{"id":3309,"date":"2022-02-11T11:28:55","date_gmt":"2022-02-11T11:28:55","guid":{"rendered":"https:\/\/xcoins.com\/?p=3309"},"modified":"2023-08-15T19:52:16","modified_gmt":"2023-08-15T19:52:16","slug":"what-does-quantum-computing-mean-for-bitcoin","status":"publish","type":"post","link":"https:\/\/xcoins.com\/en\/blog\/what-does-quantum-computing-mean-for-bitcoin\/","title":{"rendered":"What Does Quantum Computing Mean for Bitcoin?"},"content":{"rendered":"<p><i><span style=\"font-weight: 400;\">Some worry that the advent of quantum computing could pose a threat to blockchain security. We examine the potential impact on Bitcoin and the work being done to prevent the risk from materialising.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">The rapid growth of cryptocurrency over the last year has set the stage for digital currency to take over the world. More than 13 years on from the launch of Bitcoin, the world\u2019s first cryptocurrency, its market cap has skyrocketed to over a trillion dollars and it has been joined by more than 8,000 other coins.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But some believe that one of the biggest dangers to the crypto market is just around the corner: quantum computers. While quantum computing is still in its infancy, governments and tech conglomerates such as Google and Microsoft are leading efforts to develop the technology. What does this mean for the future of Bitcoin and other cryptocurrencies? Read on to find out.\u00a0<\/span><\/p>\n<h2><b>What is quantum computing?<\/b><\/h2>\n<p style=\"text-align: center;\"><i><span style=\"font-weight: 400;\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-3312\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-computer-1200.jpg\" alt=\"An image of a quantum computer.\" width=\"1200\" height=\"800\" srcset=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-computer-1200.jpg 1200w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-computer-1200-300x200.jpg 300w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-computer-1200-1024x683.jpg 1024w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-computer-1200-768x512.jpg 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/>IBM Q System One Quantum Computer at the Consumer Electronic Show CES 2020<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">To understand how powerful quantum computers will be, it&#8217;s easiest to compare them to how normal computers work.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ordinary, household computers contain computer chips that use \u201cbits\u201d. These bits are similar to small switches, which are binary, meaning that they operate on two positions: they\u2019re either in the on position (indicated by a 0) or the off position (indicated by a 1). Any function that you perform on your computer, such as playing a game or visiting a website, happens as a result of millions of bits working together as a mixture of 0\u2019s and 1\u2019s.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, not everything can be expressed as either on or off. As with anything in life, there are uncertainties that lie in between the two, but ordinary computers aren&#8217;t very good at expressing uncertainties. That&#8217;s where quantum computers come in.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Quantum computers use \u201cqubits\u201d rather than bits. As opposed to being in a clear position that\u2019s either on or off, as ordinary computers are, quantum computers can be in something called a \u2018superposition\u2019, a state which allows them to be both on and off simultaneously or operate somewhere between the two positions. A real-world example of this is the in-between position of a coin when you flip it in the air before you find out whether it lands on heads or tails.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because ordinary computer systems are binary, when you give them a task to do, they\u2019ll attempt each individual scenario one by one in order to find the solution. What makes quantum computers so powerful is that they can attempt multiple scenarios at once, meaning that they\u2019re able to process infinitely more data, at a much faster rate.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-3314\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200.jpg\" alt=\"A visual comparison of the difference between bits, used in ordinary, household computers, compared to the qubits used in quantum computers.\" width=\"1201\" height=\"1201\" srcset=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200.jpg 1201w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200-300x300.jpg 300w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200-1024x1024.jpg 1024w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200-150x150.jpg 150w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/quantum-1200-768x768.jpg 768w\" sizes=\"(max-width: 1201px) 100vw, 1201px\" \/><\/p>\n<p style=\"text-align: center;\"><i>Quantum computers use qubits while traditional computers use bits, allowing them to process data more efficiently.<\/i><\/p>\n<h2><b>Could quantum computing threaten Bitcoin?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">You may be wondering what this has to do with Bitcoin. In short, some fear that the power harnessed by quantum computers could be enough to crack the encryption that blockchains, such as Bitcoin are built on.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The security of Bitcoin transactions and wallet creation is based on a cryptographic algorithm called Elliptic Curve Digital Signature Algorithm (ECDSA). Every individual transacting in Bitcoin has a private key that corresponds with a public key. The private key is used to sign off and validate transactions, which is why it has to be kept a secret, however public keys can be shared with others so they can send you your crypto.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What makes cryptocurrency transactions secure is that it&#8217;s not possible to work out an individual\u2019s private key from their public key \u2013 which is composed of large prime numbers. This is partly because ordinary binary computers can&#8217;t factor in large prime numbers easily.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, one of the main algorithms that quantum computers use is Shor\u2019s algorithm. This means factorization can be done at an exponentially faster rate than ordinary computers, as they can attempt multiple solutions at once.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some fear that a hacker with a quantum computer could attain a private key from its public key pair. Once they\u2019ve got a private key, the hacker could hypothetically use a legitimate owner\u2019s Bitcoin funds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is no mean feat. In order to decrypt Bitcoin\u2019s encryption, <\/span><a href=\"https:\/\/www.newscientist.com\/article\/2305646-quantum-computers-are-a-million-times-too-small-to-hack-bitcoin\/#:~:text=Breaking%20this%20code%20is%20essentially,could%20theoretically%20crack%20it%20open.\"><span style=\"font-weight: 400;\">it is estimated a quantum computer would need to be a million times more powerful than the most powerful quantum computer is today<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-3316\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/hacker-1200.jpg\" alt=\"Person typing on a laptop wearing business attire to represent a hacker. 