Benzinga - As computers become more powerful through rapid quantum developments, the next associated banking crisis will likely be cryptocurrency-based. To make matters worse, it has the potential to decimate our entire economic structure… and no one is talking about it.
But how can quantum computing threaten cryptocurrency?
The answer is simple – power. Despite the most popular cryptocurrencies being built on outdated networks with significant security vulnerabilities, the market cap of the entire industry is continuously rising (sitting at $1.2 trillion at the time of writing). Unfortunately, this combination of value and exposure is potentially creating a ticking time-bomb of risk, and emerging quantum computing technology is the detonator. Indeed, top research firms like Deloitte estimate that over 25% of today's Bitcoin is vulnerable to theft and forgery – a weakness that can be easily exploited as quantum computing develops, causing a domino of events that could destabilize the entire global economy.
But is it really that serious?
Unfortunately, it is. To consider a hypothetical (but very possible) scenario – thieves using quantum computing are able to steal close to a quarter of the total current Bitcoin supply. Investor confidence is shattered, causing a vast sell-off that crashes the price of the world’s most valuable cryptocurrency down to almost zero in a matter of hours. As altcoins follow the lead of Bitcoin, this would mean a sell-off of other major assets too, sending the whole DeFi sector into a tailspin and wiping away close to a trillion dollars of value in the process, sending the financial sector back into the economic dark ages. It might sound far-fetched, but it was less than nine months ago that Luna – one of the most successful cryptocurrencies in the world – lost 99.9% of its value overnight, in an event far less severe. For risk-averse investors, this possibility is of course a major red flag.
Luckily, as concerning as the imminent threat of quantum computing is, some projects are already actively working to protect the industry with the invention of post-quantum cryptography, and one company is leading the charge. Its name?
QRL, or the Quantum Resistant Ledger.
Quantum Computers: Powerful, Impressive, Concerning. Before diving into exactly who QRL are and how they are attempting to fix the impending issue, it's important to first ask a key question – what exactly is quantum computing?
Quantum computers are the next evolution of computational power. Of course advancements in computers have been happening for decades, and each major improvement has completely transformed society alongside it. At one point in time, the public couldn't comprehend why anyone would want to use a computer daily, but now, we all have them all over our houses, and in our hands, and spend half our waking hours using them.
However, the key difference is the astronomical leap forward in technology that Quantum computers represent – akin to a paper airplane being compared to a Boeing 787. Firstly, the binary nature of the traditional computers we use in laptops and smartphones imposes limitations on their computational power. The binary systems, known as bits (the famous 0s and 1s that have enhanced our lives), create a situation where operations must be performed one step at a time. These bits can only exist in two distinct states; 0 or 1. The best way to visualize this is with a lightswitch; it can only ever be on or off; no other states are involved, which is precisely how bits work to process the computations we command.
In contrast, quantum computing utilizes a different type of system known as Quantum Bits – or qubits for short. Using what is known as Shor's algorithm, qubits are held in superposition, meaning they can simultaneously be in more than one physical state and location. Bringing back the lightswitch analogy, on the quantum scale, the light switch would be both on and off at the same time. This mind-bending capability exponentially shortens the processes required to solve factorized problems, allowing quantum computers to process vastly more calculations in a fraction of the time. Furthermore, even though quantum computers are already immeasurably powerful, (having to be stored in conditions with almost the same freezing temperature as outer space to stop them overheating), they currently operate on just 100 qubits. Researchers estimate they can easily reach 10 million within the next decade.
To put this into perspective, Google's artificial intelligence division recently released its Sycamore quantum processor. In 2019, the 53-qubit processor was tasked with a computation that would take the most powerful supercomputer 10,000 years to crack.
It did it in three minutes.
But, How Can Quantum Computing Affect Crypto? It all comes back to the vulnerabilities mentioned before. Encryption plays a vital role in keeping digital assets safe from theft in the cryptocurrency sector. For example, the SHA-256 cryptographic protocol used for Bitcoin’s network security is considered unbreakable with today's classical computers. However, this will rapidly change when quantum computers inevitably start to be released to mass consumers. One of the main security issues is how crypto is currently encrypted, which currently relies on a public and private key (known as asymmetrical cryptography). The public key is available for everybody to view on the blockchain, but the private key remains fully encrypted. Public keys are meant to be shared, but private keys are used to sign and validate transactions, and as such, keeping them secret is essential. A person's public key can be mathematically derived from their private key, but the reverse is considered impossible – creating a one-way function that classical computers can't break. The issue is that quantum computers will almost certainly be able to brute force decipher the private key using somebody's public key – allowing an attacker to forge the digital signature and gain full access to the funds in a wallet. As quantum computers become more advanced, these traditional encryption solutions and public-key cryptography standards will be rendered effectively useless.
Why Is QRL’s Quantum-safe Blockchain The Answer For Risk-Averse Investors? Fortunately Quantum Resistant Ledger (QRL) is spearheading the charge to protect against the post-quantum threat by creating a brand new blockchain, which is completely quantum-safe. The company – which came to life in 2016 – is bolstered by a team of exceptionally talented individuals, including computing and technology specialists. This has in effect created the perfect solution for risk-averse investors struggling to plunge into cryptocurrency with the imminent quantum computing threat.
QRL is the leading project in post-quantum cryptography, helping to strengthen the encryption so quantum computers simply cannot crack them, no matter the computational power. The QRL blockchain is secure by design, using a NIST-approved (The U.S. National Institute of Standards and Technology) post-quantum digital signature scheme. The algorithm is a hash-based, forward-secure signature scheme with minimal security assumptions and reusable addresses - removing the attack vector of unhashed public keys that the cryptocurrency industry faces today.
The best part about the QRL scheme is that it can be upgraded at any time without causing problems with the underlying blockchain – allowing it to keep pace with quantum computing developments. Given the severity of the ramifications of the threat quantum computers pose to not just the crypto industry, but the global economy as a whole, having projects such as QRL being proactive rather than reactive is exactly the type of safety innovation the crypto sector needs, and they are most certainly one to watch.
Featured image sourced from Shutterstock
Stuart Meczes is an independent writer based in the UK and a member of the QRL community.
This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This content contains sponsored advertising content and is for informational purposes only and not intended to be investing advice.
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