Quantum Computing & Bitcoin: Myths & Misconceptions
When we talk about quantum computing, we tend to associate it with extremely high-performance computer systems that can take down any network in the world through rapid calculation processing speed. While this holds true to a degree, such doomsday narratives do not fit the actual functionality of quantum computing.
The term quantum computing refers to a type of computation that leverages the collective properties of quantum mechanics to efficiently solve problems too complex for classical computers. Quantum computing is projected to significantly impact some of the most transaction-heavy industries such as finance, accounting, software development, machine learning, artificial intelligence, and the like. It is no surprise that today, some of the top tech firms in the world, such as Google, IBM, Microsoft, Alibaba, Nokia, Intel, HP, SK Telecom, Amgen, and others, have in-house quantum computing research divisions that continually research the emerging technology. A whopping 40 percent of companies intend to develop initiatives around quantum computing by 2025.
The main difference between quantum and classical computers is how they process information. While classical computers use transistors to process information, quantum computers tap qubits which can be 1 or 0 at the same time, thus giving them more versatility compared to transistors. The level of quantum computing is directly related to the number of qubits linked together on the network. In contrast, linking together more transistors in the case of classical computers only increases power linearly.
In this guide, we will explore the concept of quantum computing and its potential impact on the Bitcoin network. We will debunk some of the most commonly believed myths and misconceptions concerning quantum computing, and attempt to answer one of the most hotly-contested questions in the digital assets industry, is the Bitcoin network susceptible to quantum computing?
What Is Quantum Computing?
Before we attempt to understand quantum computing’s impact on the Bitcoin network, let us first develop a strong understanding of quantum computing. As explained earlier, quantum computing is typically used to process extremely complex transactions or calculations that are technologically feasible for classical computers. However, quantum computing’s tech architecture makes it possible to process several transactions or calculations that are orders of magnitude higher than that of classical computers. Quantum computers are several times faster than classical computers and even supercomputers.
Google, the world’s largest and most popular search engine, has been developing its quantum computer, Sycamore, for years and expects it to be ready by 2029. It is said that Google’s Sycamore quantum computer can successfully execute a computation in 200 seconds that IBM Summit – one of the world’s fastest supercomputers – would take 10,000 years to solve. As you can imagine, developing a quantum computing device involves massive research, development, and investment. As a result, small and medium-sized firms are not typically able to afford and integrate quantum computing into their business operations. The technology’s high barrier to entry explains why the only companies actively working on quantum computing are tech behemoths.
Quantum computing is on its path to eventually decrypting much of today’s encrypted data, ringing alarm bells among tech-skeptics who advocate individual privacy and personal data safety. According to a report by Deloitte, quantum computing is poised to break Bitcoin and all other cryptocurrencies’ signing algorithms which could render all digital assets obsolete with no utility. The level of truth in the report is a matter that requires deep study and analysis. Is quantum computing really that powerful? Does it mean higher adoption of privacy-preserving digital currencies? Is Bitcoin susceptible to the threats posed by quantum computing? In the following few sections, we will attempt to answer similar questions and eventually clear some misconceptions about quantum computing’s so-called supposed threat to the Bitcoin network.
How Strong Is the Bitcoin Network?
To develop a firm idea about the Bitcoin network’s strength, it is necessary to understand Bitcoin mining and the key terms associated with the process.
If you have ever read about the Bitcoin mining process, you would have most likely come across the term hashrate. In simple terms, hashrate refers to the total combined computational power required to mine and process transactions on the Bitcoin blockchain that follows the proof-of-work (PoW) consensus mechanism. Let us further break down the word hashrate. Hash refers to a fixed-length alphanumeric code used to represent words, messages, and data of any length. One can think of a hash as random combinations of words and numbers generated through different algorithms aimed at keeping the Bitcoin network secure from external attacks.
The Bitcoin mining process requires energy-intensive computers and supercomputers to solve extremely complex mathematical equations. All the nodes or mining operators connected to the Bitcoin network compete with each other to add the next block in the Bitcoin chain by correctly computing the solution to the equations. In essence, all miners are competing with each other to produce a hash that is completely random and impossible to predict. The most sophisticated computers in the world today would take millions of guesses – or hashes – before the miner can add the latest blockchain in the Bitcoin network and receive BTC as a reward for its services and energy usage.
Further, as new blocks are added to the blockchain, all the previously stored transactions are verified again and again, which makes it increasingly difficult to tamper with any prior transactions on the network. This way, it is not a stretch to say that the longer the Bitcoin network functions, the stronger it gets. In 2022, Bitcoin is stronger than it was in 2012. Similarly, the Bitcoin network will be much more resilient to orchestrated attacks in 2032 than it is today.
To sum up, the hashrate is critical to the Bitcoin network’s overall strength. The higher the number of machines used by honest miners to mine BTC and add a new block to the Bitcoin network, the higher the hashrate rises, making it all the more difficult for malicious agents to attack the Bitcoin network.
