The fast-paced nature of developments in the cryptocurrency space can lead to overly simplistic perspectives on the technology. From dramatic price swings to regulatory uncertainties, cryptocurrency headlines can make it easy to forget that—despite the milestones that the blockchain and cryptocurrencies have achieved—fundamental technical issues may remain open to exploitation by quantum computers.

While the use of quantum computers will not entirely wipe out the use of blockchain and cryptocurrencies, experts tend to agree agree that quantum computing will bring fundamental changes to the the security of cryptocurrencies.  

Google’s Quantum Leap

More than a year ago, Google presented the Sycamore quantum computer as the world’s first 54 qubit–chip computer with a capacity to compute a mathematical equation that would otherwise take a supercomputer 10,000 years to complete. Reportedly, Google’s 54 qubit chip achieved this task in just 200 seconds.

Experts agree that this technology is just the beginning of an arms race to develop powerful quantum computers—and that quantum supremacy might arrive sooner than expected. This outlook prompts some questions: Will quantum computers eventually crack the code of cryptographic algorithms, such as SHA256 and elliptic-curve cryptography? And, if so, what is the future of cryptocurrencies?

Quantum Computers and Quantum Supremacy

Quantum supremacy is the end goal of developments in the quantum computing space. It’s the threshold where quantum computers will leave their laboratory confines behind and begin solving previously impossible computational feats, replacing classical computers in the long run.

But first, what exactly is a quantum computer? Well, referring to quantum computers as “computers” is somewhat misleading in the first place. Quantum computers operate on a principle that fundamentally differs from classical computers.

Any type of computation relies on a machine’s capacity to store and manipulate data. While classical computers manipulate data using bits that store data in binary form—that is, 0s and 1s—quantum computers use the principles of quantum mechanics to process data.

This difference means that while binary bits (1 and 0) are the basic information unit for a classical computer, a qubit or quantum bit is the basic unit of information for a quantum computer. Therefore, a classical computer can only store information either as a 1 or a 0, but a quantum computer’s qubits can exist in superpositions, meaning they can be both a 1 and a 0 at the same time. At its core, a bit can only store one piece of data at a time. A qubit, however, can hold two bits worth of data.

Quantum Computers’ Development and Capabilities

Now that we understand the basics of quantum computers, let’s take a look at their stage of development and their capabilities. Currently, most quantum computing developments are experimental. Even with Google’s quantum processor (the Sycamore device), top researchers in the quantum computing space continue to argue about whether quantum supremacy has been achieved.

IBM has also developed a quantum computer, and has pushed back against Google’s claim of achieving quantum supremacy. According to IBM researchers, a simulation of the same task performed by Google’s quantum computer can be performed on a classical system in 2.5 days—not the 10,000 years Google suggested.

Therefore, while quantum computing developments will certainly affect modern technologies—including the blockchain and cryptocurrencies—the sector’s development is still at an early stage. According to a 2016 prediction by the United States National Security Agency, quantum computers will take decades to truly threaten encrypted information. Renowned scientist Dr. Michio Kaku (a theoretical physicist) proposed a “wait and see” approach, considering previous false alarms. However, some experts believe this threat might arise sooner.

Cryptocurrencies’ Security in an Era of Quantum Computers

Although quantum computers are largely theoretical, developments in the quantum computing space historically double every 18 months, according to some studies. Therefore, blockchain and cryptocurrency adopters should prepare for a quantum-supremacy future.

Ultimately, quantum computing will affect how information is stored and manipulated. This change will affect all technologies whose data security depends on cryptographic digital signatures.

For cryptocurrencies, experts agree that the algorithm protecting users’ public and private keys will need to change as quantum computing becomes prevalent. For instance, the cryptographic principle that protects public keys on blockchain transactions is secured with elliptic-curve cryptography (ECC).

Elliptic-Curve Cryptography

ECC is a data encryption method based on the mathematical elliptic curve. It is used worldwide to protect files so that only specified individuals can decode and read them.

Apart from encrypting public keys on a blockchain, ECC is also used to encrypt user data online. However, experts agree that ECC is not quantum-safe because its complexity and difficult implementation increase the likelihood of errors. A quantum computer can decrypt an ECC public key and generate a wallet’s private key, rendering that wallet vulnerable.

Although a quantum computer would not be able to change records on a public blockchain, since no single piece of data can be altered without alteration on all other blocks, a quantum computer could access a wallet’s private key by decrypting the public key. As long as a wallet has been used to spend cryptocurrencies, its public keys are—of course—publicly available. Therefore, a capable decryption program on a quantum computer may be able to hack these wallets.

Secure Hashing Algorithm 256 (SHA-256)

A hashing algorithm is a mathematical function that truncates data to a fixed size. The hashing process is a one-way method of data encryption, which means that every hash produced is irreversible and unique. Therefore, if you only had a hash, you could not figure out the original data in a cryptocurrency transaction.

If a quantum computer can crack the ECC algorithm using the public address left behind whenever a user spends a cryptocurrency from their wallet, can a secure hashing algorithm 256 (SHA-256) be hacked? According to some, while a public key is the digital signature of a wallet’s address, the wallet’s address results from a double hash produced by the SHA-256 algorithm.

Cryptocurrencies, like Bitcoin, use two security protocols: The ECC and SHA-256. Unlike an ECC public key, which is easily accessible to the public, a wallet that directly mines cryptocurrencies and does not spend those cryptocurrencies doesn’t produce a public key; therefore, it has a better chance of withstanding attacks—even from a quantum computer. This advantage stems from the wallet’s protection through SHA-256. Some have pointed to Satoshi’s wallet as an example of an SHA-256 address without an ECC public key since it has never spent any of its mined coins.

A hashing algorithm, such as SHA-256, aims to produce a unique hash for a wallet’s address. The higher the number of unique hashes a hashing algorithm produces, the better its level of security since the hacking algorithm would have to compute through trillions of possibilities to collide with a match.

Experts conjecture that SHA-256 is collision-resistant, which means that an exceedingly large number of trials would be necessary to land on a matching hash. However, all hashing algorithms (including SHA-256) technically produce a collision. The question is whether an existing algorithm is capable of finding that collision.

Quantum-Safe Cryptography

At the current standards, no classical computers have the computing power capable of hacking cryptocurrencies. However, increasing developments in the quantum computing space demonstrate that fundamental changes are coming that will affect cryptocurrency wallets’ security.

Researchers are already seeking  a quantum-safe cryptography, offering suggestions such as lattice-based cryptography and multivariate public-key cryptography. Although quantum computing capabilities may eventually impact sectors such as cryptocurrencies and the blockchain, quantum supremacy is likely still years away.