New research report predicts blockchain and quantum threat will quickly spread beyond cybercurrencies; More opportunities for new products and services

by Arthur · October 17, 2022

DUBLIN, Oct. 14, 2022 /PRNewswire/ — The report “The Quantum Threat to Blockchain: Emerging Business Opportunities” has been added ResearchAndMarkets.com’s Offering.

This new research report identifies not only the challenges but also the opportunities in terms of new products and services arising from the threat quantum computers pose to the ‘blockchain’ mechanism. According to a recent study by consulting firm Deloitte, roughly a quarter of the blockchain-based cyber currency Bitcoin in circulation in 2022 is vulnerable to quantum attacks.

The analyst foresees major commercial opportunities for protecting blockchain against future quantum computing intrusions and agrees with the White House National Security Memorandum NSM-10, released on May 4, 2022, which indicates the urgency to address imminent quantum computing threats and the risks they pose. to the economy and to national security in the latest report “The Quantum Threat to Blockchain: Emerging Business Opportunities”.

Although the main focus of this report is on the quantum threat to the integrity of cybercurrencies, the applicability of blockchain (and therefore the threat of quantum) is much broader than the newer money. Blockchain technology has been proposed for a wide range of transactions, including insurance, real estate, voting, supply chain tracking, gambling, etc.

A quantum computer compromised blockchain would allow eavesdropping, unauthorized client authentication, signed malware, cloak-in-encrypted session, a man-in-the-middle (MITM) attack, forged documents and emails. These attacks can lead to operational disruptions, damage to reputation and trust, as well as loss of intellectual property, financial assets and regulated data. Note that this report covers both technical and policy issues related to the quantum vulnerability of blockchain.

As the situation is now, blockchains are secured with relatively garden-variety encryption schemes. However, quantum computers will have the computational power to break these arrangements as they grow in power. Predictions of when quantum computers will achieve such power range from five years to never, but the threat hangs over the cryptocurrency industry as a whole and is a dampener on its prospects.

Quantum computers directly threaten classical public-key/private-key cryptography blockchain technologies because they can break the computational security assumptions of elliptic curve cryptography. They also significantly weaken the security of critical private key or hash function algorithms, which protect the blockchain’s secrets.

Also, some of the early spending on quantum-safe technology in the cyber currency market will undoubtedly go to protecting data from attacks later, when quantum computing resources mature. This issue becomes more important as we approach the day when powerful quantum computers become a reality. But pre-emptive action on the quantum threat means the business opportunities in this space are emerging right now.

As this report makes clear, the publisher sees great commercial opportunities in protecting blockchain and the technologies that rely on blockchain from future quantum computer intrusions. One area that this report focuses on in particular is post-quantum cryptography (PQC), where relatively traditional encryption schemes have been developed that are simply much harder to break than currently used encryption systems. With NIST announcing a new set of PQC standards in July 2022, the publisher believes that PQC firms will receive large investments in the near term as a result of the growing concern about bad actors with access to quantum computing resources.

The publisher believes there is also a need for relatively affordable information-theoretically secure (ITS) solutions that immediately strengthen standardized cryptography systems used in blockchains. Therefore, this report also discusses quantum-enabled blockchain architectures based on Quantum Random Number Generators (QRNG) and Quantum Key Distribution (QKD).

Key highlights:

With NIST announcing a new set of PQC standards in July 2022, PQC firms will soon receive large investments in the near term, much of which will be in blockchain. However, not all NIST-based PQC solutions will be feasible for blockchain use. Given the nature and complexity of PQC, a successful migration to PQC-backed Blockchain protection will take years of planning.
The earliest spending on quantum secure technology in the blockchain market will go to protecting data from attacks later, when quantum computing resources mature. This issue becomes more important as we approach the day when powerful quantum computers become a reality. But data theft today requires preventive measures. The quantum threat to the blockchain means that business opportunities in this area are emerging right now.
There is a need for affordable information-theoretically secure (ITS) solutions that immediately strengthen standardized cryptography systems used in blockchains. Already widely discussed in this context are quantum-enabled blockchain architectures based on Quantum Random Number Generators (QRNG) and Quantum Key Distribution (QKD). Another important concept is quantum-enabled blockchain, which refers to an entire blockchain or some aspect of the blockchain functionality running in quantum computing environments.
Mining is another aspect of blockchains that is vulnerable to quantum attacks. Mining is the consensus process that certifies new transactions and keeps blockchain activities protected. One risk with mining is that miners using quantum computers can launch a 51% attack. A 51% attack is when a single entity controls more than half of the computational power of the blockchain. A quantum attack on mining would undermine the network’s hash power.

