Will Quantum Computing Kill Bitcoin?

Bitcoin and other cryptocurrencies are now embedded in the global financial system. Countries are creating strategic reserves, and institutional investors, from hedge funds to pension schemes, are allocating capital to digital assets.

Many individuals, businesses, and even governments are exposed to price fluctuations in this notoriously volatile market. But could it all collapse overnight if quantum computing renders the technology behind cryptocurrencies obsolete, potentially causing trillions of dollars in value to vanish?

That’s the risk some experts associate with quantum computing. These futuristic machines harness the strange properties of quantum mechanics to perform specific types of calculations exponentially faster than even the most powerful supercomputers. Given enough power, quantum computers could one day break the cryptographic foundations of blockchain systems like Bitcoin.

So, how real is this threat? Could it mean the end of crypto or the start of a new chapter in the age of post-quantum security?

The Threat

At the start of 2024, an estimated 500 million people globally held Bitcoin or other cryptocurrencies, a 34% increase from the year before. The majority of holders reside in Asia and North America. In many cases, these assets represent a substantial portion of personal wealth or national reserves.

If a technological advance were to render these assets insecure, the consequences could be severe.

Cryptocurrencies function by ensuring that only authorized parties can modify the blockchain ledger. In Bitcoin’s case, this means that only someone with the correct private key can spend a given amount of Bitcoin.

Bitcoin currently uses cryptographic schemes such as the Elliptic Curve Digital Signature Algorithm (ECDSA) and Schnorr signatures to verify ownership and authorize transactions. These systems rely on the difficulty of deriving a private key from a public key, a task that is computationally infeasible for classical computers.

This infeasibility is what makes “brute-force” attacks, trying every possible key, impractical. Classical computers must test each possibility one by one, which could take millions of years.

Quantum computers, however, operate on different principles. Thanks to phenomena like superposition and entanglement, they can perform many calculations in parallel. In 1994, mathematician Peter Shor developed a quantum algorithm capable of factoring large numbers exponentially faster than classical methods. This algorithm, if run on a sufficiently powerful quantum computer, could undermine encryption systems like ECDSA.

Counter-Measures

The core difference lies in how quantum and classical computers handle data. Classical computers process data as binary digits (bits), either 0s or…