Alex Beath, a Toronto-based physicist and pension fund analyst, is skeptical about Bitcoin but sees one useful purpose for the crypto-currency: It may detect when someone creates a working quantum computer.
“The second someone creates a viable quantum computer, the NP-complete math problems at the heart of Bitcoin mining tech become instantly solvable,” Beath notes. “In other words, one answer to the question ‘what’s the first thing you’d do with a quantum computer?’ is ‘mine all of the remaining Bitcoin instantly.” Until that happens, nobody has a quantum computer.”
Beath’s off-the-cuff observation, which he made in response to Fortune about the security of bitcoin, is amusing. But it also underscores a serious problem: Namely, a new era of computing is fast-approaching and when it arrives, the system that gave rise to many crypto-currency fortunes will collapse.
The threat posed by quantum computing to Bitcoin and other software systems designed around its underlying encryption is not new. Indeed, it was predicted decades ago, and Ethereum founder (and former journalist) Vitalik Buterin wrote about how to defend it in 2013.
The difference today, though, is that companies like <a href="http://fortune.com/2017/09/25/microsoft-quantum-computing/">Microsoft</a>, Google and IBM are making rapid breakthroughs that could make quantum computing viable in less than 10 years.
Right now, engineers are stymied over how to deploy enough “qubits” (a quantum version of the binary bit system used in traditional computers that lets a unit be a 0 and 1 simultaneously).
According to CEO Louis Parks of SecureRF, which is developing quantum-resistant security systems, the number of qubits in a machine has recently soared from 16 to 50. This is far from the 4,000 to 10,000 that would likely be needed to crack Bitcoin’s cryptography but, at this point, Parks says quantum computing is at an early stage—akin to when the Wright brothers started taking flight.
In other words, it’s not too soon for crypto-currency “hodlers” to worry about the security of their fortune. The good news is that both Beath and Buterin think it will be possible to modify digital wallets to defend against quantum attacks, though doing the same for mining will be a bigger task.
The bigger issue in all this, however, is Bitcoin’s future vulnerability is just a microcosm of what the entire world will face when quantum computing arrives. That’s because the same vulnerabilities are present in our online banking and shopping systems, and in many of the computers all around us. As chip maven and Fortune alum Stacey Higginbotham put it when I asked about the threat to digital currency:
“As for the end of Bitcoin, I’d worry more about the end of cryptography and AES [Advanced Encryption Standard] encryption itself.”
Lots to chew on there — thanks for reading, and enjoy more security and fin-tech tidbits below.
Jeff John Roberts
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
ARM-maggedon. Well, more like Intel-maggedon. The discovery that every processor in the world is exposed to so-called “Meltdown” and “Spectre” attacks is, um, not good. But ordinary consumers may misconstrue the vulnerability and the risk it poses (very low for now) without simple, well-written explanations.
Ripple, are you for real? Ripple’s rapid rise to number two in the crypto-currency scene (and its co-founders ascent to top 10 on the world’s rich-guy list), is bringing out the doubters. Check out this Twitter throwdown between Ripple’s CEO and the NYT’s crypto-reporter.
Criminals break from Bitcoin. It’s a bad sign when a product loses a core customer base. But in the case of Bitcoin—and its longtime criminal clients— it’s probably a mixed blessing that ransomware extortionists and drug dealers are ditching it in favor of Monero, a rival crypto-currency that’s harder to trace.
Shady flashlight apps for Android are so 2010. But they’re making a comeback.
Share today’s Data Sheet with a friend:
Looking for previous Data Sheets? Click here.
—Fortune’s Aaron Pressman explains how to prevent your web browsers being exploited for Spectre attack. It’s a long-shot risk but better safe than sorry.
Blockchain May Provide a Sustainable Solution for Fishing by Jeff John Roberts
Why Smart Lock Startup Otto Has Suspended Operations by Jonathan Vanian
Why the $29 iPhone Replacement Deal Could Hurt Apple’s Stock by Aaron Pressman
Apple Watch is Impervious to Spectre and Meltdown, Experts Say by Jonathan Vanian
Intel Says Major Security Bug Also Affects ARM and AMD by Aaron Pressman
On Bitcoin and Nazis. Media accounts are noting how the boom in crypto-currency values is also swelling the bank accounts of hate groups who receive donations in Bitcoin. It’s a good time to tip our hats to clever people who build Twitter bots to track such transactions.
This is a preview of a research report from Business Insider Intelligence . To learn more about Business Insider Intelligence,… Read More
New York, NY 16 Sep 2019: – According to a new study published by Polaris Market Research the global blockchain… Read More
(Image: Stockfresh) Pro 16 September 2019 | 0Research firm Gartner, whose past evaluations of blockchain have been conservative to say… Read More
Bill Barhydt, CEO of Bitcoin investment platform Abra , claims that Facebook staffers told him the company wanted to use… Read More
Bitcoin and crypto investors were put on notice this week when French and German government officials backed European Central Bank… Read More