consists of solving a mathematical problem known as proof of work to create new blocks and obtain a reward in the form of cryptocurrencies. This problem is very difficult to solve, but very easy to verify, which ensures that only one block can be created every so often and that consensus among the nodes in the network is maintained. However, a quantum computer could solve this problem much faster than traditional computers, which would give it a competitive advantage over the rest of the miners, causing a concentration of mining power in the hands of a few players and going against the principle of decentralization and democracy of the system.
What can be done to avoid these scenarios? One possible solution is to develop new cryptographic algorithms that are resistant to quantum computing, i.e., that cannot be solved by quantum computers or that require such a long time that it is not cost-effective to try. These algorithms are called post-quantum cryptography or quantum-computing-resistant cryptography.
Another possible solution is to adapt the cryptocurrency protocol to incorporate defense mechanisms against quantum attacks, such as, for example, changing the proof of work to a more secure proof, or using alternative consensus systems to the blockchain with different ways of validating transactions and allocating rewards to participants. Each has its advantages and disadvantages, and some might be more resistant to quantum attacks than others. However, they also involve major changes to the design and governance of cryptocurrencies, and are not without their critics or technical challenges.
Quantum computing is an emerging technology that could have a major impact on the world of cryptocurrencies with both positive and negative aspects. On the one hand, it could improve their performance, scalability and energy efficiency, and open up new possibilities for innovation and development. On the other hand, it could threaten their security, integrity and decentralization, and put users' funds and trust at risk.
Given this scenario, I remain confident (and hopeful) that developers will be prepared and anticipate the potential challenges and opportunities posed by quantum computing. This requires collaboration between all the players involved in the cryptocurrency ecosystem (developers, researchers, regulators and users). It also requires constant updating of the cryptographic protocols and algorithms that underpin cryptocurrencies, to make them more resilient and adaptable to new developments.
Last but not least, a critical and responsible view of quantum computing is required, one that neither idealizes nor demonizes this technology, but rather evaluates it with rigor and objectivity. Quantum computing is neither a panacea nor a threat to cryptocurrencies, but a powerful tool that can be used for better or worse. It is up to us to harness it ethically and sustainably, and to protect our rights and values in the process.
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Author's Note: The opinion expressed here is not investment advice, is provided for informational purposes only, and reflects the opinion of the author only. I do not promote, endorse or recommend any particular investment. Investments may not be right for everyone. Every investment in the market and every trade you make involves risk, so you should always do your own research before making any decision. I do not recommend investing money that you cannot afford to chair, as you could lose the entire amount invested. “Everyone has their own forms of expression. I think we all have a lot to say, but finding ways to say it is more than half the battle" - Criss Jami. "Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth" - Marcus Aurelius.
