Fears of quantum computing breaking the back of blockchains are getting more realistic.
U.S.-based crypto exchange giant Coinbase has established an independent advisory board to evaluate and provide guidance on the threat quantum computing may pose to the cryptography used in blockchain networks. This issue has become increasingly discussed among notable financial leaders, such as Bridgewater founder Ray Dalio and VanEck CEO Jan van Eck, as it is thought to be preventing further institutional investment in crypto.
Since blockchain networks use cryptography to empower each user to have full autonomy over their digital assets on an individual basis, a cryptographically relevant quantum computer (CRQC) would effectively make these systems unworkable, as anyone with such a CRQC would be able to spend from any address. Of course, the cryptography used in these systems and the traditional financial sector can theoretically also be upgraded to be quantum-resistant.
In terms of specific activities, the new advisory board, officially known as the Coinbase Independent Advisory Board on Quantum Computing and Blockchain, will publish papers assessing threat levels, issue recommendations to institutions and developers, and respond to new breakthroughs in the quantum computing field as they arise. Board members include Director of the Quantum Information Center at the University of Texas at Austin, Scott Aaronson, and Co-Director of the Stanford Center for Blockchain Research, Dan Boneh.
Last year, new developments in quantum computing from the likes of Google, with its Willow chip, reignited excitement around the prospect of real progress in this emerging technology. Various technical organizations and institutions, such as the National Institute of Standards and Technology (NIST) and IBM, have outlined the mid-2030s as a time when fears over CRQCs will become more practical and real. In fact, many tech giants, such as Google and Amazon, have already implemented changes to prepare for what has increasingly become known as Q-Day.
One of the reasons those in the crypto space are interested in being particularly proactive when it comes to quantum preparedness — outside the fact that everything will break if a CRQC appears without being sufficiently prepared — is that decentralized systems tend to be more difficult to upgrade than centralized tech companies that have lead decision makers with the ability to have the final say on changes. Due to this longer timeframe associated with crypto network upgrades, it makes sense to start working on this issue before it is anywhere near an obvious, imminent threat.
Of course, it’s also true that crypto has become increasingly indistinguishable from traditional, centralized fintech. Blockchain networks are now being centrally operated by traditional fintech firms like Stripe and stablecoin issuers like Circle, as it has become clearer over time that mainstream userbases are more interested in dollar-compatible tokens than more volatile, crypto-native assets like bitcoin and ether. So, from this perspective, the vast majority of the crypto market would likely be able to upgrade to deal with the quantum threat in a timely manner.
On the other hand, Bitcoin itself still maintains a high degree of decentralization in its development process, which has made it extremely difficult to implement changes at the protocol level. The last improvement that altered the base protocol rules was Taproot, which was activated in 2021. The argument that Bitcoin will likely be slower to adopt changes than other networks has merit, as there could be heated disputes over specifics such as whether old, seemingly lost coins should be frozen.
Of course, there are several quantum computing startups that are hopeful old coins will not be frozen, as they’d like a chance to crack the keys holding around half a trillion dollars (depending on the day) worth of bitcoin treasure.
Bitcoin developers also see a hastily added upgrade for quantum computing as a potential security vulnerability and generally reject fear-based protocol developments outside of extreme circumstances. For now, there are some Bitcoin developers working on the issue, including a draft Bitcoin Improvement Proposal (BIP), and according to longtime cypherpunk and Blockstream CEO Adam Back, the correct approach isn’t fear but readiness for the worst potential outcome.
