The Bitcoin network should undertake urgent security upgrades to offset the imminent risk of being hacked by online crooks using quantum computers, according to Google scientists’ research.
In a paper published last week, Google’s team said it could take fewer than 500,000 qubits of quantum computing power to hack the Bitcoin network.
This is a 20-fold reduction from previous estimates of the power required to hack the $US1.4 trillion ($2 trillion) network and brings forward the timetable for Bitcoin to face its biggest challenge yet.
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Google’s research didn’t put a specific time frame on when quantum computers may harness the power required to hack bitcoin wallets.
But did warn the threat from supercomputers is a “rapidly closing window” to deliver needed upgrades for network security, and not “merely a distant danger to dormant keys”.
In particular a Bitcoin wallet is vulnerable if it has a public address to make a transaction, as an advanced quantum computer could use this information to unlock its private key to spend the owner’s other holdings, the paper said.
Future of Bitcoin
Today, a tiny fraction of holders use Bitcoin to spend like money as intended by its anonymous inventor Satoshi Nakamoto.
In reality, it’s used almost entirely for speculation. On Monday, its price fetched $US69,020 ($99,931), after a 44 per cent fall over the last six months in line with technology stocks and as investors pare back expectations the US Federal Reserve will cut interest rates in 2026.
Investors buy it hoping to sell it to someone else later for a higher price. Nobody buys it hoping its price will fall.
As no public body sets the standard for Bitcoin as a unit of account, or stands ready to redeem it, the price simply reflects the market’s opinion on its future popularity discounted for various risks.
This means the perception that Bitcoin is vulnerable to quantum computing could encourage others to sell on the basis its present value needs to be discounted lower to reflect the risk of a quantum hack.
“The value of cryptocurrency assets is based on their digital security (assured by code and cryptography) and public confidence in the decentralized system, rather than in third party intermediaries as in traditional banking,” Google’s paper said.
“The importance of public confidence in the system reflects the fact that cryptocurrencies, like traditional forms of money, are social institutions built on trust in the system and shared understanding of its rules and capabilities.
“While the digital security of cryptocurrencies can be attacked using cryptographically relevant quantum computers, public confidence can be undermined using Fear, Uncertainty and Doubt (FUD) techniques. In this sense, unscientific and unsubstantiated [qubit] resource estimates may themselves constitute a genuine or apparent attack on the system.”
Bitcoin as a store of value
In the future even if money disappears as means of payment, the world will always need a stable unit of account to price goods and services.
Not being backed by a government or central bank, Bitcoin’s price is too volatile to act as a stable unit of account. This suggests it cannot replace money, but will be a speculative asset relying on sufficient public confidence its value will rise.
More research papers and headlines suggesting its network security is at risk from advances in quantum computing are likely to shake that confidence.
For now, the Google researchers insist the risks posed by quantum computers can be offset by security upgrades including a full switch to a post-quantum-computing (PQC) network.
“We argue that steps towards this complex migration should begin immediately. In line with the defence-in-depth principle, we recommend that intermediate mitigation measures also be urgently adopted,” its paper said.
“Such measures are technically simpler than a full upgrade of the underlying cryptosystems which allows them to be deployed earlier.”
Currently around 6.9 million Bitcoin are vulnerable in having their public keys on the blockchain, the paper added.
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