Quantum computers have arrived, and new models are introduced every year. Most recently, IBM demonstrated a brand new model at this year’s Consumer Electronics Show. Most quantum computing research is currently limited to academic institutions and major corporations, but the technology will become more widely available in the not-so-distant future.

But it isn’t all good news: quantum computers pose a serious threat to most modern cryptography. Because they are extremely powerful, quantum computers will eventually be able to break many encryption schemes that are currently in widespread use.

Cryptocurrency is at risk as well, because Bitcoin and other blockchains rely on encryption at a fundamental level. Here are some of the potential problems – and a few reasons not to worry.

How Addresses Work

Cryptocurrencies store funds in addresses which rely on encryption. Each public address is controlled by a private key, a secret number that allows you to send your coins elsewhere.

Most cryptocurrencies use elliptic-curve cryptography, which relies on the difficulty of factoring extremely large numbers. It’s effectively impossible to derive a private key from a public key, except by random guessing. Since each private key is hundreds of digits long, doing so would take an impossibly long time with contemporary computers.

But quantum computers have access to advanced algorithms that could deduce private keys extremely quickly, at least for the most common encryption schemes.

There are some measures that can be taken to protect user funds. In the future, mainstream cryptocurrencies will probably adopt Lamport signatures, which will provide quantum resistance at the cost of larger block sizes.

Ethereum plans to add Lamport signatures in version 2.0 or “Serenity.” This will be an optional feature, so Ethereum users will not lose access to their funds. Bitcoin developers do not have firm plans for Lamport signatures, but it is a widely discussed possibility.

Most users would be able to easily move their funds to quantum-proof addresses, but inactive wallets would only be partially vulnerable. Since quantum algorithms require a digital signature to crack an address, your funds should be safe as long as you use each address only once.

Quantum-Resistant Cryptocurrencies

Mainstream cryptocurrencies will have to adapt, but some altcoins have been working on quantum resistance from the start. Many quantum-resistant algorithms already exist, such as XMSS, Keccack, and Winternitz, which are being applied by projects like QRL, Hcash, and IOTA.

Sometimes, these schemes are used together, since each works slightly differently. And, often, they require that public addresses only be used once, because each transaction reveals compromising information.

Even though quantum-resistant schemes are hard to break, they’re not hard to put in place. Blockchain developers don’t need a quantum computer in order to implement a quantum-resistant encryption scheme, and some of these schemes are actually very efficient and economical. That said, developers do need to implement these schemes in a user-friendly way.

Is Mining At Risk?

Bitcoin mining also relies on cryptography, albeit in a different way. Miners dedicate large amounts of computing power in order to solve cryptographic puzzles, in exchange for block rewards. The fact that countless miners are powering the network means that Bitcoin is decentralized – no single user can control it.

If one user gains access to a quantum computer, they could produce hashes very quickly and gain dominance over the Bitcoin mining network, potentially exposing the network to a 51% attack. Fortunately, this is not considered a serious problem. As long as multiple users have access to a quantum computer, no single quantum computer will gain dominance over Bitcoin mining.

Alternative proof-of-work mining schemes can also prevent quantum dominance, and some studies have found that ASIC devices, which are already faster than normal computers, can reduce the quantum advantage over mining. Additionally, proof-of-stake cryptocurrencies avoid these problems entirely, since they do not rely on mining.

Practical Considerations

Cryptocurrency is just one small corner of the tech world, and many researchers are working on post-quantum security solutions elsewhere. For example, Google and Cloudflare partnered to experiment with quantum-secure algorithms in June. The goal of this effort is to improve Internet security in general, but it is not clear if this will benefit cryptocurrency in particular. Nevertheless, quantum-resistant security research is thriving.

Practical limitations can also prevent attackers from wreaking havoc on cryptocurrencies. Would-be attackers cannot simply access a quantum computer and carry out an attack: they also need to program those computers to break an encryption scheme, and doing so is not an easy task. Right now, programming even the most powerful quantum computer to solve a problem requires a highly dedicated research team and a lot of effort.

On top of everything else, cryptocurrencies have time to prepare for quantum threats. Most experts believe that quantum computers will begin to break encryption schemes in the next five to ten years. This isn’t a lot of time, but it is a chance to prepare.

On the other hand, an actual attack might not be needed for a disaster to occur: the mere belief that an attack is possible could drive users away from cryptocurrency en masse.

In Summary

It is impossible to say exactly how developments in quantum computing will play out over the next several years. “Black swan” events cannot be ruled out entirely. Still, quantum computing will probably not be the devastating threat that it is sometimes made out to be. Quantum-resistant security schemes, as well as practical limitations, will almost certainly prevent any sudden disasters from taking the world by surprise.

Nevertheless, cryptocurrency projects will need to make a paradigm shift. Popular cryptocurrencies like Bitcoin and Ethereum will need to change gears quickly in order to become quantum resistant. Meanwhile, cryptocurrencies that are already pursuing quantum resistance will need to catch up with their popular counterparts in terms of features.

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