Quantum Computers and Cryptocurrencies

Introduction

Quantum computers possess immense computational power, capable of solving complex problems at speeds far surpassing those of conventional computers. Some experts estimate that quantum computers could potentially crack current encryption algorithms in just a few minutes, while the fastest classical computers would require thousands of years. As a result, many existing digital security infrastructures, including the cryptographic mechanisms relied upon by cryptocurrencies like Bitcoin, may be at risk.

This article will explore the differences between quantum and classical computers and analyze the risks that quantum computing poses to cryptocurrencies and digital infrastructure.

Asymmetric Encryption and Internet Security

Asymmetric encryption, also known as "public key cryptography," is a crucial component of the cryptocurrency ecosystem and most internet infrastructures. This encryption method relies on a pair of keys for encrypting and decrypting information: a public key for encryption and a private key for decryption. In contrast, symmetric encryption uses a single key for both data encryption and decryption.

The public key can be shared openly, while information encrypted with it can only be decrypted by the corresponding private key, ensuring that the information remains visible only to the designated recipient.

A primary advantage of asymmetric encryption is that it allows for information exchange over insecure channels without the need to share keys. Without this mechanism, the fundamental information security of the internet would be unachievable. For instance, untrusted parties cannot securely encrypt information, making the concept of online banking based on such a foundation nearly impossible.

The security of asymmetric encryption partly relies on a premise: the algorithms that generate key pairs make it significantly difficult to derive the private key from the public key, while deriving the public key from the private key is relatively straightforward. This is mathematically referred to as a "trapdoor function," where the forward computation is easy, but the reverse computation is hard.

Currently, most modern key generation algorithms are based on known mathematical trapdoor functions. Cracking these trapdoor functions typically requires enormous computational resources and time. Even the most powerful classical computers today would take a considerable amount of time to perform these calculations.

However, if quantum computers are successfully developed, the situation could change dramatically. To understand why quantum computers are so powerful, we first need to grasp how classical computers operate.

Classical Computers

The computers we are familiar with are referred to as "classical computers." The operations of classical computers are performed sequentially, meaning that the next computational task cannot begin until the current one is completed. This is due to the fact that classical computer memory must adhere to physical laws, where the state can only be 0 or 1 (i.e., off or on).

Through various hardware and software methods, classical computers can break down complex computational tasks to enhance efficiency. However, fundamentally, their operations remain step-by-step.

For example, when a classical computer attempts to crack a password, it must try all possible combinations one by one. Suppose there are 16 possible keys; the computer behaves like someone using 16 keys to open a lock, trying one key at a time. If the first key doesn’t work, the computer continues to the next one until it finds the correct one.

As the length of the password increases, the number of combinations grows exponentially. For instance, if the key length increases to 5 characters, the possible combinations would amount to 32; if increased to 6 characters, there would be 64 combinations; and if it reaches 256 bits, the number of combinations would approach the number of atoms in the observable universe.

However, the speed of classical computers can only increase linearly. Even if the computation speed doubles, it can only double the number of attempts in a given time frame, and this linear growth cannot keep pace with the exponential increase in the number of combinations.

It is estimated that classical computer systems would require thousands of years to crack a 55-bit key. For reference, Bitcoin recommends using at least 128-bit mnemonic phrases, and many wallets even require 256 bits.

Thus, current classical computers do not pose a threat to the asymmetric encryption used in cryptocurrencies and internet infrastructures.

Quantum Computers

A rapidly developing computer technology that is garnering widespread attention is quantum computing. As this technology matures, the ability to crack the aforementioned encryption issues will become effortless. Quantum computers are based on the fundamental principles of quantum mechanics and focus on the behavior of subatomic particles.

In classical computers, information is represented by "bits," which can only be in a state of either 0 or 1. In contrast, quantum computers use "qubits" as their basic units of information. Similar to bits, qubits can also be 0 or 1, but the properties of quantum mechanics allow qubits to exist in a superposition of both states simultaneously.

Consequently, many universities and private enterprises are actively investing time and resources into quantum computing research, aiming to solve complex theoretical and practical engineering problems in this field and push the frontiers of technology.

However, quantum computers also bring a "side effect": their operational capabilities can easily break the foundational algorithms of asymmetric encryption, posing a fundamental threat to all systems relying on this type of encryption.

Returning to the earlier example of cracking a 4-bit key, theoretically, a 4-qubit quantum computer can try all 16 combinations simultaneously, completing the decryption in a single operation. In this scenario, the probability of finding the correct key is 100%.

Post-Quantum Cryptography

Quantum computing technology presents a severe challenge to the cryptographic defenses of modern digital infrastructures, with all systems, including cryptocurrencies, being vulnerable.

The security, operations, and communications of individuals, governments, and multinational corporations worldwide will be impacted. In response, various research and development institutions and experts are actively conducting investigations and developing solutions. Cryptographic algorithms designed to withstand quantum computer attacks are referred to as "post-quantum cryptographic algorithms."

Fundamentally, by increasing key lengths, we can effectively reduce the risk of quantum computers cracking keys using symmetric encryption techniques. While asymmetric encryption has gradually replaced symmetric encryption for securely sharing keys over public channels, the advancement of quantum computing may bring renewed attention to the latter.

With quantum cryptography, the security issues surrounding key sharing over public channels may be addressed. Some progress has already been made in the area of anti-eavesdropping. By utilizing the principles of quantum computing, we can detect eavesdroppers on public channels, thus determining whether the shared symmetric keys have been interfered with or tampered with by a third party.

Additionally, researchers are exploring other methods to counter quantum attacks, including using hash functions to generate large-scale messages and lattice cryptography. The goal of these studies is to identify types of encryption that are difficult for quantum computers to break.

Quantum Computers and Bitcoin Mining

Bitcoin mining also relies on cryptographic mechanisms. Miners compete to solve cryptographic puzzles in order to obtain block rewards. If a miner were to use a quantum computer, they could potentially dominate the entire network, undermining its decentralized nature and making it susceptible to a 51% attack.

However, some experts believe that this threat is not imminent. Application-Specific Integrated Circuits (ASICs) can mitigate the impact of such attacks to some extent, at least in the foreseeable future. Furthermore, if multiple miners simultaneously employ quantum computers, the risk of an attack would be significantly reduced.

Conclusion

As quantum computers continue to advance, it seems merely a matter of time before asymmetric encryption faces significant challenges. However, there is no need for excessive worry, as many theoretical and engineering problems in this field remain unresolved.

Information security is poised to face tremendous threats, necessitating proactive measures to prepare for potential future attacks. Fortunately, many experts are researching how to implement countermeasures for existing systems. Theoretically, these strategies will help protect critical infrastructure from the threats posed by quantum computers.

Just as end-to-end encryption has been widely adopted in popular browsers and messaging applications, post-quantum standards could also be broadly deployed in the public domain. Once these standards mature, the cryptocurrency ecosystem will be able to relatively easily integrate robust defenses against external attacks.

Risk Warning

While the cryptocurrency market offers significant growth potential and innovation opportunities, it also carries a high level of market risk and price volatility. The value of crypto assets can fluctuate dramatically in a short period, potentially leading to substantial financial losses for investors. Additionally, the cryptocurrency market faces multiple risk factors, including technical risks, legal and regulatory uncertainties, cybersecurity threats, and market manipulation. We strongly advise users to conduct thorough research and due diligence before making any investment decisions and to consult professional financial advisors. All investment decisions are made at the user’s own risk. Thank you for your trust and support of Venkate!

Building The Future of Crypto Exchange

Where Meet a Confluence of Inspiration and Innovation

Venkate Exchange is an innovative cryptocurrency trading platform, drawing its name and inspiration from Venkateswara—a deity symbolizing wealth and prosperity in Indian mythology.