Because the cryptocurrency market has grown significantly during the past few years, many traditional economic analysts are trying to create fear about the future of cryptocurrency. The latest example is fear that quantum computers could eventually break the cryptocurrency market, or Bitcoin, specifically. So, can these quantum computers spell doomsday for the cryptocurrency market? The answer is not right now. What do Bitcoin miners need to know? How might this impact the cryptocurrency market moving forward?
The Nature of the Threat of Quantum Computers
Many people have compared the threat of quantum computers to mining centralization. They are concerned about mining centralization because this could enable governments to control cryptocurrencies. Quantum computers may indeed pose a potential threat to the security of Bitcoin in the distant future; however, this is not something people have to worry about right now. Because quantum computers are already on the radar screen of Bitcoin engineers, there is a good chance engineering solutions are going to be developed that can keep Bitcoin secure in the future.
Quantum Computers Could Target SHA-256
First, it is important to understand how quantum computers might pose a threat to Bitcoin. These computers could try to pull off a 51 percent attack. This means that the computers would control the majority of the hashrate, allowing the owner of those computers to manipulate the market at will. To execute this type of attack, quantum computers would have to target a hash algorithm in the Bitcoin mining process known as SHA-256.
This algorithm is a mathematical operation that controls how Bitcoin stores and writes information. One of the major selling points of Bitcoin is that all information is secure and finite. Targeting this algorithm could threaten the central tenets of Bitcoin itself. The algorithm is also used in many key applications throughout the internet, including protecting servers, websites, communication networks, and passwords. If a quantum computer were able to break through this algorithm, this would have major implications on the digital world and the future of crypto. Government agencies, online retailers, and financial institutions would also find themselves in harm’s way, just like Bitcoin.
How Is SHA-256 Used in the World of Bitcoin?
Specifically, Bitcoin mining uses this algorithm as a part of the proof-of-work method in blockchain technology. For a new block to be added to the chain, there must be proof that the work was done correctly. If this algorithm were to fail, the proof of work concept would fall apart, meaning that the market may stop expanding.
In addition, Bitcoin private keys also use this algorithm. Therefore, if the algorithm was broken, then these funds could potentially be spent. That is why there are many people concerned about quantum computers and the integrity of the algorithm. Fortunately, this is not an imminent threat.
How Quantum Computers Might Try To Attack Bitcoin Mining
So, how might quantum computers try to attack Bitcoin mining? It is important to understand that Bitcoin mining is performed using specialized hardware. This hardware is called application-specific integrated circuits. These circuits plug random input values from the myriad possibilities into the hash function associated with the SHA-256 algorithm. The goal is to find an output value that allows the miner to propose a block. As a result, the miner will earn new Bitcoins. Right now, there is no way to treat you to narrow down the number of possible values quickly. Every input is equally as likely to produce a valid output as any other possible input. With this in mind, miners are plugging in random values and finding an answer that will work in the puzzle.
Now, when it comes to quantum computers, it stands to reason that they may try to narrow down possible values, hoping that it will take significantly fewer inputs to produce a valid block. The result would be that quantum computers could increase the speed and efficiency to produce blocks and mine Bitcoins. Fortunately, this is not possible right now. Quantum computers have been shown to operate at a rate that is inferior to current ASICs.
Even though advances are being made in quantum computers, some advances are being made in ASICs. Therefore, it remains to be seen if quantum computers are ever going to catch ASICs.
Quantum computers cannot be used to mine Bitcoin effectively. This will not change shortly; however, quantum computers may catch traditional mining vehicles down the road.
What About Wallet Security?
When looking at wallet security, this is an area where quantum computers may create a more viable issue. Bitcoin uses various digital signatures, allowing users to send Bitcoins from one person to another securely. Whenever someone transfers Bitcoin, the wallet verifies the digital signature using the private key associated with the public key. If the keys are not correct, then the coins do not belong to that person. The entire process is handled through the digital wallet. The method used to create these signatures is based on something called the elliptic curve digital signature algorithm. For a long time, this curve has been deemed safe; however, there is a possibility that quantum computers could break it in the future.
In other words, a quantum computer could derive a wallet’s private key from a public key, rendering the signature scheme insecure and making bitcoin wallets vulnerable to theft. The question then becomes, how can people protect themselves against this type of threat?
This Is Only a Problem with Legacy addresses.
People must remember that the public key is only revealed when someone spends Bitcoin from a legacy address, such as P2PK. Therefore, everyone needs to think about where they spend their coins and send them to. The instant the private key is revealed to a quantum computer, people need to change their address and get a new set of keys. That way, they do not have to worry about having their coins stolen. This is already one of the best practices for spending Bitcoins, and it is an essential part of protecting against quantum computers in the future.
One of the most obvious ways to maintain Bitcoin’s security in a future with more powerful quantum computers would be to upgrade the Bitcoin network to quantum-resistant encryption through a soft fork upgrade. This would result in creating a new address type to which users would send their bitcoins to achieve quantum security.
Can Quantum Computers Pose a Significant Threat in the Future?
It is impossible to predict the future, and everyone must pay attention to the news. One thing is sure; Quantum computers cannot mine Bitcoin more efficiently than ASICs. Today’s quantum computers have impractically high error rates and can operate only in lab conditions at temperatures near absolute zero. The amount of time that it currently takes to break the encryption associated with wallet keys is prohibitive, meaning that quantum computers do not pose a significant threat right now.
At the same time, people need to protect themselves against quantum computers. The Bitcoin network may eventually upgrade to a stronger form of encryption, referred to as quantum-resistant encryption. A new address type would have to be created to make this happen, allowing people to protect their addresses against quantum computers.