Quantum computing is one of the biggest leveraging technologies to come. We have defined and explained what quantum computing stands for, where it is applicable, and its future development in our previous article, Quantum Computing Software Development Kick-off: When? To get a better understanding of quantum technologies, do read this article.
We also mentioned that quantum computers can break lots of security rules. They are extremely fast in their actions, and it takes a blink of an eye to fulfill a request. Therefore, unprotected transactions, data, and other sources might be compromised via such a computer. Quantum computers can break through some of the security measures, especially in vulnerable environments.
Humanity has created quantum-resistant algorithms that ensure data security cannot be breached. Of course, these algorithms are being advanced to protect even better against quantum computer threats. However, there are cryptocurrencies such as Bitcoin that are only partially protected. As the security question involves the most popular cryptocurrency, it is vital to understand whether Bitcoin will be cracked by quantum computing. Sencury decided to look for an answer and see what we found out!
What is Bitcoin and How Does it Work?
Bitcoin is a digital form of money, an electronic currency. It does not have a physical form. So, we cannot hold it in our hands like traditional coins or banknotes, because it exists only in a digital format.
To operate, Bitcoin uses a decentralized network called the blockchain. The latter is a public ledger and records all Bitcoin transactions. These transactions are conducted with the help of cryptographic technology. This measure is needed to prevent fraud and enhance security.
Each Bitcoin transaction is transparent and accessible to the public as it is verified and added to the blockchain. To send and receive Bitcoin, you must have a Bitcoin wallet, digital cryptocurrency storage with the user’s Bitcoin addresses, and private keys.
Bitcoin is unique because it is limited and the world’s very first cryptocurrency. There are 21 million Bitcoins worldwide and this factor makes them extremely valuable. Nowadays, there is a global deflation of Bitcoin. The main factor of this drawback is due to the human possibility to lose or forget private keys/seed phrases. Without proper keys, Bitcoin volume is locked forever and will not circulate in the economy. This makes Bitcoin even more pricy. However, the price of one Bitcoin highly depends also on demand and supply and is determined by the market. For example, Bitcoin’s price reached 27,639.73 on May 11, 2023.
As Bitcoin represents digital money, its secure transactions are a priority. Hence, a quantum computer poses a threat to these transactions by cracking a specific part of Bitcoin’s cryptographic algorithms. Therefore, let’s discuss this vulnerability in detail.
The Impact of Quantum Computing on Bitcoin
Bitcoin appears to be vulnerable when it concerns quantum computers. Its weak spot lies in the cryptographic algorithms called ECDSA - the elliptic curve digital signature algorithm. This particular cryptographic algorithm is used for generating and verifying Bitcoin addresses and transaction signatures.
The digital signatures are protected by certain mathematical problems and computational difficulty to solve them. ECDSA relies on ECDLP - the elliptic curve discrete logarithm problem. These algorithms presuppose that ECDLP will be hard to crack. Traditional computers are unable to solve this problem due to the big size of the keys and unapproachable timeframes. However, quantum computers can solve these and even more complex problems via Shor’s algorithm. Using this method and taking advantage of quantum bit properties, calculations are done faster and appear to be more precise. Classical computers are unable to perform the same.
We all expect quantum computers to enter the market soon. With quantum computer availability, there is a chance they will break the ECDSA algorithm of Bitcoin, inflicting the security of the whole network. In the wrong hands and acknowledging the possibilities of private key calculations, a fraudster can crack the Bitcoin address and spend the digital money related to that address.
As a result, researchers still work on quantum-proof algorithms to avoid digital thefts of a kind. As there is limited availability of quantum computers due to their not having enough scale for industrial use, it is hard to tell what exactly they will be capable of after their “experimental” stage is over. However, this kind of threat exists, and it should be prevented rather than dealt with afterward. The World Economic Forum highlights the following statement:
“Quantum world is not yet here and the time to shape its contours is now.”
Sencury’s Reflections on Bitcoin Security Issues
Sencury has been founded by fundamental scientists and engineers, which allows us to easily spot potential threats and their mitigation in the topic of quantum computing threats for Bitcoin and the cryptocurrency industry.
Concerning quantum-proof cryptographic algorithms, a new cybersecurity paradigm should be developed in advance before it is too late. Scientists will eventually add a protection layer to both Bitcoin and cryptocurrency transactions. For now, it is just a matter of time.
In addition, addressing such leveraging technology as Web 3.0, a new quantum reality might require the creation of a completely new web and IT cybersecurity ecosystem. Sencury would be more than happy to be a part of these innovations and make our contribution as well.
If you are interested in quantum technologies in general and their implications/prospects for Bitcoin and cryptocurrency safety, contact us today!