Quantum computing could be just as a few years away from creating a day of reckoning for cryptocurrencies

Researchers are working to head off the collapse of cryptocurrency markets that, experts warn, could happen when quantum computers become strong enough to break the encryption underlying Bitcoin, Ethereum and other cryptocurrencies – estimated to come by 2035.

That timeline represents an existential threat for Bitcoin and its ilk, which rely on mathematical encryption so complex that contemporary systems would need much longer than the age of the universe to brute-force them.

That’s why the RSA-2048 encryption underlying cryptocurrencies is considered to be safe – yet continuing development around quantum computers is challenging those assumptions by threatening to decipher the keys supporting cryptocurrencies and the blockchain technology on which they are built.

“Bitcoin is 12 years old,” Kaz Family of Companies CEO Constantine Kazacos said, “and when it was launched, Pentium computers were the state-of-the-art.

“And while there have been a lot of upgrades, a lot of them for security reasons, the technology is showing its age.”

“Satoshi Nakamoto chose elliptic curve encryption based on the fact that was the best available at the time,” he continued, “but with the advent of quantum system and technologies, the encryption holding this together is vulnerable to attack.”

Aiming to help stave off disaster, Kaz has joined ‘next generation quantum assets’ firm Quantum Assets (QA) to launch QA tokens on the Binance Smart Chain.

Users holding QA tokens can swap them for quantum-safe cryptocurrency holdings as they are generated, using a Kaz Quantum Bitcoin Mainnet that, Kazacos says, will bypass the vulnerabilities of conventional crypto by tapping quantum electron tunnelling to generate completely random encryption keys.

“We’re effectively fighting fire with fire,” Kazacos explained, “by using something completely random in its functioning.”

The QA system will enable swapping of cryptocurrency for Quantum BTC and Quantum ETH cryptocurrency holdings, which Kazacos says use the quantum-generated encryption keys to provide cryptocurrency that will resist attacks by increasingly powerful quantum computers.

“If you’re holding onto them for a certain time period, you’re guaranteed an airdrop of the quantum coins when they launch,” he explained, “because they’re on their own mainnet. It gives people a chance to relax and have their holdings long term.”

It’s one of numerous approaches being tested by researchers as inexorable improvements in quantum systems bring the widespread cracking of cryptocurrencies ever closer.

Quantum Resistant Ledger, for one, uses a blockchain secured by the National Institute of Science and Technology (NIST)’s post-quantum XMSS digital-signature technology.

A University of British Columbia research project has explored the construction of a quantum-safe blockchain, while last year the CSIRO’s Data61 arm released a quantum-resistant blockchain protocol called MatRiCT that has been licensed to Australian cryptocurrency developer HCash.

Crypto’s day of reckoning

Quantum systems have gone from strength to strength, with Australian pioneers contributing critical capabilities and Canberra firm QLabs recently securing a $25m investment fund to take its technology global.

Breaking secure encryption has long been discussed as a use case for quantum computers – and quantum researchers already have a good idea about how to crack the encryption once fast-growing quantum computers reach Q-Day, that point where quantum computers can factorise encryption keys within hours or minutes.

“Given the strong coupling between data and cryptosystems in blockchains, the potential vulnerability of these cryptosystems to quantum attacks, the likely introduction of capable quantum computers in the mid-term future – not to mention the usual high monetary value of the assets secured by blockchains – it is important to more deeply understand their current level of vulnerability,” University of Kent researchers recently wrote in a study evaluating the threat that quantum poses to crypto.

“We can confidently conclude that by the year 2035 it is more likely than not that quantum technology will have advanced sufficiently to be able to break RSA2048 efficiently,” they wrote, noting that despite “comprehensive” work on post-quantum cryptography “the field of post-quantum blockchain cryptography seems to be fairly barren”.

That is a glaring deficiency given the increasingly important role cryptocurrencies are playing in major economies.

Positioned by some as a ‘crypto-apocalypse’, the ability to factorise encryption keys in minutes would have devastating repercussions for a global economy where cryptocurrencies are being increasingly normalised – from El Salvador’s recent adoption of Bitcoin as legal tender to the Commonwealth Bank’s launch of a cryptocurrency exchange and ASIC’s recent formalisation of rules to ensure that crypto assets are “held in safe and secure custody”.

Widespread availability of quantum computers would leave over 4 million Bitcoin “potentially vulnerable” to compromise, Deloitte calculated in one 2019 study in which it noted that many Bitcoins have been generated but sit unusable because owners have lost the private keys necessary to access them.

“These coins cannot be transferred,” Deloitte noted, “and are waiting to be taken by the first person who manages to build a sufficiently large quantum computer.”