The Quantum Computer Threat to Cryptocurrencies and Global Finance

Monday - December 11 2023, 14:15 UTC - 11 months ago

Quantum computers are on the rise and are expected to have the power to decrypt and attack existing encryption standards in the near future. This could have massive implications for cryptocurrencies such as Bitcoin, as the existing standards are not quantum-resistant and could render them vulnerable to attack. To protect existing cryptographic systems, regulations are expected to come into effect in 2035 that may require existing cryptocurrency networks to move to a quantum-safe chain.

I was at the Q2B Quantum Computer conference today and there was a talk about NSM-10 and the change of the encryption that underlies global finance and data protection.

In 2024, the US government will start adopting new encryption rules and a phase out of existing encryption. There is a study being released next year that will guide the US government transition and describes the dates when various encryption will be deprecated. Commercial and finance will follow with rules and a plan in 2025. However, commercial and finance will essentially adopt what the $100 million government study determines. Other nations will also follow the same plan of the US government. It is likely that 2035 will be the target for full implementation, but once the plan is set all nations who join the plan will have to be on a forced march to the change. This will happen even if quantum computers do not reach the level now required for decrypting the current standards.

Cryptocurrencies including Bitcoin are not quantum resistant. They too rely on cryptographic algorithms that are vulnerable to quantum computing attacks. To attack SHA-2 functions with 256-bit states, using Grover's algorithm, 2593 qubits (error corrected) would be required, according to Richard Preston's paper. Quantum computers with 4000 error corrected qubits will be able to decrypt RSA 2048. The 2593 error corrected qubits are estimated to be able to break crypto wallets and wallets containing Bitcoin. If the public key is known, an attacker with a quantum computer of about 1500 error corrected qubits can potentially solve it according to researchers at the Centre for Cryptocurrency Research and Engineering of Imperial College London.

Bitcoin and the other vulnerable cryptocurrencies would have to fork to a quantum secure chain if quantum computers reach the levels of power needed to decrypt existing cryptography standards.