Frankly the only concern I ever had about bitcoin was about quantum computers being able to break the encryption.
Let me explain:
Bitcoin only does one thing basically, and that is proof of work. It does that by solving a complicated algorithm called SHA-256.
Now, Satoshi Nakamoto chose that Secure Hashing Algorithm and now it is part of Bitcoin’s code, essentially its DNA. And we’ve all seen how things go when people try to tinker with Bitcoin’s DNA. *cough* Bitcoin Cash *cough*.
The point is that this is an algorithm that can be solved with a certain amount of processing power. No matter how fast computers get with Moore’s law, that states that computing power doubles every year, the difficulty built inside Bitcoin takes care of that issue. Even if we have computers that are twice as fast mining bitcoin, the next bitcoin will always be just out of their reach and they have to expend pretty much the same amount of computing power to get it as they did a year ago.
But, and this is a titanic but, quantum computers just throw a monkey wrench in the works and then toss in a grenade for good measure. Quantum computers are orders of magnitude faster than the computers we have today. We’re not talking about comparing Pentiums to 486 processors here, which is a significant improvement but you can still fit it in a neat chart. We’re talking about comparing an abacus to a Pentium. We’re talking off the charts. Like, look at that graph above this paragraph and put a dot on your ceiling. That’s where quantum computing will be in relation to current processors.
And this is the great fear for everyone in cryptography.
Wait, doesn’t that mean that Bitcoin is doomed?
Well, no. The cryptography nerds are some of the smartest mathematicians and computer programmers on the planet. This is a growing field, even more so with Bitcoin, and this doesn’t concern just the cryptocurrencies. Everything we use has built-in cryptography. Visa payments, computer logins, even this very website you’re reading right now has SSL encryption. So, all these people wagging their fingers telling you that quantum computers will be the end of bitcoin don’t really understand the implications of widespread adoption of quantum computing.
Let me be clear:
EVERYTHING WILL BREAK.
But we’re planning for that. The mathematicians and computer programmers in the cryptography space are not dumb. They’ve been planning for this for years now, and there are alternatives to the SHA-256 algorithm. From the Bitcoin Wiki we dispel the myth of quantum computers breaking Bitcoin’s security.
While ECDSA is indeed not secure under quantum computing, quantum computers don’t yet exist and probably won’t for a while. The DWAVE system often written about in the press is, even if all their claims are true, not a quantum computer of a kind that could be used for cryptography. Bitcoin’s security, when used properly with a new address on each transaction, depends on more than just ECDSA: Cryptographic hashes are much stronger than ECDSA under QC.
Bitcoin’s security was designed to be upgraded in a forward compatible way and could be upgraded if this were considered an imminent threat (cf. Aggarwal et al. 2017, “Quantum attacks on Bitcoin, and how to protect against them“).
Now, the problem is that we’d need to have a consensus to do this upgrade. We like to think that people will agree to the upgrade to a quantum-resistant algorithm if the future of Bitcoin is at stake. But I’m not very optimistic about that, people are dumb. We like to think that people are logical, when in fact they’re very much governed by emotion. Just look at the stock market.
Also, quantum computers are very much real, but they’re at the prototype phase. They require specific conditions, like near-absolute-zero cooling for superconducting materials, expert handling, cosmic particles throw them off and you need to account for that error, it’s a whole different ballgame. It’s not like you can just buy one and put it in your garage, at least not for now. The main thing people don’t get is that quantum computers are good for a different set of things. You’re not gonna run a videogame on them just because it’s faster. And as the wiki says, even if it’s a billion times faster, it doesn’t mean it can break a specific cryptograph.
Anyway, the conclusion is this: Quantum computing is a real threat. Yes, it threatens the DNA of Bitcoin, the SHA-256 algorithm. No, this doesn’t mean the death of Bitcoin, we can upgrade if need be. Yes, Bitcoin will probably survive even that. No, your financial institution is not immune, they rely heavily on cryptography too.
No, it’s not going away anytime soon.