June 06, 2023 - 11 min read
When it comes to the future of computing, blockchain and quantum computing are two of the most fascinating and controversial industries. While blockchain is far more advanced in its practical applications — including the creation of cryptocurrency and cryptography that can be used by individuals and enterprises — the quantum computing industry is also growing at a breakneck speed. In fact, quantum computing is perhaps second only to blockchain in industry growth rates, with the industry expected to grow at 25% per year from 2022 to 2027.
Some experts believe that advances in quantum computing could be the beginning of the end for blockchain; as quantum computers might be able to break the encryption of even the most advanced blockchains. Alternatively, quantum computers, in some capacities, could replace blockchains as an even more advanced method to secure the future of data.
In some ways, blockchain encryption and quantum computing are locked in a race to determine which will win the cryptography race. The essential question is perhaps whether quantum computers will develop quickly enough to hack blockchains. The answer will be determined by whether cryptographers develop security solutions fast enough to protect themselves from quantum hacking.
However, the relationship between quantum computing and blockchain may not necessarily be adversarial; some researchers believe that quantum computing and blockchain technology will end up merging. This could create more secure, faster, and potentially revolutionary computing solutions that could end up helping to solve a variety of both cryptographic and real-world problems.
For those who may be unfamiliar, quantum computing is a unique type of computing that harnesses “quantum states” to solve logic problems that would take either an incredible amount of processing power, or would be practically impossible for regular supercomputers to solve. Instead of analyzing a set of problems one by one like a traditional supercomputer, quantum computers can analyze huge amounts of potential problems and answers simultaneously. These computers use the powers of quantum physics to minimize the amount of potential wrong answers incredibly quickly while honing in on potentially correct answers with incredible speed.
Current computers, often referred to as classical computers, consist of bits that are either 1s or 0s, but not both. Instead of bits, quantum computers consist of qbits, which, due to a concept called quantum superpositioning, allows these bits to simultaneously exist in both states at the same time. In addition, unlike traditional bits, qbits can influence each other in a process called quantum entanglement, which creates one, large quantum state for the entire computing system. Each time a qbit is added, the number of potential states of the computer doubles, giving these computers massive computational abilities compared to classical computers.
In addition to solving highly complex problems, quantum computing also has incredible potential to change the world of encryption. Due to the nature of quantum physics and quantum states, the state of a specific piece of information actually changes when it is observed. Therefore, in theory, quantum encryption could be truly unbreakable, as the state of any piece of information would be irrevocably changed if it was viewed by anyone (or any machine) other than the intended party. However, just like quantum computing can create powerful encryption technologies, it can also potentially break previously unbreakable forms of encryption, which places it in potential conflict with the entire purpose of blockchains.
Companies like IBM are currently utilizing quantum computers to solve problems as diverse as developing higher energy-density batteries for electric cars, developing new materials that can be created with fewer carbon emissions, and even searching for particles that could shed light on the origin of the universe.
In contrast to quantum computing, blockchain can be described as a set of distributed ledger technologies that use cryptography to create a ledger of information that cannot be effectively changed once it has been validated by a series of distributed computers, referred to as nodes. Using various consensus mechanisms, a distributed network of nodes agree or disagree to “validate” blocks of information, adding it to the blockchain. Blockchains are fully in the realm of classical computing, meaning that the blockchain will only be in a single state at one point in time.
As the industry has shown, blockchain technology is a fantastic tool for creating distributed applications via self-executing smart contracts including digital currencies, logistics and record-keeping protocols, and various financial products. These include lending, staking, yield farming, and even distributed insurance protocols.
However, due to network constraints, blockchain is not necessarily good at solving problems that require a high level of computational problem-solving ability. In fact, slow transaction speed is one of the biggest issues in blockchain today, with new blockchains racing to deliver solutions that can operate at a higher amount of transactions per second (TPS). In contrast, quantum computing has great potential to solve some of the big, hairy problems that science and technology present, but it’s not necessarily a good tool to create consumer applications used by everyday people.
Therefore, it can be safely said that quantum computing is two highly distinct technologies, but how they interact could change both industries forever.
