Quantum computing and public-key cryptography
While commercial viability remains some way off, the unique properties of quantum mechanics could one day allow quantum computers to uncover solutions to previously unfathomable problems, such as climate change and cancer. Switching to quantum computing will have the added benefit of reducing energy consumption – quantum computers are ten times more energy efficient than classical supercomputers.1
It is difficult to predict when, if ever, quantum computing will supersede classical computing. But given the investments being made by deep-pocketed governments and multinationals, it is likely that a breakthrough will occur at some point. Indeed, it may have already occurred. In October 2019, Google announced what may one day prove one of the greatest advances in the history of technology, claiming it had reached ‘quantum supremacy’ by performing a calculation on its quantum computer, Sycamore, that no traditional computer is capable of matching.2
Quantum computing may one day endanger all existing use cases for public-key cryptography, including Bitcoin.3 The (still theoretical) problem arises from the fact that Bitcoin, like all major cryptocurrencies, relies on the mathematical relationship that exists between a public and private key.
In simple terms, a public key is similar to a bank account number. A private key is similar to a secret PIN which provides access to the account.4 Anyone wishing to transact in Bitcoin must provide a digital signature (their private key) to prove ownership of the address where their funds are stored (the public key).
In 1994, a mathematician called Peter Shor published a quantum algorithm capable of breaking the relationship between private and public keys. He proved that if someone had enough quantum computing power, they could use his algorithm to discern the private key from its corresponding public key, and thus, falsify any digital signature.5
Implications for Bitcoin
Only holdings whose public keys are already ‘publicly available’ are vulnerable to quantum attack. Unfortunately, this is fairly common. When Bitcoin was founded in 2008, public keys served directly as the Bitcoin address of the recipient. This type of transaction (‘pay to public key’ (p2pk)) was identified as a problem in 2010, and a new transaction (‘pay to public key hash’ (p2pkh)) was created in response. Under p2phk, a public key is only revealed to the outside world at the moment the owner wishes to begin a transaction.6
The prerequisite for being ‘quantum safe’ is that the public key associated with an address has never been made public. As a result, Deloitte estimates that about 25 percent of all Bitcoin already mined is vulnerable to quantum attack – those stored in p2pk and reused (and therefore public) p3pkh addresses. Transferring these coins to a new p2pkh address removes this risk.
However, even if these protection measures were taken by all Bitcoin holders, quantum computers might one day become so advanced that they completely upend the Bitcoin protocol anyway. This could happen by finding a new way to make private keys insecure. Alternatively, one Bitcoin miner gaining quantum supremacy would give them the computational power needed to mine blocks much faster, rendering competitors uneconomic almost overnight.
The solution to both is to transition over time to a new type of cryptography called ‘post-quantum cryptography’, which would enable the Bitcoin protocol to run on quantum-resistant algorithms capable of thwarting even the most computationally intensive of quantum attacks. Post-quantum cryptography remains an active field of research, with multiple research projects underway.7
Megatrend summary: Quantum Computing
- Quantum computing may one day solve humanity’s most vexing problems.
- Around 25 percent of the Bitcoin already mined is theoretically vulnerable to quantum attack.
- The miner who first achieves quantum supremacy will dominate the industry.
- Post-quantum cryptography will enable the Bitcoin protocol to run on quantum-resistant algorithms capable of thwarting quantum attacks.
 Chicago Quantum, Quantum Computers are more Energy Efficient, 29 August 2019, https://chicagoquantum.medium.com/quantum-computers-are-more-energy-efficient-b6ba62bcb9f2
 Google AI Blog, Quantum Supremacy Using a Programmable Superconducting Processor, 23 October 2019, https://ai.googleblog.com/2019/10/quantum-supremacy-using-programmable.html
 ARK Invest, Bitcoin Mining The Evolution of a Multibillion Dollar Industry, 9 March 2020, https://research.ark-invest.com/bitcoin-mining-white-paper
 Antonopoulos, Andreas M., Mastering Bitcoin, 2nd Edition, Chapter 4, Keys Addresses, O’Reilly https://www.oreilly.com/library/view/mastering-bitcoin-2nd/9781491954379/ch04.html
 Deloitte (Netherlands), Quantum Computers and the Bitcoin Blockchain, https://www2.deloitte.com/nl/nl/pages/innovatie/artikelen/quantum-computers-and-the-bitcoin-blockchain.html
 ARK Invest, Bitcoin Mining The Evolution of a Multibillion Dollar Industry, ibid.