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Quantum computing is a new prototype in computer science that leverages quantum phenomena like superposition, entanglement, and interference to gain a crucial speedup over classical algorithms when solving some complex problems.
Quantum computing can have a direct impact on blockchains.
Potential threats:
So, current blockchains will also need their migration. This will likely take the form of a fork or a protocol update, creating a new post-quantum chain or addresses and a limited window of time for users to migrate their data and assets.
Adapting blockchains to the post-quantum era will require increased storage and computing resources. Probably the evolution of technology will account for that in most cases. Perhaps IoT applications, where resource constraints are greatest, will have greater difficulty in adapting.
The German-born programmer and crypto trader forgot the password to unlock his digital wallet, which contains 7,002 bitcoin, now worth $265 million. Quantum computers, which will be several million times faster than traditional computers, could have easily helped him crack the code.
Though quantum computing is still very much in its inception, governments and private-sector companies such as Microsoft and Google are working to make it a reality. Within a decade, quantum computers could be powerful enough to break the cryptographic security that protects cell phones, bank accounts, email addresses, and also bitcoin wallets.
Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings said "If you had a quantum computer today, and you were a state sponsor for example China, most probably in about eight years, you could crack wallets on the blockchain".
This is exactly why cryptographers around the world are hurrying up to build a quantum-resistant encryption protocol.
To be precise quantum hacking is the use of quantum computers to carry out malicious actions. Quantum hacking is performed by modern cryptographic strategies which often use private and public keys to encrypt and decrypt data through a mathematical equation.
Presently, much of the world runs on something called asymmetric cryptography, in which individuals use a private and public key pair to access things such as email and crypto-wallets.
Thiel said, "Every single financial institution, every login on your phone is based on asymmetric cryptography, which is defenseless against hacking with a quantum computer". Thiel is a former director of Utimaco, one of the largest cryptography companies in Europe, which has worked with Microsoft, Google, and others on post-quantum encryption.
The public-private key pair allows users to generate a digital signature, using their private key, which can be verified by anyone who has the corresponding public key.
In the case of cryptocurrencies such as bitcoin, this digital signature is called the elliptic curve digital signature algorithm, and it ensures that bitcoin can only be spent by the rightful owner.
In a way, someone using quantum computing could reverse-engineer an individual's private key, forge his digital signature, and subsequently empty his bitcoin wallet.
Thorsten Groetker, former Utimaco CTO and one of the top experts in the field of quantum computing, "If I was dealing in fear-mongering. I'd tell you that among the first types of digital signatures that will be broken by quantum computers are elliptic curves, as we use them today, for bitcoin wallets".
Castle Island Ventures founding partner Nic Carter highlighted that quantum breaks would be gradual rather than sudden.
"We would have plenty of warnings if quantum computing was reaching the stage of maturity and advancements at which it began to threaten our core cryptographic primitives," he said. "It wouldn't be something that happens overnight".
There is also the fact that the community knows that it is coming, and researchers are already in the process of building quantum-safe cryptography.
"The National Institute of Science and Technology (NIST) has been working on a new standard for encryption for the future that's quantum-proof," said Thiel. NIST is running that selection process now, picking the best candidates and standardizing them.
Experts say that quantum hacking is only preventable if quantum cryptography encryption keys are so entangled that even the most advanced quantum computers cannot break them. The only drawback to this is that continual encryption would lead to very lengthy keys that would ultimately slow down the process.
