Bitcoin Could Become Quantum-Safe Without an Upgrade, But at a Cost

According to a Starkware researcher, Bitcoin transactions could be quantum-safe from attacks in the future without making modifications to its protocol. Although this method is effective in terms of providing safety, its expensive nature in terms of computation and practical considerations casts doubt on its scalability.

Quantum Threat to Bitcoin: Why It Matters

Bitcoin is currently based on the Elliptic Curve Digital Signature Algorithm (ECDSA) to secure transactions. 

This cryptographic algorithm is resistant to classical computers; however, it might be susceptible to quantum computers running Shor's algorithm, which, in theory, can derive a private key from a public key.

The issue has escalated with the recent study indicating that it might be possible to break the encryption of Bitcoin with fewer quantum resources than assumed. 

One of the most susceptible segments is the close to 1.7 million BTC that is stored in early wallet formats,  where the public key is already compromised, making them a possible target during a quantum attack.

What Is Quantum Safe Bitcoin (QSB)?

In a paper published on Thursday, Avihu Levy, a Starkware researcher, introduced Quantum Safe Bitcoin or QSB. He said QSB would remain secure “even against an adversary with a large-scale quantum computer running Shor’s algorithm.” 

QSB is a scheme that aims to enable quantum-resistant transactions without requiring changes to the Bitcoin protocol by replacing signature-based security assumptions with hash-based proofs within its design.

The ownership in the current Bitcoin model is validated by ECDSA signatures. With QSB, however, the user has to produce a hash output that is similar to a valid signature, effectively substituting the cryptographic reliance on elliptic curve mathematics. 

This involves a large amount of brute force computation, with billions of possibilities to be tried in order to generate a valid transaction. Notably, quantum acceleration does not have a high impact on hashing, so this method is not vulnerable to quantum-based attacks.

The other significant benefit of QSB is that it does not violate the current consensus of Bitcoin. This implies that it does not need a soft fork or approval of miners or any network-wide upgrade, and it can be done immediately.

Also Read: New to Bitcoin? Key Things to Remember Before You Invest

The Cost Issue: 500x More Costly

Each transaction involves off-chain computation on GPUs, estimated to cost between $75 and $200 per transaction. 

By comparison, the current average Bitcoin transaction fee is approximately between 0.30 and 0.50, and QSB transactions are over 500 times more expensive.

Besides cost, the process brings about several complexities in operations. It may require transactions to be relayed directly to miners rather than being relayed via the normal network. 

Moreover, the system is not compatible with Layer 2 solutions like the Lightning Network, and users would require access to external computing resources, such as cloud GPUs, to produce valid transactions.

Market Reaction

According to some industry leaders, QSB is an important breakthrough, proving that quantum resistance can be reached without the need to upgrade the protocols. However, some people complain that these assertions are exaggerated and indicate the drawbacks of the suggestion.

Critics note that the system fails to tackle the weaknesses in dormant wallets or public keys that are open. They also point out that the model is not efficient in scaling to global levels of transactions, and it may bring centralization risks as it may depend on external computational resources.