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There is a lingering fear among cryptocurrency investors that their bitcoin could be run over by a hacker.
It’s not very likely, but it’s not impossible either, especially once quantum computing gets into the wrong hands. Last year Google’s quantum computer called Sycamore was given a puzzle that would have taken even the most powerful supercomputers 10,000 years to solve – and completed it in just 200 seconds, according to the journal Nature.
That kind of processing power unleashed on the bitcoin blockchain – which is a heavily encrypted ledger of all bitcoin transactions – is cause for concern.
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The encryption technology used by the bitcoin blockchain has proven robust enough to withstand all attacks. This is due to its brilliant design and continuous improvements by an ever-growing community of cryptographers and open source developers.
A report by the research group Gartner (Hype Cycle for Blockchain Technologies, 2020) suggests that blockchain researchers are already anticipating possible attacks by quantum computers that are perhaps five to 10 years away from commercial availability. It’s a topic called “Postquantum blockchain” which is a form of blockchain technology that uses quantum-resistant cryptographic algorithms that can withstand the attacks of future quantum computers.
The good news is that quantum-resistant algorithms are likely to remain several steps ahead of hackers, but it is an issue that is attracting considerable attention in the financial, security and blockchain communities.
Postquantum cryptography is not yet a threat, but crypto exchanges will need to implement quantum-resistant technologies in the next few years, before quantum computers become generally available.
Phishing is probably a bigger threat
In truth, you’re much more likely to be hit by a phishing scam, where identity thieves use fake emails, text messages, and websites to trick you into divulging sensitive personal information such as bank accounts or crypto exchange passwords. .
As a user, you should use LastPass or similar software to generate strong passwords, along with two-factor authentication (which requires you to enter a time-sensitive code before you can log into your crypto exchange account). Most valid exchanges are enabled for this security level.
There are many sad stories of bitcoin theft, but they are usually the result of weak security on the part of the bitcoin holder, just like leaving your wallet in the front seat of your car as you walk into the store for a minute.
Like all technological breakthroughs, quantum computing can be used for better or for worse.
On the plus side, it will greatly accelerate drug discovery, molecular modeling, and code breaking. It will also be a gift to online hackers and thieves, which is why financial services firms will need to invest in defensive technologies to keep customer information and assets safe.
Most cryptocurrency exchanges invest substantial amounts in security. The vast majority of crypto assets (approximately 97%) are stored in geographically separate encrypted offline storage. These cannot be violated.
The risk arises when bitcoins are moved from offline (or cold storage) to online, for example when a customer is about to make a transaction.
But even here, the security level is generally robust. An additional layer of protection is the insurance of all bitcoins stored in online systems. They also have systems in place to prevent any employee from robbing customer assets by requiring multiple “ keys ” before a bitcoin transaction is authorized.
There have been hacks on crypto exchanges in the past (although not the blockchain itself) and millions of dollars in crypto assets have been stolen. In more recent years, this has become less common as exchanges have moved to strengthen their security systems.
In 2014 Mt.Gox, at the time responsible for around 70% of all bitcoin transactions in the world, suffered an attack when around 800,000 bitcoins, worth 460 million dollars, were stolen. In 2018, Japan-based cryptocurrency exchange Coincheck was hit by a $ 534 million fraud that impacted 260,000 investors.
As the value of bitcoin and other crypto assets increases, the incentive for hackers increases proportionally, which is why problems like quantum theft have already been addressed.
Read: Moneyweb Crypto glossary