The primary threat to any blockchain is a 51 percent attack. Although we have seen countless Bitcoin hard forks succumb to such attacks over the years, Bitcoin remains undefeated. Bitcoin’s total hashrate currently sits near its all-time high at around 213 million. The USD cost of performing a 51 percent attack on the Bitcoin network in October 2021 was estimated to be more than $13 billion. We can assume that the Bitcoin network is sufficiently strong to withstand any major attack orchestrated by an outside entity.
However, is the Bitcoin network strong enough to face the challenge of quantum computing? Before answering this, let us first highlight some of the advantages of quantum computing and why the decision to put an outright ban on this emerging technology might not be the best course of action to follow.
Benefits of Quantum Computing
For all the perceived threats to encryption and individual privacy posed by quantum computing, the emerging technology also offers a wide range of advantages that make it worthwhile to develop hardware that can process quantum computing and take tech innovation to new heights. Some of the advantages offered by quantum computing are as follows:
Quantum computing promises computing power at a scale that classical and even supercomputers can never match. Previously, we talked about Google’s quantum computer, expected to launch in 2029. It is widely accepted that quantum computing can process transactions 158 million times faster than the fastest supercomputer in existence today. The key to such high performance is that quantum computers do not have to wait for one process to end before they can start another. Unlike traditional computers, which follow a linear process flow, quantum computers can initiate and execute multiple transactions simultaneously in different instances.
In addition, quantum computers stay true to Moore’s Law which states that computing power doubles roughly every two years. Quantum computers are expected to kickstart a new wave of innovation in the field of data and predictive analytics as it facilitates the processing of numerous transactions at once.
Traditional computing, including Bitcoin’s PoW consensus mechanism, is constantly criticized for being too energy-intensive. It was Bitcoin’s energy-intensive nature that forced Elon Musk’s Tesla to temporarily halt accepting payments in BTC for its automobiles. In contrast, quantum computing is frequently touted as an eco-friendly technology that holds the potential to tackle the raging issue of climate change by decelerating the process. A report by McKinsey posits that quantum computing could “revolutionize the fight against climate change.” The report adds that quantum computing holds the potential to transform the economics of decarbonization and play a crucial role in limiting global warming to the target temperature of 1.5 degrees Celcius.
Leading quantum software company Zapata Computing notes that quantum computing could positively impact various goals outlined by the United Nations for sustainable development. Specifically, quantum computing is expected to substantially impact the agriculture industry as it promises to dramatically reduce the power required to manufacture fertilizers, which accounts for close to 2 percent of global energy.
Use of Advanced Technology
Quantum computing is expected to power tomorrow’s tech landscape which will be dominated by some of today’s emerging technologies such as artificial intelligence, machine learning, and others. Gartner, a leading global research firm, describes quantum computing as “the use of atomic quantum states to effect computation.” The research firm adds that by 2025, nearly 40 percent of large companies are expected to develop quantum-computing initiatives within the organization. Quantum computing will make the process of communication between systems a lightning-fast process.
Besides Google, companies such as International Business Machines Corp., D-Wave Systems Inc., and Honeywell International Inc. are actively investing billions of dollars in this nascent technology. In the financial industry, Wall Street giant JPMorgan Chase & Co. and automobiles firm Volkswagen are also experimenting with quantum computing. Google says that to ensure its quantum computer can perform different functions, it must build a 1-million qubit machine that can reliably perform high-scale, complex calculations with no errors. At present, Google’s current systems have less than 100 qubits. Similarly, IBM plans to develop a 1,000-qubit quantum computer by 2023. In the same vein, Microsoft is already allowing companies access to its quantum technology solutions via the Azure Quantum platform.
Now that we have discussed some of the benefits of quantum computing let us shift our focus to the perceived threats posed by this nascent technology. Does the adoption of quantum computing mean an end to individual privacy? Does quantum computing sit in direct competition with cryptography? We will find answers to these pressing questions and more in the following sections.
Threats Posed by Quantum Computing
Quantum computing skeptics argue that emerging technology could do more bad than good for society if it is not appropriately regulated. Quantum computing’s potential to disrupt industries can be used for nefarious purposes such as spying, corporate espionage, comprising a nation state’s cybersecurity, and so on. The following are the two major threats quantum computing could pose to society.
Threat to Cybersecurity
Wars in the 21st century are fought virtually. We saw this claim hold true during the recent Russian invasion of Ukraine when cyberactivism groups such as Anonymous waged a cyber war against the Russian state. Quantum computing has the potential to make it easier for anyone to engage in a large-scale cyber war against any entity. The American Scientist organization argues that although quantum computers currently do not have enough processing power to break encryption keys, their future versions with higher capabilities and tech infrastructure might pose a serious threat to cybersecurity frameworks around the world.
