Quantum computers may make bitcoin obsolete

Quantum computing will eventually break bitcoin's cryptographic security, researchers say.
  • Researchers at the National University of Singapore say the advent of quantum computers will pose an existential threat to bitcoin.
  • The well-known vulnerability with bitcoin’s proof of work algorithm is that it leaves the network vulnerable to so-called “51% attacks”, whereby if a malicious actor controlled the majority of the blockchain’s hashrate, they could do whatever they like. Such attacks have been seen as unlikely for bitcoin at present, because miners now have 13,000 times more combined power than the world’s 500 biggest supercomputers.
  • However, many are speculating that quantum computers could soon wield enough firepower to surpass the 50% threshold.
  • The Singaporean researchers decided to study the projected clock speeds of quantum computers over the next decade and compare that to the forecasted power of application-specific integrated circuits (ASICs), which are currently used for mining.
  • Bitcoin investors will be relieved to hear that the current mining hardware is unlikely to be beaten by quantum computers over the next decade, the researchers concluded.
  • But that is where the good news ends. There is a far more alarming problem. The “elliptic curve signature” cryptographic feature, used by bitcoin to verify whether someone has a right to spend coins, faces an imminent threat by quantum computers.
  • The researchers say this could be “completely broken by a quantum computer as early as 2027,” allowing a quantum-powered criminal to double spend coins.
  • There are public-key schemes that are resistant to attack by quantum computers. So, it is conceivable that the Bitcoin protocols could be revised to make the system safer. But there are no plans to do that as of now.
  • 2027 may seem like a long way off, but as with all financial assets, it is not the current state of affairs that matters for valuation. It is the expected future cashflows and long-term viability that matters. Therefore, prudent investors may start getting out a lot sooner, based on the quantum threat alone. Is bitcoin the greatest bubble in the history of the world? If the price hits zero, it will certainly be remembered that way.

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