Bitcoin's Quantum Computing Risk From a Practical Standpoint
A Balanced and Practical Outlook on Bitcoin's Quantum Computing Risk
This newsletter has effectively been dormant for a few years as I have been taking a long and potentially permanent hiatus from writing about cryptocurrency developments. However, the recent developments in Quantum Computing and the FUD which is being generated as a result of it is an area worth giving my thoughts on and one where I may be able to add some value.
What makes the quantum computing matter interesting is there is a lot of complicated vocab and fearmongering being proliferated on X. Given the generally complicated subject matter, it is completely natural for an immediate response to be one of panic and concern.
My goal here is to present the risk from the most balanced and practical standpoint possible and only in relation to Bitcoin. I will aim to explain the issue in a way which is easily understandable to someone with no knowledge of quantum computing, I will present the varying opinions on the mater, and I will consider what can be practically done by Bitcoin stakeholders.
What is the Quantum Computing Risk as it relates to Bitcoin?
Anything I’ve read so far on quantum computing has without fail came with complicated terminology such as qubits, various algorithm names, and some computing terminology. With little prior knowledge of the subject and after reading around it for a few days (which is clearly only scratching the surface of the surface), I believe it boils down to the following from a practical standpoint…
Our computing infrastructure as we know it is underpinned according to something known as classical physics. Classical physics is essentially a simplified model of how the world operates but at a much deeper level, it operates according to quantum physics which is vastly more complicated. Quantum computing is built on this branch of physics and as a result, it will be able to accomplish some tasks which are unreachable to computing systems built on classical physics. At the forefront of relevancy to Bitcoin stakeholders is quantum computing’s ability to factor large numbers. The inability of classical computing to do this is what Bitcoin’s security depends on.
And that’s pretty much what you need to know. Anything else is heading into the merry rabbit hole of what exactly is quantum computing. While I have found my initial foray into this rabbit hole interesting, the prior paragraph is ultimately my conclusion thus far from a practical standpoint.
But where does Bitcoin come into play? Essentially, Bitcoin’s security, particularly it’s cryptographic signature system, is built based on the limitations of classical computing capabilities as is basically every other security infrastructure in the world.
Quantum computing poses a risk to this security system and as a result, key players in the Bitcoin space are calling out for quick action which is uncharacteristic of the Bitcoin development process (note that Bitcoin has carried out two upgrades in the last decade). However, at the heart of the issue is a widespread disagreement over how concerning these risks really are.
We will consider the disparity of opinions in the following section. In the final section, we will give closer consideration to the timeline for these risks and what can be done from a practical standpoint.
The Disparity of Opinions on Bitcoin’s Quantum Computing Risk
It is worth noting that we already have quantum computers. The current discussion and fear is related to how these computers will progress and “when” and “if” they will be able break Bitcoin’s security system.
What sparked the recent spike in discussion and debate in this topic was the release of both a Google paper and Ortamic paper on Monday. These papers made estimates for when new improved algorithmic components of quantum computing would be capable of breaking ECC256 which is the security system that virtually all cryptocurrencies rely on. A straightfoward and fearmongering headline would say something along the lines of “Google says quantum computing will be capable of breaking Bitcoin’s cryptography by 2029”.
However, it’s a lot more complicated than that. The papers are essentially detailing algorithmic improvements that are showing that the amount of computational power quantum computers would need to break cryptocurrency security is lower than it was before. However, there is also a hardware component to quantum computers which still needs to have significant developments for the computers to be capable of fully utilizing the capacity of these algorithmic improvements.
Essentially, the hardware and software components of quantum computing are simultaneously improving and will eventually converge at a point where the security systems of cryptocurrencies are at risk. At what point this is is a huge matter of debate and this is why you will see huge disparities in opinion when you try get a gauge of the matter on X.
Others arguing that these scenarios are largely theoretical at this point as quantum computers have as of yet failed to demonstrate any practically significant results in terms of factoring large numbers. The responses in the community have ranged from “this needs to be urgently addressed” to “quantum computing is not a risk worthy of consideration”. Here is a collection of some quotes to give a rough idea of the differences of thinking on this matter.
