The Impact of Quantum Computing on Cryptocurrency Security
Recently, we’ve developed many ways to increase computational power tenfold by “borrowing” concepts from other disciplines. The most potent example of this phenomenon is quantum computing. Quantum computing leverages principles from the pure sciences to perform complex calculations at amazing speeds, promising breakthroughs in various fields, from drug discovery to artificial intelligence. But while quantum computers’ incredible computational abilities promise to better our lives, they pose a potential threat.
It’s a threat that can affect the transition of the global financial system from traditional to decentralized. As mentioned earlier, quantum computers have the power to bolster security measures, but they can also shake the cryptographic foundations that underpin the digital world, including cryptocurrencies. This has led the decentralized finance community to ask questions about how quantum computing can affect the security of digital assets and blockchain technology, and that’s why you’re reading this article.
In this article, I’ll discuss quantum computing, explain how it could threaten the security of cryptocurrencies, and discuss how research is preparing for a quantum future.
Introduction to Quantum Computing
Quantum computing [QC] is a revolutionary technology concept that David Deustch invented to prove the existence of parallel universes. He derived QC from the principles of quantum mechanics, a branch of physics. Quantum computing’s information processing differs greatly from the classical computing that regular computers and even supercomputers use. In classical computing, bits are the smallest unit of information. They can only exist as a 0 or a 1 at any given time. Quantum computers, on the other hand, use quantum bits or qubits. Qubits can represent and store much more information than a traditional bit because they can exist in a state of 0, 1, or both simultaneously, thanks to a phenomenon known as superposition.
After superposition, there are two other principles of quantum computing, namely entanglement and decoherence. Entanglement is a phenomenon where qubits that are “entangled” can correlate with each other in such a way that the state of one qubit can instantly affect the state of another, no matter how far apart they are. Picture a pair of magic dice that will always show the same number no matter the distance between them. So, if one shows a 6, the other shows a 6, too. This feature of QC allows qubits to work together in a way that is impossible in classical computing.
Here’s an example of how quantum computing beats classical computing using entanglement. Say there’s a problem with many possible solutions; the goal is to find the most efficient. Unlike classical computing, where the computers spend time checking each solution, entanglement helps quantum computers evaluate multiple solutions at once and ultimately find the most efficient solution much faster.
The last and most problematic principle of quantum computing is decoherence. As much as entanglement and superposition help qubits exist in multiple states, [their source of amazing computing power] decoherence makes these qubits extra-sensitive. Qubits are very sensitive to their environment; any disturbance ranging from a change in temperature to an electromagnetic wave can disrupt their state. These changes can completely erase the qubit’s special quantum characteristics and cause them to exist as regular bits, which can interfere with the calculations the computer is performing. The qubit’s loss of their quantum properties is what we refer to as decoherence.
With the principles of QC, it’s capable of completing incredible tasks, including:
- Superior problem-solving: This includes tasks like factoring large numbers and efficiently searching through unsorted databases.
- Simulating quantum systems: This includes accurately simulating the behavior of other quantum systems, such as molecules and materials.
- Machine Learning: This includes building more powerful and efficient AI models for tasks like pattern recognition, natural language processing, and decision-making.
Enhanced cryptography is also something quantum computing is capable of, but it’s a double-edged sword. Quantum computers can revolutionize cryptography by enabling the development of new cryptographic algorithms, while they also pose the potential threat of breaking many current encryption methods.
Quantum Threat to Cryptocurrencies
Quantum computing and its principles hold the power to complete the most complex tasks and solve the most daunting problems in seconds. One of these problems is the foundation of cryptocurrencies. Cryptocurrency security is a fortress built on a concept we refer to as public-key cryptography.
Public-key cryptography is a complex mathematical “wall” that exists to protect blockchain transactions and user wallets from unauthorized access. The wall is made up of mathematical problems such as factoring large numbers into primes and solving discrete logarithms. At this point, these problems are almost impossible for classical computers. Still, they manage to solve them after a significant amount of time. Such delays are what have kept attackers at bay until…quantum computing.
