Every few months, I see warnings that quantum computing is about to become a reality and that it will enable code breakers to solve password and encryption keys in minutes that previously would have taken millions or billions of years. This is a potential threat to Bitcoin, but somehow, people tend to focus only on Bitcoin.
First, I expect we’ll have functional quantum computers in our lifetimes. While there is regular debate regarding how soon and how powerful, it’s reasonable to assume that current cryptography will crumble when faced with an effective quantum computer with a low error rate. Let’s examine the implications for Bitcoin and other assets.
There are some who claim existing quantum computers could break all digital security securing the blockchain. Others say those kinds of computers are years away and an order of magnitude too slow to break blockchain security. High-level computing experts disagree on this point, and I don’t possess enough knowledge to let you know when a bad actor will be able to break the existing system. Some Bitcoin advocates assert that at that time, the blockchain could then be protected by quantum cryptography. Theoretically, that makes sense. Cryptography and digital security have been a cat and mouse game from the beginning. The fraudsters improve their game and the security experts find new ways to guard the keys.
Some could argue that the Bitcoin code is set up to reject any changes, and there is some truth to that. However, the system contains an option called a “fork”. Bitcoin holders who want to have theoretical quantum cryptography in the future could split from the Bitcoin holders who want to keep the same at-risk security. These things do happen on occasion, and there have been other votes. Even in the event of a security-related fork, I consider the probability of approving an increase in the 21MM cap to be around zero.
Fiat enthusiasts regularly cite potential quantum computing code breaking as the reason they avoid owning Bitcoin. Fair enough, but I don’t think they’ve thought through the problem thoroughly. In the event of a quantum computer in the wrong hands being used to break Bitcoin security protocols, do you think the bad actors will stop there?
I don’t. In that scenario, every single fiat currency, bank account, and brokerage account would be at risk. The only money that would have any value in that situation is physical possession of precious metals like gold and silver. You’ll also need some way to secure those self-custodied physical assets from theft. At this point, with the exception of some physical ownership of gold and some cash, all of our assets are digital and secured with similar kinds of security.
Quantum computing code breaking is a threat to the entire financial system, not just Bitcoin. Unless you want to secure all of your assets at home in physical form, it’s not clear to me that quantum computing is a bigger risk to Bitcoin than it is to any other financial asset even though the problem tends to be discussed as a Bitcoin-related risk.
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