Now that Alphabet Inc. (GOOG)-owned Google has unveiled its powerful new Willow quantum chip, cryptocurrency holders are facing an uncomfortable truth: The technology that secures their digital assets today could become their greatest vulnerability tomorrow.
Indeed, the foundations of modern cryptography – which tokens like bitcoin and ether need to function – rely on mathematical problems that are extremely difficult for traditional computers to solve (like factoring large numbers), but that quantum computers might be able to solve.
Key takeaways
- In December 2024, Google announced what it considered a major breakthrough in quantum computing.
- This raises concerns that such quantum chips could break the encryption securing cryptocurrencies.
- Yet crypto proponents say these concerns are overblown, at least for now.
The quantum threat explained
A small chip the size of a mint may have demonstrated that cryptocurrency encryption systems may be living on borrowed time. In December 2024, Google said its new Willow processor had achieved what researchers call a “staggering” breakthrough in quantum computing speed – and it may be just the beginning.
While it would take today’s most powerful computers billions of years to crack cryptocurrency encryption, quantum computers work in a fundamentally different way. The Willow chip leverages quantum mechanics, in which matter can exist in multiple states simultaneously, to perform calculations at almost inconceivable speeds. The chip can solve some computing problems in less than five minutes, which would take the world’s best supercomputers about 10 minutes. septillion years to complete – a time span that far exceeds the age of the universe.
The problem for crypto holders? If you think of your crypto wallet security as a huge combination lock, ordinary computers should try the combinations one by one. Quantum computers? They can test millions of combinations simultaneously.
That’s why, even though experts say there’s likely plenty of time for Bitcoin and other blockchains to build better defenses, a Deloitte analysis found that about a quarter of the Bitcoins currently in circulation would be vulnerable to attacks. hackers using quantum computing.
If a recent analysis from Deloitte is correct, quantum computing could soon make around 25% of Bitcoin vulnerable to hacks, implying assets worth around $500 billion by the end of 2024.
Why your crypto is not (yet) in danger
Even with these advancements, your crypto assets are safe for now. Breaking Bitcoin’s encryption appears to require around 13 million qubits, well beyond Willow’s current 105 qubits, at least according to crypto advocates at CoinDesk. But by ending a recent article by dismissing concerns arising from quantum computing – “Try another day, crypto naysayers” – the site’s article exposes real dangers.
The article notes that Google’s Willow does not yet have the scale or capacity to correct its errors so that it can bypass the encryption methods used in Bitcoin transactions (RSA, ECC and AES). But it’s right after this sentence: “Bitcoin uses algorithms like SHA-256 for mining and ECDSA for signatures, which could be vulnerable to quantum decryption.”
That’s like saying a store’s cash registers are safe, but thieves could just walk out the front with whatever item is on the shelves.
Here’s why: Mining and signatures are essential to the functioning of the Bitcoin system. Mining is how new Bitcoins are created and transactions are verified and added to the blockchain. If a quantum computer could decipher the SHA-256 algorithm used in mining, it could take over this process, altering transaction history or preventing new transactions from being confirmed. Additionally, if they could tamper with the ECDSA encryption of signatures, an attacker could steal Bitcoins by faking transactions to appear legitimate or impersonate users by taking over Bitcoin wallets.
How cryptosystems could defend themselves
The crypto community is not sitting idly by. Ethereum co-founder Vitalik Buterin is not as optimistic as others in the crypto world about what quantum computing could achieve.
Since quantum computers excel at finding hidden patterns in current cryptographic signatures, he suggested that quantum-resistant systems could use completely random, single-use keys, with no patterns to discover. Buterin said including it in a hard fork – a permanent divergence in a blockchain that creates two separate, incompatible chains – could mitigate the risks of quantum computing.
The essentials
Although Google’s Willow chip represents a remarkable leap forward in quantum computing technology, we are likely still far from the quantum computers that threaten encryption. Nonetheless, the industry is already preparing for a quantum future and the threats it could pose, with some platforms exploring quantum-resistant algorithms.