“We’re at a 1 (out of 10) in preparedness as far as Bitcoin is concerned and we’re at a 9 in terms of the threat” Nic Carter, Castle Island Ventures
There’s basically 100% chance in my opinion for bitcoin to migrate to post-quantum schemes… IF cryptographically relevant quantum computers are ever built (in some decades). but why FUD? Adam Back, Bitcoin Developer
“It’s not FUD to point out that significant advancements are being made in quantum computing. It is FUD to make claims that ECC will be broken in X years. No one can honestly make predictions about the rate of progress we’ll see in the future, and how many breakthroughs are needed.” Jameson Lopp
I must say I have a lot of respect for Nic Carter and it was his X posts which brought my attention to this matter. However, I also have deep respect for the Bitcoin development team and professionals like Jameson Lopp. They have effectively navigated prior uncertainties such as the blocksize war and have also brought Bitcoin securely to the point which it is at today.
The main crux of the issue appears to be time horizon. Part of the community is arguing that a quantum computing threat could emerge to threaten Bitcoin’s security in the coming 5-10 years with the development community completely unprepared. Another part of the community have some compelling arguments that quantum will not be a threat in the near-term horizon and see the current research and work being done to eventually migrate to post-quantum security schemes as sufficient.
A key part of the tension is that the Bitcoin upgrade process is an extremely slow and arduous one woven with significant social consensus complexities. Bitcoin’s slow development process has historically acted as a feature and not a bug by ensuring that any updates are carried out in a highly secure manner.
Those currently raising awareness about quantum vulnerabilities see it as an unnecessary risk to not have a comprehensive upgrade prepared and are calling for Bitcoin developers to align on one. From this perspective, the risk lies in the combination of quantum computing’s unpredictable rate of progression and capability coupled with Bitcoin’s inherently slow development process.
What can Bitcoin holders do from a Practical Standpoint?
From my rudimentary dive into the subject, it is clear the the quantum computer risk as it pertains to Bitcoin is highly debatable. Experts agree that Bitcoin’s current cryptographic security will ultimately be broken at some point – either by classical or quantum computers – and there is ongoing work to improve it.
The current matter is that there is loud part of the community saying that the risks associated with quantum computing are no longer ignorable with the recent progression updates and a safeguard plan needs to be put in place. Even with this, the shortest expectations for quantum computing being capable of breaking Bitcoin’s security system are between 2030-2035. While such estimates are concerning on first glance, the risk of quickly implementing a Bitcoin upgrade should not be underestimated as there is a variety of complex interrelated implications such as signature schemes, block size, and transaction throughput to consider which all need to be carefully managed to optimize for Bitcoin’s long survival and health.
To come to a sophisticated opinion on the quantum computing risk would require a deep understanding of quantum computing and the various sides of the argument which I do not have. However, I have generally seen the inherent slowness in the Bitcoin development as a feature and not a bug which safeguards against unnecessary risk.
At the same time, it is also healthy that stakeholders can take to social forums to discuss potential risks, bringing awareness of issues to the forefront of the community, and encouraging developers to take action. This was the process through which I became aware of the current developments in quantum computing which initiated this foray into the topic. I will abstain from leaving too much of my personal opinion on the matter as I believe everyone should come to their own conclusion and progression in quantum computing does seem to be highly unpredictable.
From a practical standpoint, I would encourage concerned Bitcoin stakeholders to participate in and encourage discussion on the topic. Furtermore, one interesting point I did learn from my surface-level foray is that the quantum computing threat does not impact all bitcoin equally. The quantum computing risk depends on the type of address the bitcoin is in and whether that address has sent any transactions. For more information on how quantum computers would theoretically break Bitcoin’s security, I would recommend reading this post.
Author’s Note:
As noted above, quantum computing is also a relatively new topic for me. This post is my attempt to abstract away the complexities of the matter and leave the reader with practical notes and a balanced perspective in relation to Bitcoin specifically. You will find much more technical information on X and in blog posts. I can recommend following Nic Carter who is providing regular updates and discussion on the matter. If you enjoyed the piece, feel free to connect with me on X or LinkedIn.