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BlackRock has officially acknowledged quantum computing as a potential security threat to its iShares Bitcoin Trust (IBIT) in a recent regulatory filing. This disclosure, submitted to the U.S. Securities and Exchange Commission on May 9, marks the first time the asset manager has raised concerns about this issue in relation to its spot Bitcoin ETF. IBIT is the largest spot Bitcoin fund, boasting a net asset value of $64 billion.
The filing discloses one of the concerns that if the quantum processors become powerful enough, they might decrypt the cryptographic algorithm that secures Bitcoin wallets. Advanced quantum machines might theoretically break private keys by reverse-solving the mathematical puzzles based on Bitcoin’s elliptic-curve signatures. Although this scenario remains theoretical, the legal team of BlackRock incorporated it to ensure transparency for investors and to address upcoming technological threats.
Advancements in quantum computing in recent years have sparked debate on its potential impact on the security of digital assets. At the end of 2023, Google unveiled Willow, a chip that, according to its makers, should be able to finish specific tasks in minutes that would consume trillions of years for existing supercomputers. Shortly afterwards, Microsoft revealed Majorana 1, a processor intended to solve scalability problems in quantum systems.
Although the technologies are still being tested, the announcements are eye-catching news for the crypto sector. Experts estimate that an advanced quantum computer that can run Shor’s algorithm has the potential to crack the current encryption methods eventually.
In February, Tether CEO Paolo Ardoino suggested another consideration: recovering lost Bitcoin. Approximately 3.7 BTC are considered permanently lost because of lost private keys. If quantum computers crack these old keys, that might activate sleeping assets.
Crypto analyst Willy Woo also said that a development of this kind may ignite an investment wave in quantum research. He asked whether a corporation, government, or startup would be the first to get to the $350 billion of inactive coins.
Despite long-term worries, investors have been interested in Bitcoin ETFs. Farside investors' data reveals more than $41bn in net inflows since the products came in January. The ETF inflows also posted a new weekly record on May 8th.
Market analysts observe that despite the risk of quantum attacks, the crypto sector and standards bodies are already working on post-quantum security protocols. Developers are interested in implementing some quantum-resistant cryptographic schemes before any real threat becomes apparent.