When it comes to quantum computing and blockchain, one major concern is that quantum computers could overpower blockchain encryption— leading to the end of secure cryptocurrency as we know it. If quantum encryption can overpower blockchain cryptography, it could lead to massive cryptocurrency thefts and major disruption, if not collapse, for the entire crypto industry.
One study by Deloitte showed that 25% of bitcoin could be stolen in one attack. As of January 2022, that would amount to approximately $300 billion, and, as the cryptocurrency market size continues to grow dramatically, a quantum computer-based crypto hack could end up stealing trillions of dollars, potentially throwing the global economy into chaos, destroying entire blockchains in the process.
Specifically, a well-known theoretical computer algorithm called the Shor function, when implemented by a quantum computer, can, in theory, solve for the prime factors that are currently concealed by elliptic-curve multiplication. This is a form of multiplication used for hashing that is (currently) nearly impossible to reverse (i.e. discover the original numbers that were multiplied together to form the private key).
For example, researchers have calculated that it would take a classical computer 340,282,366,920,938,463,463,374,607,431,768,211,456 basic operations, to determine a private key associated with a public key utilizing elliptic-curve multiplication. In theory, that could take thousands of years.
In contrast, according to the same calculations, a quantum computer utilizing Shor’s function would take only 2,097,152 basic operations to determine the private key associated with a public key. This, in contrast, might only take a few hours. It’s important to realize, however, that mainstream quantum computers have not, as of yet, developed the ability to utilize Shor’s function, and it’s unclear exactly when this functionality will be fully developed.
In addition to breaking blockchain encryption, another concern is that quantum computers could replace traditional computers for cryptocurrency mining. If these computers, as is theorized, can mine exponentially faster than traditional mining equipment like ASICs, it could lead to unstable asset prices, 51% attacks, and extreme centralization of mining power. It should be noted, however, that this is mainly a concern for proof-of-work blockchains like Bitcoin, and would, in general, not likely impact proof-of-stake-based consensus models. Due to environmental concerns and other factors, most proof-of-work blockchains, like Ethereum, are moving toward proof-of-stake and other consensus models that do not involve computationally-intensive mining.
Despite these calculations and estimates, not all experts believe that quantum computing will effectively be able to hack blockchains and render traditional cryptography obsolete. For instance, some believe that the SHA-256 encryption used in bitcoin may be quantum-resistant. Even if quantum computers will be able to break current blockchain encryption methods, this could take 10-20 years, giving blockchain cryptographers a strong head start in order to develop new and more powerful encryption methods.
In addition, RSA encryption, the most common alternative to elliptic curve cryptography, may also be somewhat quantum resistant. While elliptic curve cryptography is considered more secure than RSA encryption when it comes to traditional de-encryption, experts suggest that the reverse may be true when it comes to quantum decryption. Plus, even if RSA ends up being ‘quantum hackable,’ soft forks and constantly changing wallet addresses may be able to alleviate much of the practical ability for quantum computers to break blockchains or steal cryptocurrency.
While some believe that quantum computing could destroy blockchains and cryptocurrency as we know it, others believe that quantum encryption can combine with blockchains to create blockchains that are exponentially more secure than today’s protocols. In theory, these blockchains would be highly resistant to both traditional hacking and quantum computer attacks.
Specifically, experts believe that traditional methods of blockchain cryptography, such as asymmetric-key algorithms, and hash functions utilizing the aforementioned elliptic-curve multiplication, could be replaced with quantum keys.
Quantum key cryptography, also known as quantum key distribution (QKD) operates by sending “quantum particles” of light, in the form of photons, across an optical link. As we mentioned earlier, any attempt for an eavesdropper to view the photons being transmitted would effectively cancel the verification transaction.
In order to be practically effective, these quantum keys would need to be used with One-Time Pad (OTP) encryption, which would generate keys that could only be used once.
One fascinating paper published in The Journal of Quantum Computing entitled Quantum Blockchain: A Decentralized, Encrypted and Distributed Database Based on Quantum Mechanics by Chuntang Li, Yinsong Xu, Jiahao Tang, and Wenjie Liu detailed how the use of quantum computing for future blockchains may also provide other benefits; particular for node choice randomization, currently a major problem in blockchain. Instead of utilizing current randomization methods, a quantum blockchain protocol could utilize a quantum random number generator to pick a randomly chosen verifier node.