Key topics covered:

Chapter 1: Introduction
1.1 Aim and scope of this report
1.1.1 The threat from quantum computers to blockchain
1.2 Cryptography Background for this report
1.2.1 Affected organizations
1.2.2 NIST PQC efforts and beyond
1.2.3 Addressable market for quantum-safe cyber currency
1.3 The objectives of this report

Chapter Two: Classical Blockchain Encryption and Quantum Data Attacks
2.1 Overview of the quantum threat
2.2 NIST and post quantum encryption
2.2.1 Structure of the NIST PQC Effort
2.2.2 The importance of asymmetric digital signatures
2.2.3 The effect of doubling the key size
2.2.4 Algorithm Security Strength
2.3 Advanced Encryption Standard (AES)
2.4 Quantum Attack Resources Estimates for breaking ECC and DSA
2.5 Quantum-resistant cryptography for blockchains
2.5.1 Taproot and Bitcoin Core
2.5.2 Impact of NIST-Based PQC Algorithms
2.6 Post-Quantum Random Oracle Model
2.6.1 Modeling random oracles for quantum attackers
2.7 Summary of this chapter

Chapter Three: Quantum Possibilities of the Blockchain Type
3.1 Blockchain basics
3.1.1 What are classic blockchains?
3.2 Quantum-enabled blockchain
3.2.1 The role of quantum secure security technologies
3.3 Blockchain Security
3.3.1 The role of conventional cryptography
3.3.2 Attacks on classical cryptography
3.3.2.1 Some known attacks against ECDSA
3.3.2.2 Generation of ECDSA key pairs:
3.3.2.3 Signature calculation:
3.3.2.4 Recommendations:
3.3.2.5 Blockchain Security Summary:
3.4 Reducing cyber attacks on blockchains
3.5 Blockchain Security: Entropy/Randomness
3.5.1 Examples of low entropy attacks
3.6 Random number generator Product development
3.6.1 PRNGs
3.6.2 TRNGs
3.6.3 QRNGs
3.6.4 OpenSSL 3.0
3.7 Summary of this chapter

Chapter Four: Quantum Effects on the Cryptocurrency Business
4.1 Qubits and Quantum Gates
4.1.1 Qubits
4.1.2 Quantum Gates
4.1.3 Quantum Fourier Transform
4.1.4 Oracle
4.1.5 Amplitude gain
4.2 Quantum algorithms
4.2.1 Shor’s algorithm
4.3 Specific quantum threat to blockchains
4.3.1 Risk of quantum attacks in authentication
4.3.2 Grover’s algorithm and hashing
4.4 Risk of quantum attacks in mining
4.5 Non-Attack
4.6 Blockchain Data Structures
4.7 Summary of this chapter

Chapter Five: Quantum Hash and QKD
5.1 Classical to quantum hashing functions
5.1.1 Summary: Quantum Hashing Functions
5.2 Quantum Key Distribution (QKD)
5.2.1 Technical problems
5.2.2 Issues Needing Work in Blockchain-Enabled QKD
5.2.2.1 Summary: QKD technical issues and blockchain integration
5.2.2.2 Software-defined network QKD and Blockchain
5.3 Notes on interface protocols
5.3.1 Southbound interface
5.3.2 Northbound interface protocol
5.3.3 Resource distribution
5.4 Steps Blockchain Organizations Can Take Now
5.5 Summary of this chapter

About the publisher

About the analyst

Acronyms and abbreviations used in this report

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SOURCE: Research and markets