After Google, largest U.S. crypto exchange warns of quantum threat

By TheStreet Roundtable

7 days ago

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Last month, Google warned that a quantum computing system could crack a Bitcoin (BTC) transaction in about nine minutes.

Not today, but the crypto industry should be prepared for the challenge in the near future, the tech giant warned in a white paper.

Now, the largest crypto trading exchange in the United States has also issued a similar warning.

Coinbase-commissioned report sounds alarm

Founded in 2012, Coinbase Global (Nasdaq: COIN) is the largest crypto trading exchange in the United States.

In January this year, the company set up an independent advisory board to study the impact of quantum computing on blockchain networks like Bitcoin and Ethereum (ETH). The board is composed of leading experts like:

Professor Scott Aaronson, director of the Quantum Information Center at the University of Texas at Austin
Professor Dan Boneh, cryptography professor and co-director of the computer security lab at Stanford University
Justin Drake, Ethereum Foundation researcher
Sreeram Kannan, EigenLayer founder
Yehuda Lindell, Coinbase cryptography head
Professor Dahlia Malkhi, head of the Foundations of Fintech Research Lab at the University of California, Santa Barbara

On Apr. 21, the advisory board published its first position paper and said though cryptocurrencies are safe for now, the industry needs to start preparing.

The board said it has "high confidence" that a sufficiently powerful quantum computer will eventually be built that will break the cryptography underlying virtual assets.

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What's at stake

Though experts expect at least a decade before such a system is built but a shorter timeline can't be ruled out, it said.

As per the Coinbase-commissioned paper, Bitcoin’s core infrastructure, such as mining, hash functions, and historical ledger, isn't "meaningfully threatened" by quantum computing.

But it threatens cryptocurrencies at the wallet level, such as cryptography proving a user's asset ownership, digital signature, etc. Most vulnerable are wallets with publicly visible key information.

"For Bitcoin, an estimated 6.9 million BTC fall into this category."

Proof-of-stake (PoS) chains like Ethereum have additional exposure in the signature schemes used by validators, the paper warned.

The solution seems to exist but implementation is the harder part. The paper underlines that quantum-safe signatures are significantly larger and affect transaction speed, costs, and storage.

Migration of millions of wallets, with every user required to take action, is an enormous coordination challenge, it acknowledged.

While Bitcoin and Ethereum are exploring new roadmaps, chains like Solana, Algorand, and Aptos are offering or planning quantum-resistant options.

However, crypto assets held in lost keys or inactive/abandoned accounts will inevitably be vulnerable to quantum attacks. The board recommended that the responsible network make a quick decision around how it plans to deal with such vulnerable holdings.