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Quantum Computers – the End of Bitcoin?

The fundamental algorithms of the Bitcoin Blockchain make it practically unhackable. For example, it would take conventional computers millions of years to crack the Bitcoin protocol’s signature algorithm.

Recently, however, concerns have grown that quantum computers could pose a threat to Bitcoin. This is because, as the term quantum leap suggests, quantum computers will catapult technological possibilities forward. The question, then, is whether this represents a threat to Bitcoin.

As a mechanical instrument of quantum physics, a quantum computer works differently to a conventional computer. While the latter stores information as bits in the form of binary code – which can only have two values, namely ‘zero’ or ‘one’ – quantum computers store information in quantum bits (or qubits). In this system, the information can take both values at the same time.

The Inside of a Quantum Computer.                      Source: Courtesy Rigetti Computing. Photo by Justin Fantl

Qubits only take a distinct value, either zero or one, when they are measured. As a result, a quantum computer can perform tasks in the blink of an eye that would take conventional computers millions of years. Until 2017, quantum computers only existed in theory. However, in January 2019, the US tech giant IBM introduced the first commercial quantum computer with 20 qubits.

For a long time, 20 qubits was seen as the absolute minimum a quantum computer would require to function. A 50-qubit quantum computer would, in theory, exceed the capabilities of the modern high-performance computers currently used by national defence ministries and space agencies. Google announced in March 2018 that it was working to develop a quantum computer with a processor possessing 72 qubits.

In the Bitcoin Cosmos

Could quantum computers threaten the Bitcoin system? At a fundamental level, Bitcoin is based on two algorithms. On the one hand, there is the Elliptic Curve Digital Signature Algorithm (ECDSA), a signature algorithm based on the properties of elliptic curves; on the other is the SHA-256 algorithm, a cryptographic hash function.

In the SHA-256 hash algorithm, bit operations are carried out in sequence as Bitcoin miners constantly search for blocks with valid hashes – unique combinations of letters and digits.

The Bitcoin protocol sets down the criterion that determine whether a hash is valid – namely, that the hash must start with a specific number of zeroes. By continuously trying different combinations, the miners check whether a block has a hash with the right number of zeroes at the start in order to publish the next transaction block in the network. Effectively, the miners are looking for a needle in a haystack.

While a quantum computer is capable of solving various types of mathematical problems many times faster than a normal computer, when it comes to cracking the SHA-256, it would only have a slight advantage over Bitcoin miners. A wallet is made up of three components: a Bitcoin address, a public key and a private key.

Operating Principle of a Bitcoin Wallet

 

The Bitcoin address can be generated from the public key’s SHA-256 hash, with this hash being transformed by another algorithm. A hacker seeking to crack the public key for a Bitcoin address has to work in the other direction, identifying the public key based on the Bitcoin address.

According to a Bitcoin news portal, conventional computers would need 4×1052 years to crack a public key; meanwhile, a quantum computer would “only” take 107.9 billion years to do so. Quantum computing therefore does not pose a threat to the system or the network.

To crack a private key, a hacker needs to take an entirely different route, as private keys are based on the ECDS algorithm. As previously mentioned, the ECDSA is a signature algorithm. Its role is to authorise Bitcoin transactions. In doing so, the private key that generates a transaction signature remains secret, while the public key is published on the blockchain together with the signature.

There are algorithms that a quantum computer could use, working in reverse to recreate a previously used, ECDSA-based private key. In doing so, it would use the public key and a signature to determine the corresponding private key.

In fact, a fully functional quantum computer could execute this algorithm in less than two days – if such computers actually existed, that is! But is this reason to panic? Not at all.

Bitcoin Is Effectively “Post-Quantum”

This information should not cause anyone to panic, as the Bitcoin protocol’s signature procedure can be replaced. Before quantum computers pose a genuine threat, ECDSA can be replaced with a quantum-resistant, cryptographic signature procedure.

The IBM Quantencomputer “IBM Q System One”

Quantum technology is developing at a slow pace, meaning that the Bitcoin ecosystem has sufficient time to adapt. The network can implement soft forks – changes to the Bitcoin protocol – by consensus at any time.

In other areas and systems such as banks, the energy sector, military applications, communications, transport and utilities, conventional signature procedures such as ECDSA will be replaced by quantum-resistant mechanisms when the time comes.

This means we can look forward to the fantastic applications that such a supercomputer would deliver. Illness diagnosis, fraud detection, and energy management are just some of the areas set to be dramatically improved by quantum computers.

Their ability to simulate materials could also lead to breakthroughs in chemistry and physics. Risk analysis will be elevated to the next level, from the financial sector and education through to counterterrorism.

It is clear, therefore, that quantum computers are not something we need to be worried about. Bitcoin experts are not the only people who know that quantum computers will not pose a threat.

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References

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