Emma Newbery, The Motley Fool
6 min read
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Quantum computing's development is advancing faster than many people expected.
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It's only a matter of time before quantum computers are able to break the encryption on millions of Bitcoin addresses.
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The crypto community must prepare for this impending security risk.
Crypto investors are accustomed to volatility risk. You have to be when prices of coins regularly swing by 10% or more in mere days. Unfortunately, volatility is just one of several potential pitfalls of crypto investing. And sometimes, the short-term noise can make it easy to overlook the bigger, longer-term risks.
Quantum computing is one such long-term threat. Without delving too deeply into how these two complex technologies work, the issue is that if quantum computers become powerful enough, they will pose a significant threat to Bitcoin's (CRYPTO: BTC) security. If you're a buy-and-hold investor with an interest in crypto, this is an issue you need to have on your radar.
The crypto community thought they had decades before quantum computing became a pressing problem. However, a recent article on Decrypt, a news website focused on the decentralized web, says that experts are now worried that the industry has a decade, or maybe only a handful of years, to prepare. Moreover, around 4 million Bitcoins could be at risk right now.
To be clear, quantum computing is not going to break the cryptographic protection around people's wallets today. However, in 1994, a mathematician called Peter Shor published an algorithm that showed how a quantum computer, if it were powerful enough, could break the encryption standards commonly used nowadays.
It's all about how crypto keys work. Bitcoin and other cryptocurrencies use a system of public and private keys to authenticate transactions. Let's say I wanted to send you some Bitcoin. I would use your public key to make the transfer. You would then use your private key -- like the PIN to your bank card, only much, much longer -- to finalize the transaction.
Each public key is generated from the corresponding private key. Asymmetric cryptography makes it practically impossible to reverse-engineer a private key from a public one. Using classical computers -- the digital type with which we are all familiar -- the task would require a prohibitive amount of time and computing power. But it isn't impossible.
Quantum computers, though, use a different technology for solving problems, and for certain unusual uses, that method could be much faster. One of those potential uses is solving the type of problem that would derive a private key from a public one. And once someone knows your private key, they can then access or transfer your crypto.
