Key takeaways:

Quantum computing can handle multiple possibilities simultaneously, creating increased processing power to solve more complex problems.

It threatens to crack cryptographic algorithms that secure cryptocurrencies, exposing private keys used to access crypto funds held in wallets.

The quantum computing impact on blockchain is concerning, as consensus mechanisms could be easily solved and smart contracts compromised.

Quantum computers could be available by 2030, but quantum-resistant cryptocurrencies are already being developed to protect against the threat.

Quantum computing stands poised to revolutionize technology. The step forward in computing power is truly extraordinary. In fact, Google estimates its recent quantum advancements are 241 million times more powerful than previous models and are able to instantly execute tasks that would normally take 47 years.

The full impact of quantum computing on cryptocurrency is a huge concern for the industry. Once quantum computing is fully developed, it could crack the cryptography behind digital currencies in minutes. If you own crypto, continue reading to learn about the threat of cryptocurrency vs. quantum computing, the future of cryptocurrency and quantum computing, and what you can do to protect yourself.

What is quantum computing?

Imagine a computer that is lightning-fast and whip-smart at processing information. To operate, it uses bits, which are like tiny switches that are set to either 0 or 1, to process information. Quantum computing is a supercharged version of this using special bits called qubits.

Unlike regular bits, qubits can be both 0 and 1 simultaneously, thanks to an invention called superposition. It’s like flipping a coin; it’s both heads and tails until you stop it.

Qubits can also be linked together through entanglement. This is a phenomenon where the state of one qubit instantly affects another, no matter how far they are apart. This is like having two magic dice; when you roll them, the same number always shows — even if one is on Earth and the other is on Mars.

Superposition and entanglement are complex theories to understand, but they are huge steps forward in computing. They give qubits the ability to handle multiple possibilities simultaneously to solve problems much faster. For cryptography, the coding information behind cryptocurrency is revolutionary.

Quantum computing feels like unlocking limitless computing power, but that could pose a disastrous threat to cryptocurrency. So, next up, it’s time to discuss cryptocurrency security and quantum computing.

Did you know? The concept of quantum computers was proposed by Richard Feynman in 1982 before Peter Shaw showed how they could be used to crack encryption in 1994. It’s older than crypto.

How quantum computing threatens cryptocurrency

The power of quantum computing enables computers to perform tasks previously impossible or that take an impractically long time. This step forward in computing power could break the cryptography securing cryptocurrencies. Regular computers simply don’t have enough processing power to crack the algorithms securing crypto, but quantum computing could potentially crack them instantly.

Cryptocurrencies rely on public and private keys to transact on blockchains. It is currently impossible to work out a private key from a public key. Quantum computing could compromise this with its ability to solve discrete logarithms and integer factorization.

If this encryption becomes crackable, it would give access to private keys and allow those with quantum computing to access and steal from crypto wallets. Essentially, it would make the whole industry valueless.

And if that wasn’t bad enough, the very fabric of blockchain is under threat, which is why you need to understand the wider blockchain vs. quantum computing battle.

The impact of quantum computing on blockchain technology

Blockchain technology has been a huge breakthrough in network security through distributed ledgers. Blockchains rely on the power of multiple (hundreds or thousands) computers. There’s no single point of failure, and to attack it, you need to command 51% of the processing power on the network.

On the biggest blockchains like Bitcoin, this is an impossible feat unless a quantum computer is used to undermine the security to take control and start altering blocks and transaction histories.

If that wasn’t bad enough, it would also affect the distribution of network power. There’s also the battle of quantum computing vs. cryptocurrency mining. Quantum computers could more easily solve the consensus mechanism puzzles, like proof-of-work (PoW), used to verify and mine new blockchain blocks. And the final nail in the coffin: The security of smart contracts could be compromised.

Cryptographic challenges: Quantum computing vs. blockchain

Quantum computing might not be the end of blockchain technology, though. Hash functions used in blockchain technology for encryption, data integrity and security have more immunity to quantum computers.

Hash functions use mathematical algorithms to convert a variable number of characters into a fixed number of characters. It’s like throwing data — e.g., passwords — into a blender and mixing it to produce a unique output, called a hash.

This is thought to be quantum-resistant because a hash function doesn’t use the same mathematical problems quantum can break, like factoring prime numbers. However, there are theories that Grover’s algorithm could threaten a hash function.

Did you know? IBM has developed quantum-safe cryptographic algorithms called ML-KEM, ML-DSA and SLH-DSA to help cybersecurity protect itself against the power of quantum.

Quantum-resistant cryptocurrencies: What are they?

Technology never stands still. While quantum computing threatens original cryptocurrencies like Bitcoin and Ether, new cryptocurrencies are being developed with claims to be quantum-safe.

The most notable project is Quantum Resistant Ledger (QRL), a full-featured quantum-resistant blockchain protocol. It uses a special digital signature called eXtended Merkle Signature Scheme (XMSS). It’s like a single-use lock that quantum computers can’t easily pick. The XMSS signature can only be used once, so every time you make a transaction, a new signature (lock) is created. This makes it hard for even quantum computing to figure out.

Did you know? Quantum computing qubits are very sensitive to their environment, and small changes cause them to lose quantum properties, a challenge the industry is struggling to overcome.

How to protect your crypto from quantum threats

Quantum computing is a scary thought, so what can you do as an individual to protect your crypto stash?

Change blockchains: Moving to a quantum-resistant cryptocurrency as it becomes available is the best protection against quantum threats. As the world moves closer to quantum technology, it could even be a strong investment strategy to hold these cryptos ahead of a possible market trend.

Multisignature wallets: Multisignature wallets deliver an extra layer of security as they require multiple encrypted keys to be exposed to access your crypto.

Cold storage: Employing best storage practices like cold storage helps to reduce vulnerabilities by keeping your crypto offline.

Regular updates: Make sure to stay on top of wallet firmware updates, which are regularly updated to improve security measures.

Quantum-resistant wallets: Long-term quantum-resistant storage is already in development, such as Anchor Wallet, which could stop people from using quantum computing for cryptocurrency hacking.

Future of cryptocurrency in a quantum world

Original cryptocurrencies could be under threat if they fail to adapt their encryption. For example, quantum computing and Bitcoin could be a big problem; some calculations predict Bitcoin could be hacked in just 30 minutes by a quantum computer — a scary thought for a crypto with over $1 trillion riding on it, something that is also echoed for the future of quantum computing and Ethereum.

The race to develop quantum-resistant blockchains

It’s uncertain exactly how quantum computing affects cryptocurrency, but quantum computing threats to cryptocurrency shouldn’t be underestimated. Right now, quantum computing is still in development, and estimates for when it’ll be available vary between 2030 and 2050. So, the technology isn’t quite ready yet. This buys crypto the time it needs to adapt to remain secure.

Of course, the industry isn’t sleeping on this with increased investment in the development of quantum-resistant technology and quantum computing in crypto research. It shouldn’t be forgotten that this is a threat to all cybersecurity, even banks and governments that rely on traditional encryption methods.

So, the race is on for both quantum computing vs. decentralized finance (DeFi) and traditional finance.

Disclaimer：

1. This article is reprinted from [cointelegraph], All copyrights belong to the original author [Marcel Deer]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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