As computers become more powerful through rapid quantum development, the next associated banking crisis is likely to be cryptocurrency-based. To make matters worse, it has the potential to destroy our entire economic structure… and no one is talking about it.
But how can quantum computing threaten cryptocurrency?
The answer is simple – power. Despite the fact that the most popular cryptocurrencies are built on outdated networks with significant security vulnerabilities, the market capitalization of the entire industry is continuously increasing (sitting at $1.2 trillion at the time of writing). Unfortunately, this combination of value and exposure potentially creates a ticking time bomb of risk, and the new quantum computing technology is the detonator. In fact, top research firms like Deloitte estimate that over 25% of today’s Bitcoin is vulnerable to theft and counterfeiting – a weakness that can be easily exploited as quantum computing advances, causing a domino of events that could destabilize the entire global economy.
Means it actually so serious?
Unfortunately, it is. To consider a hypothetical (but very possible) scenario – thieves using quantum computing are able to steal close to a quarter of the total current Bitcoin supply. Investor confidence is shattered, causing a massive sell-off that crashes the price of the world’s most valuable cryptocurrency to near zero in a matter of hours. As altcoins follow Bitcoin’s lead, this will also mean a selloff of other major assets, sending the entire DeFi sector into a tailspin and wiping out close to a trillion dollars of value in the process, sending the financial sector back to the financial dark ages. It may sound far-fetched, but it was less than nine months ago that Luna – one of the most successful cryptocurrencies in the world – lost 99.9% of its value overnight, in an event far less severe. For risk-averse investors, this opportunity is of course one major red flag.
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Fortunately, despite the imminent threat of quantum computing, some projects are already actively working to protect the industry with the invention of post-quantum cryptography, and one company is leading the charge. Its name?
QRL, or Quantum Resistant Ledger.
Quantum computers: Powerful, impressive, concerning.
Before diving into exactly who QRL is and how they are trying to fix the impending problem, it is important to first ask a key question – what exactly is quantum computing?
Quantum computers are the next evolution of computing power. Of course, advances in computers have been happening for decades, and each major improvement has completely transformed the society alongside it. At one time the public couldn’t understand why anyone would want to use a computer on a daily basis, but now we have them all over the house and in our hands, spending half of our waking hours using them.
The most important difference, however, is the astronomical leap forward in technology that Quantum computers represent—like a paper airplane being compared to a Boeing 787. First, the binary nature of the traditional computers we use in laptops and smartphones places limitations on their computational power. . The binary systems, known as bits (the famous 0s and 1s that have improved our lives), create a situation where operations must be performed one step at a time. These bits can only exist in two distinct states; 0 or 1. The best way to visualize this is with a light switch; it can only always be on or off; no other states are involved, which is exactly how bits work to process the calculations we command.
In contrast, quantum computing uses a different type of system known as quantum bits – or qubits for short. Using what is known as Shor’s algorithm, qubits are kept in superposition, meaning they can simultaneously be in more than one physical state and location. Bringing back the light switch analogy, at the quantum scale, the light switch will be both on and off simultaneous. This mind-boggling ability exponentially shortens the processes required to solve factored problems, allowing quantum computers to process many more calculations in a fraction of the time. Furthermore, although quantum computers are already immensely powerful (must be stored in near-freezing conditions as outer space to stop them overheating), they currently operate on just 100 qubits. Scientists estimate that they can easily reach 10 million within the next decade.
To put this into perspective, Google’s artificial intelligence division recently released its Sycamore quantum processor. In 2019, the 53-qubit processor was tasked with a calculation that would take the most powerful supercomputer 10,000 years to crack.
It did it in three minutes.
But how might quantum computing affect crypto?
It all comes back to the vulnerabilities mentioned before. Encryption plays an important role in keeping digital assets safe from theft in the cryptocurrency sector. For example, the SHA-256 cryptographic protocol used for Bitcoin’s network security is considered unbreakable with today’s classic computers. However, this will quickly change when quantum computers inevitably begin to be released to mass consumers. One of the main security issues is how crypto is currently encrypted, which currently relies on a public and private key (known as asymmetric cryptography). The public key is available for anyone to view on the blockchain, but the private key remains fully encrypted. Public keys are meant to be shared, but private keys are used to sign and validate transactions, and as such it is important to keep them secret. A person’s public key can be mathematically derived from their private key, but the reverse is considered impossible – creating a one-way function that classical computers cannot break. The problem is that quantum computers will almost certainly be able to brute force decrypt the private key using someone’s public key – allowing an attacker to forge the digital signature and gain full access to the funds in a wallet. As quantum computers become more advanced, these traditional encryption solutions and public key cryptography standards will become useless.
Why is QRL’s quantum secure blockchain the answer for risk-averse investors?
Fortunately, the Quantum Resistant Ledger (QRL) is leading the way in protecting against the post-quantum threat by creating an entirely new blockchain, which is completely quantum-proof. The company – which came to life in 2016 – is powered by a team of exceptionally talented individuals, including IT and technology specialists. In fact, this has created the perfect solution for risk-averse investors struggling to dive into cryptocurrency with the looming threat of quantum computing.
QRL is the leading project in post-quantum cryptography, helping to strengthen encryption so that quantum computers simply cannot crack it, regardless of computing power. The QRL blockchain is secure by design, using a NIST-approved (The US National Institute of Standards and Technology) post-quantum digital signature scheme. The algorithm is a hash-based, forward-proof signature scheme with minimal security requirements and reusable addresses – removing the attack vector of unhashed public keys that the cryptocurrency industry faces today.
The best part about the QRL scheme is that it can be upgraded at any time without causing problems to the underlying blockchain – allowing it to keep pace with the evolution of quantum computing. Given the severity of the implications of the threat quantum computers pose to not only the crypto industry, but the global economy as a whole, having projects like QRL that are proactive rather than reactive is exactly the kind of security innovation the crypto sector needs, and they are certainly one to watch.
Featured image sourced from Shutterstock
Stuart Meczes is a freelance writer based in the UK and a member of the QRL community.
This post was written by an external contributor and does not represent Benzinga’s opinions and has not been edited for content. This content contains sponsored advertising content and is for informational purposes only and is not intended to be investment advice.