The paper posits that quantum blockchains also have the potential to replace the classical Byzantine agreement protocol with a new type of quantum-Byzantine agreement protocol, which would employ quantum encryption. While highly theoretical at this point, this could both help prevent 51% attacks and result in the creation of new and highly-secure quantum-encryption based cryptocurrencies.
While most of the above refers to the creation of new quantum blockchains, it’s also possible that quantum technology could be applied to existing blockchains, which could both increase decentralization and potentially decrease transaction times for major blockchains like Bitcoin, Ethereum, and Solana.
One potential issue that’s extremely unclear, and not covered in the referenced paper, is how quantum computing functions, including quantum key generation, would be distributed via node operators. Currently, most quantum computers are both highly experimental and extremely expensive, meaning that it could be difficult to achieve the large number of node operators required for a truly decentralized blockchain. However, that could be changing; one company in China has unveiled a small quantum computer that costs only $5,000, far less than it currently takes to run a full Ethereum node.
So far, only two public blockchain projects have claimed to be fully quantum-resistant, the Quantum Resistant Ledger and Bitcoin Post Quantum. The Quantum Resistant Ledger (QRL) calls itself “a post-quantum secure blockchain featuring a stateful signature scheme and unparalleled security.”
To do this, the QRL protocol utilizes “IETF specified XMSS, a hash-based, forward secure signature scheme with minimal security assumptions.” XMSS is an extended Merkle signature scheme that utilizes Merkle trees. These are trees in which each node is labeled with the cryptographic hash of a data block.
A Merkle tree can be defined as “the complete hash of all the hashes of all the transactions in a single block in the existing blockchain network.”
State-based hashful signature schemes like Merkle signatures are thought to be much more resistant to quantum hacking than either RSA or elliptic curve cryptography. However, state-based hashful signature schemes, like XMSS, may be vulnerable if a key is used more than once, which does put them at a disadvantage to other forms of cryptography.
Currently, the National Information Technology Laboratory (NIST) Computer Security Resource Center is actively soliciting research and comments on these cryptographic technologies in order to assess their potential strengths and weaknesses for both civilian and government use. In addition to XMSS, NIST is currently evaluating nearly 70 new methods for “post-quantum cryptography.”
The Quantum Resistant Ledger claims that its “extended” Merkle signature scheme is both more efficient and more secure than traditional Merkle signature schemes, though this is difficult to prove without a truly effective quantum computer to break-test it.
In addition to developing a proprietary blockchain, the group has issued its own cryptocurrency (QRL), which, as of January 2022, had a price of less than $0.20 and an overall market cap of slightly more than $14 million. Like the blockchain it’s based upon, the creators of QRL claim that the cryptocurrency itself is also the first currency that is fully secured against quantum hacking. Like other cryptocurrencies, QRL can be mined from either an individual node or as part of participation in a mining pool.
In addition to the somewhat popular QRL project, another blockchain project, Bitcoin Post Quantum, also claims to use hash-based stateful extended Merkle Signature Scheme (XMSS) to secure itself against quantum computing attacks. Specifically, BPQ is an experimental branch of Bitcoin’s primary blockchain that uses quantum-safe digital signatures instead of more traditional encryption techniques. In future years, the research that BPQ has conducted may be the basis for introducing quantum-resistant cryptography to the main Bitcoin network.
Unlike QRL, BPQ is currently in more of a research stage, and its planned currency BitcoinPQ is not currently being mined.
The future of quantum computing and blockchain is extremely uncertain– and could be one of the defining factors in the future of computer science. Blockchain has helped democratize the internet, create cryptocurrencies, and has generated the world’s largest distributed computer networks in the form of popular blockchains like Bitcoin and Ethereum.
In contrast, quantum computing, which is still in its early stages, has the potential to help solve many of the most impactful scientific and technological questions of our time, advancing technology in ways we can’t yet foresee. If quantum computing and blockchain clash, it could be a disaster of epic proportions. However, if cryptography continues to advance to create increasingly quantum-resistant encryption methods, or if quantum encryption itself is integrated into blockchains, the marriage of these promising technologies could help create a more secure, democratized internet with a greater potential to create a positive impact on the world around us.
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