Crypto doomsday? New quantum computer poses 'existential threat' to Ethereum and Bitcoin

Quantum Computers: What are their capabilities?

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Quantum computers are developing at a fast pace and could soon be used to crack the digital wallets used in cryptocurrencies such as and Ethereum. For cryptocurrency transactions to be processed with due diligence and authenticity, independent of a centralised authority, they rely upon cryptographic technology. However, it has been claimed the accelerating development of quantum computers could present an “existential threat” to the encrypted blockchains powering this nascent cryptocurrency financial revolution.

Speaking to Express.co.uk, David Williams, Chairman and co-founder of Arqit, a leader in quantum encryption technology, said: “The advent of quantum computing presents an existential threat to blockchain technologies.

“We have already seen large hacks of the crypto space, including the most recent $600m Poly Network attack, and this will only get worse since quantum computers and their immense power will easily be able to break the cryptographic security that protects crypto wallets, exchanges and other essential infrastructures.

“Crypto foundations, companies and those working on blockchain projects should take this threat extremely seriously and seek to upgrade their security systems.”

It is estimated the cryptocurrency ecosystem has between five to 10 years to strengthen its security measures so that it can survive hackers armed with quantum computers.

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Advances in “quantum computing presents an existential threat” to cryptocurrencies (Image: GETTY)

However, these hackers could also bring down the global financial institutions and central banks that provide the fiat currencies of the world economy, as they also rely on cryptographic security.

Mr Williams believes that “information is being harvested today for future decryption and that the likely arrival of a universal quantum computer is around five years”.

He added: “But what really matters is that companies like PsiQuantum and IBM have made huge strides this year in ‘error correction’ meaning that the number of ‘qubits’ or quantum circuits needed has collapsed from millions to thousands.

“This is not blue-sky research and development, it’s just good old fashioned product engineering showing that the industry is moving towards an endpoint.

“There are so many companies investing in this tech that what academics previously thought about what timescales were viable with small static university budgets is no longer relevant.

“There is also the risk that nation-states or other companies may be working in ‘dark mode’ and their advances could be much further along than the public currently knows.

“The blockchain industry cannot afford to be complacent.”

READ MORE: Dogecoin price prediction: Crypto forecasted to smash past $1 in sensational rebound

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Advances in “quantum computing presents an existential threat” to cryptocurrencies (Image: GETTY)

The cryptocurrency sector has made some effort to prepare for the coming quantum threat such as the idea of post-quantum algorithms.

However, Mr Williams suggests these will generate key sizes that are “far too large and can dramatically slow blockchains down”.

He added, “this is something that Charles Hoskinson, co-founder of Ethereum and the founder of Cardano, has acknowledged”.

Arqit, the company co-founded by Mr Williams, has worked to create a method of encryption that means that “unbreakable keys can be created for every transaction so they can’t be compromised”.

Mr Williams suggested the new approach developed by Arqit creates “symmetric encryption keys, at scale and at endpoints is the answer because they are just random numbers”.

Cryptocurrency ATMs around the world

Cryptocurrency ATMs around the world (Image: GETTY)

He added this is “because there are no maths a quantum computer can’t break, and the Arqit system, unique in the World, is a much more efficient (1,400 times faster) way of making blockchains quantum-safe.”

The news comes after China announced in late 2020 it had achieved ‘quantum supremacy’ with the development of a photon powered quantum computer.

The Chinese computer is called Jiuzhang and was designed by scientist, Chao-Yang Lu and is said to have the potential to solve mathematical problems in seconds that the world’s fastest conventional computer, Japan’s Fugaku, would take an estimated 600 million years to solve.

China, a country hostile to Bitcoin, Ethereum and decentralised finance cryptocurrencies, could potentially undermine the encryption used to store transactions used in blockchain ledgers if their quantum computer becomes more developed.

Quantum computing could also lay bare private communications, company data, military secrets and obliterate digital banking records.

Quantum computing could utilise the strange effects of quantum mechanics, such as superposition and entanglement, and accelerate the speed by which a quantum computer can solve certain problems, such as hacking encrypted communications in seconds.

Cryptocurrency ATMs around the world

Cryptocurrency ATMs around the world (Image: Express)

The same process of solving encrypted passwords would take classical computers millions of years.

This is because according to the effects of superposition, a quantum bit, or qubit, can be both 1 and 0 at the same time.

This is unlike the bit from classical computing, which can only be in one state, either 1 or 0.

Entanglement is another advantage of the quantum world that this computing revolution could capitalise on.

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