Quantum Computers vs Cryptocurrencies: What is the Risk? – Coin Push Crypto Alerts

Quantum computers represent a fundamentally different computing paradigm compared to classical computers, leveraging principles like superposition and entanglement through the use of qubits. Unlike classical bits that are either 0 or 1, qubits can exist in multiple states simultaneously, enabling quantum machines to process vast amounts of information in parallel. This capability threatens to disrupt many cryptographic systems that underpin cryptocurrencies.

Cryptocurrencies such as Bitcoin and Ethereum rely heavily on cryptographic algorithms designed to be secure against classical attacks. However, the unique power of quantum algorithms-most notably Shor’s algorithm-poses a significant risk. Shor’s algorithm can efficiently break widely used asymmetric cryptography schemes (like ECDSA and RSA), potentially allowing attackers to derive private keys from public keys and compromise digital signatures.

While practical, large-scale quantum computers capable of mounting such attacks are not yet available, their eventual development could undermine the security foundations of current cryptocurrencies. Understanding the nature of this risk is crucial for preparing effective defenses and ensuring the long-term resilience of blockchain technologies.

How Cryptocurrencies Work

Cryptocurrencies like Bitcoin and Ethereum run on blockchains – public ledgers of transactions grouped into blocks. Miners bundle transactions and solve a cryptographic puzzle (proof-of-work) to add each new block, securing the chain. The security of transactions relies on cryptography. Every wallet has a public key and a matching private key. The private key is secret; the public key (or its hash) is shared on the blockchain. When you send coins, you create a digital signature with your private key that anyone can verify with your public key. For example, anyone can encrypt a message using your public key, but only you (with the private key) can decrypt it. In cryptocurrencies, this means only the private-key holder can authorize spending. If an attacker obtained your private key, they could sign transactions and steal your funds.

In Bitcoin, addresses often start as hashes of a public key (P2PKH), which hides the key until you spend coins. Early “pay-to-public-key” (p2pk) addresses actually exposed the raw public key on-chain. In those cases a quantum attacker could use Shor’s algorithm to recover the private key from the known public key and steal any funds at that address. Even with hashed addresses, once you make a spend transaction your public key is revealed on the blockchain. If a sufficiently powerful quantum computer were watching, it could immediately break that key and potentially forge a second transaction. In short, the backbone of cryptocurrency security – elliptic‐curve digital signatures and hash functions – depends on math that quantum algorithms may break.

Quantum Threats to Cryptography

Quantum computers run special algorithms that threaten today’s crypto:

• Shor’s Algorithm (Asymmetric Crypto): Shor’s algorithm can solve integer factoring and discrete logarithms efficiently. It can derive an elliptic-curve private key from its public keymedium.com. This means a quantum adversary could break ECDSA and RSA. In cryptocurrencies, that lets an attacker forge digital signatures, spend coins from any address whose public key is known, and undermine blockchain integrity.
• Grover’s Algorithm (Hashing, Symmetric Crypto): Grover’s algorithm gives a quadratic speed-up for brute-force search. It halves the effective security of hash and symmetric algorithms. For example, SHA-256 (used in Bitcoin’s mining and addresses) would drop from 256-bit to about 128-bit security under Grover. 128-bit security is still strong today, but advancing quantum power will gradually make brute-forcing hashes easier. Likewise, AES-256 encryption would effectively be no weaker than AES-128 under Grover. In practice, symmetric-key methods remain much safer than asymmetric ones: a large key size still provides strong protection.

The main vulnerability for blockchains is Shor’s algorithm. Once a public key is revealed, Shor’s algorithm could compute the private key rapidly enough to break signatures. Current networks assume signatures cannot be forged, but a quantum attacker could break that assumption. Hashing and mining (Grover’s threats) are secondary issues – they make proof-of-work somewhat faster for a quantum miner, but do not fatally break the protocol.

How Soon Is a Quantum Threat?

Experts disagree on timing, but most agree we have years to decades before crypto is at risk. Estimates vary: a 2022 analysis notes that the number of qubits is roughly doubling each year, but building a fault-tolerant quantum computer with millions of qubits (needed to break 256-bit ECDSA in hours) is extremely challenging. One projection showed 13 million qubits by ~2037 if growth continues exponentially. However, realistic considerations of error-correction delays that timeline to 2040 or later. Even so, practical cryptographic attacks likely require 10–20 years to develop.

Real-world experts echo this caution. The National Institute of Standards and Technology (NIST) notes that while some forecasts put a cryptographically relevant quantum computer in under 10 years, others predict decades are needed. Coinbase says current quantum hardware is noisy and error-prone, with a large quantum threat still “years or even decades away”. A 2025 survey of quantum progress concludes that a machine capable of instantly breaking Bitcoin’s ECDSA is unlikely in the 2030s, but could emerge sometime in the next 10–20 years. In short, the quantum threat is real but not imminent – giving the crypto industry time to adapt.

Mitigation: Quantum-Resistant Cryptography

The cryptographic community has already been preparing for this. Post-quantum cryptography (PQC) aims to replace vulnerable algorithms with new ones secure against quantum attacks. In 2024, NIST expects to publish its first PQC standards. Approved candidates include:

• Lattice-based schemes (e.g. CRYSTALS-Kyber, CRYSTALS-Dilithium): use hard lattice problems.
• Hash-based signatures (e.g. SPHINCS+, XMSS): rely only on secure hash functions.
• Code-based and multivariate systems: based on error-correcting codes or polynomial problems (similar to schemes like McEliece or Rainbow).

