While still in its early stages, Quantum Computing is expected to revolutionise problem-solving and data processing, casting a looming threat over current blockchain encryption methods. Amidst the uncertainty, cloud-based quantum-proof encryption rises as a tentative solution to quantum threats to blockchain cryptography. Before we delve into its profound implications for cryptocurrencies, let’s cover the basics.The Power of Computing SystemsComputers are essentially problem-solving machines that perform logical and arithmetic operations. Classical computing is essentially behind all of our daily tech operations whereas quantum computing, far more limited in scope, promises exciting advancements and is slowly being integrated to the broader public landscape. Just recently, for instance, the first quantum computer was made available for a European cloud service provider and will be available to students from select universities for scientific research.But what makes them different?Two Kinds of Power: Classical v/s Quantum ComputingClassical computers are ruled by classical physics and process information one bit at a time in basic units called bits. These bits work by alternating between 1 and 0 to solve complex calculations. As problems increase in complexity, so do the amount of calculations needed to solve them. Some of these are so complex that it is believed only quantum computers can solve them. Others are simply too impractical or straight impossible to solve in a reasonable timeframe using classical computations.Quantum computing, on the other hand, leverages the principles of quantum physics, allowing for multiple operations to be performed simultaneously on units called “qubits.” Unlike the traditional bit, these can take on multiple values in a process called “superimposition,” meaning they can be 0, 1, or both at the same time. This, alongside other features like tunneling, annealing, and parallelism, unlocks the possibility to decode problems once thought uncomputable at unprecedented speeds.For instance, the D-Wave quantum computer firm has recently developed a quantum prototype known as Advantage2 (Adv2), featuring more than 1,200 qubits and a 20x faster time-to-solution problem solving ratio on complex optimisation problems. With this unparalleled computing capacity, giant datasets could be parsed in less than seconds, large factorials calculated with ease, and conundrums currently beyond the scope of classical computing could be solved in the matter of seconds.How does this affect cryptocurrencies?It’s All About The EncryptionBlockchain networks hold and secure digital assets worth billions of dollars. Cryptography — the mathematical art of ciphering or encrypting data — is the discipline that protects these valuables and makes cryptocurrencies safe, decentralised and anonymous. From securing transactions with unique IDs to verifying ownership, cryptography lays at the foundation of decentralised cryptocurrency networks.Different encryption techniques are utilised to protect blockchain data. For example, many blockchains use secret values known as keys to control access to encrypted information. The more complex the encryption, the more bulletproof to hacking and other digital threats the data is.Today, classical computers have limitations in breaking certain encryption algorithms, especially those with large keys. Remember what we said about quantum computing? The longer the key, the harder it is to decipher the encrypted information.However, what is considered secure now might not be safe tomorrow.The Quantum ThreatCurrent blockchain protocols utilise cryptographic algorithms commonly known as Public Key Infrastructure or PKI. Unfortunately, these are non-quantum resistant and as quantum technology evolves, cryptocurrency encryption is at greater risk of being cracked. This means that the most common encryption algorithms such as RSA (Rivest, Shamir, Adleman), ECDSA (Elliptic Curve Digital Signature Algorithm), and ECDH (Elliptic Curve Diffie-Hellman) could be rendered obsolete if a powerful-enough quantum computer were to be deployed.The damages would not only be catastrophic in terms of cybersecurity; they would also pose an economic crash worth trillions of dollars. To put things into perspective, Bitcoin (BTC) and Ethereum (ETH) — the two of the largest cryptocurrencies by market capitalisation — both use ECDSA encryption. As of May 2024, Bitcoin has a market cap of approximately $1.37 trillion, whereas Ethereum (ETH) has a market cap of around $454.24 billion.It’s not only the giants, however, who must mitigate this risk. RSA and ECDSA are the most common encryption algorithms used by the vast majority of cryptocurrencies, including Ripple (XRP), Litecoin (LTC), Dogecoin (DOGE), Dash (DASH), Zcash (ZEC), Monero (XMR) and Stellar (XLM).Put together, the total global market capitalisation of all cryptocurrencies combined reaches a towering $2.59 trillion. This is more than the standalone GDPs of Italy and Canada — approximately $2.36 trillion and $2.02 trillion respectively. These numbers surely put into perspective the far-reaching consequences of a quantum-induced crypto crash.Beating the Odds: Quantum ComputingTo draw a parallel of how quantum computing could undermine the stability of cryptographic encryption methods, let’s apply quantum power to a real-world scenario. For instance, consider the following example. In a traditional roulette wheel, the odds of winning are fixed: each player has a 1 in 38 (or a 2.632%) chance of winning. Just like the odds of winning at casino roulette are not only stable, but also well-understood and unchangeable, so are the established mathematical principles currently used by cryptographic algorithms to protect encrypted data in classical computation.However, the introduction of quantum computing would be similar to suddenly introducing a new type of roulette wheel whose configuration is unpredictable and widely disruptive. If this hypothetical quantum wheel were able to predict the outcome, the whole gambling industry would be at peril.Luckily, this is all just a metaphor. Roulette is a game of chance, with each spin being independent and unpredictable. Foreseeing the exact outcome is impossible, even for supercomputers. Quantum computers, on the other hand, pose a significant and very real threat to the security of cryptographic systems.But how soon can we expect a crypto-apocalypse? And what is the solution?The Present StateIt’s hard to know exactly when a powerful quantum computer might be built to break encryption. Nevertheless, a small number of experts think that it could happen sooner than many expect. According to the Quantum Threat Timeline Report, some experts believe there’s a more than 5% chance it could be within 10 years, with a few even saying it’s more than a 50% chance.However, quantum research is slow and expensive. The real-world application of quantum computers are limited and there’s still plenty of work to do before all this quantum superpower becomes widely available to destabilise decentralised networks. 80-bit, 112-bit, and 160-bit encryptions are all pretty much safe against classical attacks at least for the next three or four decades. A super complex 2048-bit key, on the other hand, would need about 20 million qubits, which is way beyond the current processing power capacity of quantum computers.The good news is that, today, it’s just too complicated and expensive to break current security cryptosystems. It’s much more reasonable to think that scientists will be able to develop quantum-proof encryption before quantum computers become mainstream and cost-efficient.A Ray Of Light: Quantum-Proof Cloud EncryptionQuantum-threats have been on the radar for a while, which has led the cryptocurrency community to actively work towards developing quantum-proof solutions. One such advancement are quantum-proof cloud-based encryption systems, such as those being pioneered by Proton. In a quantum-proof cloud-based world, Public Key Infrastructure could provide another layer of protection to blockchain encryption, which is largely reliant on keys to protect data and valuables.As such, it is no surprise that the field of quantum-proof cryptography is steadily developing and attracting major investments in the sector. China, boasting the world’s largest quantum research facility, also leads global investment in quantum technologies, accounting for more than half of the world’s public expenditure in the field.While most scientists agree that there is still plenty of time to prepare for Q-Day — the day when quantum computers will be capable of breaking the encryption algorithms — researchers in the area are not taking this time for granted. They are actively gearing us towards a transition to a quantum-proof future, with the ends of protecting our privacy and transactions. Cloud-based quantum-proof encryption, albeit one of the possible solutions, is becoming more appealing as a solution to the quantum threats to blockchain cryptography.As long as the push to safely transition to a quantum-proof blockchain continues, your crypto wallet should be safe from a quantum-crash for decades to come. Hopefully by then you will also have seen some profits.Want to learn more about cybersecurity and the cloud from industry leaders? Check out Cyber Security & Cloud Expo taking place in Amsterdam, California, and London. Explore other upcoming enterprise technology events and webinars powered by TechForge here.Tags: cryptocurrency, quantum computing
