Can Quantum Computing Kill Bitcoin?
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[I listened to this song while writing this article]
The basics of quantum computing
Computers we use today have “classical processors” which operate with bits to encode either a zero or one. Quantum computers use quantum bits, or “qubits.” These can encode a zero, one, or both states simultaneously, which allows for exponentially faster processing for certain types of math problems.
In 1994, Peter Shor created an algorithm called Shor’s algorithm, which demonstrated that a quantum computer could solve math problems tied to encryption. This led to researchers worrying that quantum computing may be able to crack existing encryption.
Below I’ll provide a few points as to why quantum encryption isn’t something to be worried about in the short to medium term:
Highly experimental
Quantum computing requires running parts of a computer at temperates barely above absolute zero (-459.67 degrees Fahrenheit or -273 degrees Celsius). There are various issues like coherence and half-life that interfere with the stability of the individual quibits as you add more quibits. These problems are far from fixed and are only theoretically solvable.
Poor scalability
In a Lex Friedman episode, interviewing Scott Aaronson, a theoretical computer scientist, they stated that Google had built a state of the art quantum computer that has 53 cubits. However, a quantum computer would require thousands to millions of qubits required to crack certain types of cryptography!
Let’s say we could actually build a stable quantum computer that is production ready, what types of encryption would it impact? Bitcoin uses two types of encryption algorithms: SHA-256 (Bitcoin mining), and ECDSA (Controlling Bitcoin ownership)
Hashing algorithm (SHA-256)
SHA-256 is the encryption algorithm is used for Bitcoin mining. Most experts agree that quantum computers will unlikely be able to break this even at scale.
Even if it could be solved at a faster rate, Bitcoin has a built in defense mechanism: the difficulty adjustment!
What is the difficult adjustment? As more miners join the network the network automatically adjusts to the additional hash rate (miners) that have joined the market by making it more difficult to mine a block. This is done so the production of newly minted Bitcoin occurs on a predictable issuance schedule.
If a quantum computer, or even an alien computer, with a million times the aggregate computing power of earth, came here to mine Bitcoin, the network would eventually (in 2016 blocks) self adjust to the new level of computing power. Note that the retarget can never be higher than a factor of 4, so it may take some time for Bitcoin to adjust.
Since inception, as Bitcoin’s hash rate climbed, so the difficulty, which ensured that the issuance of Bitcoin remained as planned. Bitcoin mining went through several level step compute era, like the moves from CPUs to GPUs to ASICs. The below chart shows this clearly.
Elliptic Curve Digital Signature Algorithm (ECDSA)
The other type of encryption that quantum computing might impact is used to control your Bitcoin wallet: Elliptic Curve Digital Signature Algorithm (ECDSA).
Quantum computers will likely impact this encryption algorithm first. The risk here is that a quantum computer could reconstruct the private key from the public key.
Old Bitcoin transactions used pay-to-public-key (P2PK) which exposed the public key of the UTXO. This would have a far smaller impact on newer Bitcoin transactions which use pay-to-public-key hash (P2PKH) that only publicly show a hash of the public key in a permanent fashion. However, when transacting, P2PKH briefly exposes the public key, so to be quantum resistant there could be no address reuse, and a quantum computer couldn’t crack public keys in under 10 minutes. No exactly an ideal level of protection against quantum computers, but some level of protection.
The below chart shows the quick switch from P2PK signature type to more quantum resistance ones in 2011.
However, many early coins, like Satoshi’s stash are exposed.
As mentioned above, if a transactor used the old signature type, P2PK, then the public key has been exposed which means about 1.7M Bitcoin are particularly vulnerable to quantum computing.
Post Quantum Cryptography
As mentioned in the beginning, the threat of quantum computing to encryption was anticipated back in the 1990s.
The National Institute of Standards and Technology (NIST), which plays an active part in encryption standards, has been working on developing new encryption standards for this post quantum world. So we already have quantum resistant encryption algorithms today.
In the future, the Bitcoin community could decide to “update” encryption currently used by Bitcoin to quantum resistance algorithms (via soft fork) and have everyone transfer their coins to the new format over a certain time period. All unmoved coins after that time period could then become invalid/deleted to protect against dormant coins/ones that have exposed public keys flooding the market.
To summarize: quantum computers are still largely experimental, we’ll know far in advance as to when they’ll be viable, Bitcoin is already largely protected against some of these attacks, and if there truly was a threat, then we could simply update the Bitcoin protocol.
HODL,
Dan Held
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It's like you know the evolution of the journey of Newbie was listening to a podcast about this. So does it make sense to just use 24-word key seed instead of 12 just to be safe?
i was wondering how quantum computing would effect us, thanks for addressing this concern!