As we all know, the most simple albeit tiresome way to break a code is to try all the possible keys and combinations and hope for one of them to be the correct one. The process is not too complicated and, as such, traditional computers can do the same at present. However, the challenge lies in scalability and speed. Quantum computers can process transactions that are orders of magnitude higher than supercomputers of today and are, therefore, better positioned to break encryptions and corrupt any system. Specifically, such successful quantum computers would require 100,000 times more processing power and an error rate that is 100 times better than today’s best quantum computers.
RSA, the world’s most widely used form of encryption, is used to transmit sensitive data over the Internet. For the uninitiated, RSA is based on 2048-bit numbers which are relatively harder to crack. Quantum computing experts note that a system as large as 70 million qubits would be required to break the 2048-bit encryption. However, with the rapid pace of development and innovation in the quantum computing space, the development of such a computer within the next 3-5 years cannot be ruled out. The MIT Technology Review mentions that Google and the KTH Royal Institute of Technology in Sweden found “a more efficient way for quantum computers to perform the code-breaking calculations, reducing the resources they require by orders of magnitude.”
Impact on Cryptography
Quantum computing’s impact on cryptography is expected to be similar to that on cybersecurity. It will leverage the higher processing speed to guess the correct cryptography key, continually breaching the security of the underlying network. Should quantum computers become efficient at breaking some of the leading cryptography standards today, such as RSA, almost every major information technology service provider will be affected as they become susceptible to outside cyber-attacks.
Quantum computing’s impact on cryptography will also likely spread to the cryptocurrency industry. Every crypto project today uses cryptography to secure its network and validate block transactions, generate a hash number, verify transaction completion, and so on. However, with efficient quantum computers in place, many crypto projects could pose an existential threat if they do not continually advance their security mechanisms in tandem. As a result, we might witness a resurgence of interest in privacy-oriented cryptocurrencies that use the most advanced cryptographic technologies to hide transaction privacy on the blockchain. Advanced quantum computing could also pose a challenge to blockchain protocols related to decentralized finance (DeFi) that custody of billions of dollars worth of users’ digital assets. Similarly, online banking transactions could also be affected, along with digital signatures used to sign cryptocurrency transactions through digital wallets.
Now that we have discussed the major threats quantum computing poses to cryptography and cybersecurity, let us shift our focus to the burning question in everyone’s mind. Is the Bitcoin network susceptible to quantum computing? Can this emerging technology also pose an existential risk for the largest and most trusted cryptocurrency in the world?
Is Bitcoin Network Susceptible to Quantum Computing?
To answer this question, we must look at the health of the Bitcoin network today. As previously mentioned, executing a 51 percent attack on the Bitcoin network is a reasonably expensive task today, and it will only become increasingly expensive with BTC’s rising adoption and usage. Further, Bitcoin is the most decentralized blockchain by far, making it all the more difficult for any nefarious elements to execute an attack. It would require cooperation from numerous transaction validators at the same time. In contrast, the vast majority of altcoins’ blockchains are heavily centralized in terms of governance and, as a result, give attackers a wider opening to exploit the network.
Further, the global Bitcoin community understands the threats posed by quantum computing and is already working toward making the Bitcoin network’s security less susceptible to advanced technologies. For instance, the Digital Currency Initiative at the MIT Media Lab recently launched a new Bitcoin Software and Security Effort in partnership with industry leaders. The Bitcoin Software and Security Effort is a four-year research and development program aimed at strengthening the Bitcoin network against any potential external threat. The program includes regular financial contributions to Bitcoin Core development and investigation into the development of software to provide strong robustness and correctness guarantees.
Additionally, we are witnessing the rise of quantum-resistance ledgers that make it irrelevant whether the attacker is using a quantum computing system to attack a blockchain. For example, the Quantum Resistant Ledger aims to solve the threat related to digital signatures. The solution uses a set of post-quantum secure data encryption algorithms called ‘eXtended Merkle Signature Scheme’ (XMSS) that utilizes a ‘One Time Signature’ that allows users to sign only one transaction with one key.
To conclude, no, Bitcoin is not susceptible to quantum computing today. The sophisticated quantum computers required to meaningfully attack the Bitcoin network are still at least 5-10 years away. This gives enough time to the Bitcoin community to strengthen the protocol security and develop several quantum-resistant solutions that will help the network successfully tackle any threat from the emerging technology.
Just like every other technology, quantum computing is inherently neutral. It all boils down to how people use these technologies that make them beneficial or harmful to society. Quantum computing is not the end of the road for tech innovation. We will likely see numerous other exciting technologies built in the future that could potentially be more advanced than quantum computing, including quantum-resistant cryptography.
At the moment, the Bitcoin community can rest assured about any considerable threat from quantum computing on the network. However, this does not mean that the Bitcoin ecosystem can afford to be complacent. Efforts must be put into research and development to bolster the Bitcoin network’s strength to keep it up to date with the changing technological landscape.