Quantum computers will kill cryptocurrencies, but that’s just the start of it

The Thinker by Rodin

About five years ago I took my first gander at the BitCoin phenomenon. In that post I wrote:

In short, to trust a Bitcoin you must buy into its assumption that it can’t be hacked. Since the dawn of the computer age, hackers have demonstrated their ability to hack anything. They love the challenge. It’s reasonable to believe that Bitcoin is going to be hacked one of these days.

Five years later, BitCoin and similar cryptocurrencies are still safe, but they may not be much longer. This is because quantum computers, which are still-in-the-laboratory are going to fundamentally reinvent computing.

When I wrote this post on BitCoin, I was thinking some hacker would just figure out a very clever way to hack these coins that wasn’t so computationally prohibitive. Right now you can throw supercomputers for years at the problem and they won’t succeed.

Quantum computers though are leveraging actual quantum physics, and that looks like a game changer. If you follow my blog, you’ll realize I’ve been fascinated by quantum physics and its implications, most recently this post. Quantum physics is the study of the ultra tiny; it’s a realm so tiny it cannot be seen at all, but only inferred. The foundation of quantum physics seems ridiculous: it postulates that two things can be in two different states at the same time.

Quantum computers take advantage of this seemingly impossible fact of nature. By allowing a bit of storage in a quantum computer (an atom) to take on not just two values (0 or 1) but an extra value (both 0 and 1 at the same time), putting a quantum computer to a task that would challenge even a supercomputer becomes doable. As a practical matter, this puts the security of the Internet and most of our electronic trust-based systems in jeopardy. It looks like someone with the right quantum computer will be able to decode anything electronically encrypted without breaking much of a sweat!

One thing this will impact is digital currencies like BitCoin. Right now to “mine” a new BitCoin requires rooms full of servers. As most BitCoins have already been “mined”, creating new BitCoins gets prohibitively more expensive. With the right quantum computer though, creating new BitCoins won’t be a problem, even if there aren’t that many more that can be created.

But any digital currency that depends on this blockchain technology could be minted quite easily on a quantum computer. Effectively this means that the “preciousness” of digital currencies is going to go away. Quantum computers will be able to “mine” new digital currencies in whatever quantities will be desired. These currencies then move from being on something similar to a gold standard (a finite number of Bitcoins, for example) to a fiat currency.

But with fiat currencies like the U.S. dollar, some entity controls the creation of dollars (the Federal Reserve). With digital currencies, anyone with a correctly programmed quantum computer can create as many units as desired and the currency permits. In short, digital currencies will reach a point where they cannot be trusted and quantum computers should kill them.

Much scarier though is how easily these computers will crack passwords and encryption keys. Consider that electronic commerce is carried out over the Internet using pairs of public and private keys. The private key is retained by vendors like Amazon, and the public key is handed out, but you need both to make the transaction secure. If you can figure out the private key though you can certainly purport to be some entity that you are not, and once you have someone’s credit card or bank account number grabbing their money won’t take much effort. Of course, if you can easily figure out someone’s password with a quantum computer, not much remains private anymore, at least not in electronic form.

As bad as this is, it has much worse implications. Suppose North Korea or China get a leg up on us on quantum computers. Imagine the havoc they could create. Right now, China is leading on quantum computing. It’s not clear if the United States even has a strategy in this area. We have to hope the NSA is studying the problem and perhaps surreptitiously developing quantum computers too. Quantum computers will break the model of electronic trust that we take for granted. We will need something else that can’t be broken with quantum computers but which can still be done electronically. I can’t think of what can viably replace it. But moving whatever solution we come up with, we have to retrofit every system to use it instead.

The United States would be well advised to become the leaders in quantum computing, and quickly. Unfortunately, our tone-deaf Trump Administration is much more concerned about people seeking asylum on our border or getting rid of Obamacare than tackling a super-huge national security threat like quantum computing. Let’s hope that when the grownups are back in charge again, there is still time to gain the upper hand.

To get your head around this, watch this 3:44 video: