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Quantum Computing Threatens Blockchain: BOE Admits It will Impact Payments

Last Updated January 18, 2024 5:47 PM
Samantha Dunn
Last Updated January 18, 2024 5:47 PM

   Key Takeaways

  • The Bank of England blog outlined how quantum computing could affect digital currencies.
  • Quantum computing will enable more complex payment transactions.
  • Cryptography is an area that may be threatened by quantum computing capabilities.

The Bank of England has published a blog  post outlining how quantum technology could affect financial markets, and the potential for increasing efficiency in online payments.

The development of quantum computers will have a transformative impact on many industries, with quantum technology being a key focus for Big Tech companies.

Transforming Financial Systems

Ed Hill, Senior Research Data Scientist, and author of the BoE blog post, notes  that “quantum networks would allow a fundamental change to what a payment means, allowing counterparties to communicate sophisticated, conditional, strategies to the payments system”.

The blog underscores the transformative nature of quantum computers on payment systems, with quantum networks leading to a  “fundamental change to what a payment means, allowing counterparties to communicate sophisticated, conditional, strategies to the payments system”.

Hill uses the example of real estate to illustrate the use of quantum payment systems:

“Imagine that instead of simply saying ‘buy’, a party can say ‘buy, if…’ certain conditions on other simultaneous payments or events are fulfilled – like chains when houses are bought and sold, but much more complex and interrelated. A quantum computer would then allow the problem of which combination of instructions should proceed to be solved”.

These high-level changes will become clearer as quantum computers, networks and other technologies continue their journey from science fiction to reality.” the blog concluded.

 

How Quantum Computing Works

It’s important to note that quantum computing  is not yet a practical reality, however, all major technology development companies are exploring the value and potential of quantum computing, as they focus on how quantum computers might one day solve complex problems at lightning speed.

In regular computing, we use bits as the basic unit of information, which can be either a 0 or a 1. But in quantum computing, we use quantum bits, or qubits which can be both 0 or a 1 – a property called superposition. In simple terms, this allows quantum computers to process a lot of information at once.

The emerging technology is based on the principles of quantum mechanics to solve problems that are too complex for classical computers and could be used to create computers that are faster, more efficient, and able to solve important global problems.

Closing In On Mainstream Usage

IBM leads the way in quantum computing, recently unveiling its IBM Quantum System Two , a modular quantum computer that the technology corporation claimed will “further increase the quality of a utility-scale quantum technology stack – and put it into the hands of our users and partners who will push the boundaries of more complex problems”.

A number of recent quantum breakthroughs  have taken place, bringing widespread quantum computing closer to reality. A paper  by a group of IBM researchers demonstrated a new process by which a quantum computer could achieve a complex problem beyond the capacity of a standard computer, marking a significant advancement in the field.

Impact on Blockchain Protocols and Cryptocurrency Mining

Quantum computers could eventually solve mining puzzles much faster than current-generation mining devices, and could also threaten blockchain security which is reliant on cryptography.

One of the biggest weaknesses of blockchain is its reliance on one-way mathematical functions. This risk-factor was highlighted in an article published in Nature :

“The advent of quantum computing threatens blockchain protocols and networks because they utilize non-quantum resistant cryptographic algorithms. When quantum computers become robust enough to run Shor’s algorithm on a large scale, the most used asymmetric algorithms, utilized for digital signatures and message encryption, such as RSA, (EC)DSA, and (EC)DH, will be no longer secure. Quantum computers will be able to break them within a short period of time”.

China Develops Superconducting Quantum Computer

China’s third-generation quantum computer, Origin Wukong, went live on January 6, 2024, and has since completed 33,871 quantum computing tasks for global users since it became operational on January 6. The South Morning China Post reported  61 countries have accessed Origin Wukong since it went live. The US tops the list of countries accessing China’s quantum computer, although US quantum computers can’t be accessed by China.

The threat that quantum technologies pose to cryptocurrency is exacerbated by the rate at which these technologies are being developed. This has led to researchers looking into new methods to protect against the threat of quantum computing including the incorporation of quantum algorithms with blockchain  technologies as a way to further improve system securities.

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