These families are believed to resist both classical and known quantum attacks. For example, a hash-based signature like XMSS or Winternitz One-Time Signatures (WOTS+) only uses hash chains, which so far no quantum algorithm can break. Lattice-based cryptography (the basis of Kyber and Dilithium) is also widely viewed as strong against quantum methods.

Cryptocurrency projects are exploring or already implementing these quantum-safe ideas. Some notable initiatives:

• Quantum Resistant Ledger (QRL): Built from the ground up to be quantum-safe, QRL uses XMSS (eXtended Merkle Signature Scheme) instead of elliptic-curve signatures. XMSS is a hash-based, stateful signature scheme approved by IETF and NIST that offers forward security. QRL’s whitepaper highlights that “it’s always been the case that QRL has been built with non-Elliptic curve encryption”.
• Mochimo (MCM): A cryptocurrency designed for quantum resistance. It implements WOTS+ (Winternitz One-Time Signatures), an EU PQCrypto–approved hash-based signature scheme. Mochimo’s developers worked directly with the algorithm’s creators to validate their code. They note that WOTS+ was chosen because hash-based signatures “do seem to be resistant to quantum computing attacks so far”.
• Others in development: Some platforms (like Cardano and Ethereum) have research programs on PQC. Cardano published studies on adapting Winternitz signatures, and Ethereum’s roadmap includes plans to support post-quantum upgrades (for example via zero-knowledge proofs) in the future. However, most major blockchains (Bitcoin, Ethereum, many altcoins) currently use vulnerable elliptic-curve or RSA signatures.

Table: Quantum-Safe vs. Vulnerable Cryptocurrencies

Cryptocurrencies also face a “harvest now, decrypt later” risk: attackers could record encrypted transactions today and decrypt them once quantum computers exist. U.S. agencies (NSA, CISA, NIST) have issued guidance urging organizations to inventory critical cryptographic systems and start migration plans well before quantum breakthroughs. For crypto, this means moving funds out of old addresses, upgrading wallets, and planning protocol forks to swap in PQC algorithms. For example, all Bitcoin users are advised to use a fresh new address for each transaction, avoiding reuse (so no long-term exposure of any given public key. Miners and developers are studying potential forks or soft-upgrades that could introduce lattice-based or hash-based signatures when standards are finalized. The transition will be challenging – PQC keys are larger and slower – but the industry is highly motivated. As one study notes, “The blockchain industry is one of the most advanced in awareness of the quantum computing threat,” and projects like Ethereum and QRL are leading efforts to address it.

Defenses and Future Outlook

Even if a breakable quantum computer appears sooner than expected, cryptography is evolving. NIST’s PQC program (with industry and academia) will soon finalize standards (post-2024) for public-key encryption and signatures. Many PQC candidates rely on the same mathematical problems for public keys and keys used by blockchains, so updating crypto protocols is largely an engineering effort. In practice, if threats accelerate, blockchains could fork to switch signature algorithms (just as they have for hash or key-size upgrades in the past).

Symmetric algorithms and hashes can also be strengthened: doubling a key length effectively counters Grover’s speed-up. For instance, moving from AES-256 to AES-512 (or simply requiring long-term data to use AES-256 with keys refreshed) would push quantum brute-force costs back into infeasible range. Likewise, using SHA-3 with larger output or chaining hashes can mitigate Grover’s impact.

Importantly, balanced voices in the community urge cautious preparation rather than panic. Reviews by security firms emphasize the threat is real but not immediate. Famous cryptographers and standards bodies agree: 10–20 years is a reasonable window to retool our crypto systems. During that window, “crypto-agility” (the ability to plug in new algorithms) will be critical. Fortunately, blockchain networks are already aware of this need, and collaboration between developers and cryptographers is underway.

In summary, quantum computing poses a serious long-term risk to cryptocurrencies’ security, but it is one the industry is actively addressing. Most experts do not expect an immediate crisis, but they strongly advise preparing now. By monitoring developments, supporting post-quantum upgrades, and using fresh addresses/keys as a precaution, crypto investors and developers can greatly reduce the risk. Future-proofing the ecosystem with quantum-resistant cryptography – whether by adopting lattice-based signatures, hash-based signing, or other PQC schemes – will ensure digital assets remain secure in the coming decades.

Summary of Quantum Vulnerabilities vs. Quantum-Safe Options

• Asymmetric Signatures: Current schemes like ECDSA and EdDSA can be shattered by Shor’s algorithm. Quantum-safe replacements include hash-based signatures (XMSS, SPHINCS+) or lattice-based signatures (Dilithium).
• Hash Functions: SHA-256’s effective strength drops to 128 bits under Grover, still robust for now. Using SHA-3 with longer output or simply treating Grover’s speedup as halving key-length (e.g. AES-256→AES-128 equivalent) maintains security.
• Cryptocurrencies: Nearly all major coins (Bitcoin, Ethereum, etc.) today use vulnerable ECC or RSA schemes. In contrast, a few projects (QRL, Mochimo) use hash-based or one-time-signature systems that are currently considered quantum-safe. Other platforms are researching upgrades.

By staying informed, following expert guidance, and migrating assets and protocols proactively, crypto investors can navigate the quantum transition safely.