3D images of padlocks and binary code to represent cyber security.\" width=\"1200\" height=\"800\" srcset=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/hacker-1200.jpg 1200w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/hacker-1200-300x200.jpg 300w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/hacker-1200-1024x683.jpg 1024w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/hacker-1200-768x512.jpg 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p style=\"text-align: center;\"><i>Quantum computers will have the power to crack encrypted data, which could pose a security threat to Bitcoin.<\/i><\/p>\n<h2><b>What are the risks?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The biggest risk is that Bitcoin\u2019s decentralized structure could make it difficult to coordinate a defence against quantum computers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In order to execute a major upgrade on the network, the majority of miners need to agree on a change, which then leads to either a <\/span><a href=\"https:\/\/xcoins.com\/en\/blog\/whats-the-difference-between-a-hard-fork-and-a-soft-fork\/\"><span style=\"font-weight: 400;\">soft or hard fork<\/span><\/a><span style=\"font-weight: 400;\">. If this process of obtaining unanimous agreement takes too long, quantum computers could hypothetically compromise the security of Bitcoin\u2019s blockchain before it can be updated to prevent such an attack.<\/span><\/p>\n<h2><b>Should Bitcoin holders be worried?<\/b><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-3318\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/btc-network-gold-coin-1200.jpg\" alt=\"A pile of Bitcoin, represented as physical gold coins, on a circuit board with one Bitcoin standing on the top of the pile.\" width=\"1200\" height=\"710\" srcset=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/btc-network-gold-coin-1200.jpg 1200w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/btc-network-gold-coin-1200-300x178.jpg 300w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/btc-network-gold-coin-1200-1024x606.jpg 1024w, https:\/\/xcoins.com\/wp-content\/uploads\/2022\/02\/btc-network-gold-coin-1200-768x454.jpg 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">The short answer is \u201cno\u201d. Although any new technology is worth watching out for, here are a few reasons why hearing the words \u201cquantum computing\u201d shouldn&#8217;t make you rush to sell your holdings.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">There is a solution<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Specific types of encryption, namely post-quantum cryptography, can be deployed to create an impenetrable barrier against future quantum-related attacks.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Work is underway<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Developers of Bitcoin and other cryptocurrencies are well aware of the impact that quantum computers could have once they\u2019re fully developed and widely available. For that reason, they\u2019re actively working on quantum-safe security solutions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The National Institute for Standards and Technology (NIST) has begun work on the standards for post-quantum cryptography, with a 2024 rollout in mind. It&#8217;s also reported that the Ethereum Foundation, behind the <\/span><a href=\"\/en\/buy-crypto\/ethereum\/\"><span style=\"font-weight: 400;\">Ethereum<\/span><\/a><span style=\"font-weight: 400;\"> cryptocurrency, is mapping out quantum-resistant solutions.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Fear is premature<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">What&#8217;s most important to understand is that the current fear of quantum computing is premature. We&#8217;re several years away from its emergence in any meaningful form when it comes to impacting crypto, and work is already being done to ensure that cryptocurrencies remain secure upon its arrival.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This type of technology isn&#8217;t something that will be available overnight. We have plenty of advance notice, so researchers and developers have time to build and integrate quantum-safe cryptography.<\/span><\/p>\n<h2><b>The risks of quantum hacking go far beyond crypto<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">While <\/span><a href=\"\/en\/buy-crypto\/bitcoin\/\"><span style=\"font-weight: 400;\">Bitcoin<\/span><\/a><span style=\"font-weight: 400;\"> leads the cryptocurrency market, quantum computers are a topic of interest for the whole market, so it\u2019s in the interest of a wide range of parties to coordinate towards the development of reliable solutions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One of those parties is institutional investors who account for approximately 63% of crypto trading and counting. That\u2019s a big increase from only 10% in 2017. A crypto collapse would have a ripple effect on the whole financial system so it\u2019s likely that very powerful forces will be heavily invested in arriving at a solution.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It&#8217;s worth noting that the issue isn\u2019t limited to crypto, in fact, crypto may actually be one of the safest sectors when it comes to the risks of quantum hacking. Quantum computers will also be able to breach the cryptographic encryption which we use for other secured products, such as traditional bank accounts and email addresses.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s more than likely that protective measures will be taken across industries and as Bitcoin is the world\u2019s biggest cryptocurrency, we can expect that keeping it stable will be top of mind for a huge range of stakeholders.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">To stay up to date on all things crypto, like Xcoins on <\/span><\/i><a href=\"https:\/\/www.facebook.com\/xcoinsofficial\"><i><span style=\"font-weight: 400;\">Facebook<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, and follow us on <\/span><\/i><a href=\"https:\/\/twitter.com\/realxcoins\"><i><span style=\"font-weight: 400;\">Twitter<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"https:\/\/www.instagram.com\/xcoins.hq\/\"><i><span style=\"font-weight: 400;\">Instagram<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, and <\/span><\/i><a href=\"https:\/\/www.linkedin.com\/company\/54161996\/\"><i><span style=\"font-weight: 400;\">LinkedIn<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Some worry that the advent of quantum computing could pose a threat to blockchain security. We examine the potential impact [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":3321,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[740],"tags":[],"class_list":["post-3309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-analysis-2"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What Does Quantum Computing Mean for Bitcoin? I Xcoins<\/title>\n<meta name=\"description\" content=\"Some fear that the advent of quantum computers could leave cryptocurrencies vulnerable to attack. 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