With quantum computing, we have a technological titan that possesses the tools to tear down this mathematical wall. One of these tools is Shor’s algorithm. Shor’s algorithm is a quantum algorithm developed by mathematician Peter Shor in 1994. Shor designed this algorithm to factor large numbers and solve discrete logarithm problems — the very foundation of the classical encryption scheme that secures cryptocurrencies. When run on a quantum computer, it also holds enough power to shatter the encryption that secures our digital communications.
However, the damage quantum computing can do to cryptographic encryptions stretches beyond individual wallets and transactions. It can wreak havoc on blockchain technology as a whole. A quantum computer equipped with Shor’s algorithm can, in theory, forge transactions and double-spend coins, destroying the trust and integrity that binds the crypto ecosystem together.
How Quantum-Resistant Cryptography Can Help
The threats I mentioned have sparked a race against time to fortify the cryptographic security “wall” of cryptocurrencies. This race will determine if the crypto world and its innovators can rise to the challenge and embrace resilience to secure its place in the quantum future. Let’s discuss how researchers are approaching the problem.
At the frontlines of the battle against quantum computing’s power is The National Institute of Standards and Technology[NIST]. Since 2016, it acknowledged the quantum computing threat and has been pushing to standardize quantum-resistant public-key cryptographic algorithms. This push sensitized the mathematics community and led to the submission of 69 eligible algorithms from experts worldwide. These algorithms underwent multiple rounds of evaluation, where experts analyzed and attempted to crack them in an open and transparent process. This evaluation aimed to select the most promising algorithms for mass adoption and it worked.
As of 2022, the NIST selected only four algorithms worthy enough to protect cryptocurrencies and sensitive data from quantum computers. The four algorithms announced by NIST for post-quantum cryptography are CRYSTALS-Kyber, CRYSTALS-Dilithium, SPHINCS+, and FALCON. These four algorithms were designed to handle different cryptographic tasks with unique different strengths and weaknesses. Here’s an overview of what each algorithm is capable of:
1. CRYSTALS-Kyber
The CRYSTALS-Kyber algorithm was selected for general encryption purposes because of its versatile capabilities. If you have access to it, you can use it to create secure websites and to facilitate speedy cryptocurrency transactions. Why? Because of the CRYSTALS-Kyber’s small encryption keys.
2. CRYSTALS-Dilithium
The scientists and researchers who submitted this algorithm built it for digital signatures. They also added features for general encryption purposes, such as verifying the authenticity of cryptocurrency transactions. The efficiency of CRYSTALS-Dilithium could make it a frontrunner candidate for protecting the integrity of blockchain transactions.
3. SPHINCS+
SPHINCS+ is another algorithm built for digital signatures. It is near-perfect for protecting cryptocurrency transactions because of its hash-based signature scheme. A hash-based signature scheme is a type of digital signature algorithm that relies on the security properties of hash functions instead of the difficulty of discrete logarithms or general mathematical problems.
4. FALCON
FALCON is a post-quantum cryptography algorithm based on the hardness of Short Integer Solutions [SIS] and the Ring Learning With Errors [R-LWE] problems in lattice cryptography. These are some of the problems that are secure against both classical and quantum computer attacks, making FALCON a promising candidate for post-quantum security.
Conclusion
The rise of quantum computing is a double-edged sword for cryptocurrency, promising groundbreaking power but also threatening the security of digital assets. The potential for quantum computers to shatter public-key cryptography is a present danger that has sparked a race to develop quantum-resistant solutions to safeguard the integrity of the blockchain. In the face of this quantum challenge, the crypto community did not sit idle, leading to the selection of algorithms like CRYSTALS-Kyber and SPHINCS+ by the NIST. But the battle is far from over.
Looking ahead, the collaboration between the crypto industry and regulatory bodies will be important. There may need to be more than the four selected algorithms, so developing new cryptographic standards and implementing quantum-safe protocols will require a concerted effort. As we embrace this challenge, the crypto ecosystem must also work hard to address the broader implications of quantum computing, from privacy concerns to regulatory compliance, ensuring that the revolutionary potential of digital currencies continues to thrive in an era of quantum supremacy.
