The rapid developments in quantum computing that raised concerns in the cryptocurrency market late last year, especially regarding Bitcoin’s long-term stability, have returned.
The on-chain data analytics platform recently addressed these issues in a series of articles titled “Quantum Computing Poses a Growing Risk to Bitcoin.”
As quantum technologies advance, Bitcoin mining security and private key flaws may become major issues.
Quantum Risks of Bitcoin Mining and Network Security
Bitcoin's Proof-of-Work (PoW) method validates transactions and secures the network using computing power. By avoiding tampering with the blockchain, the SHA-256 hashing algorithm for Bitcoin mining provides great security.
CryptoQuant warns that quantum algorithms, particularly Grover's algorithm, could "speed up hashing processes."
Quantum computers that outperform traditional mining equipment could give quantum miners control over block validation. This dominance could disrupt the network’s consensus and threaten Bitcoin’s decentralization.
CryptoQuant emphasizes keeping a significant amount of non-quantum hashing power in the network. A vibrant and diverse mining environment would reduce the possibility of a quantum-based monopoly.
Quantum mining supremacy is still theoretical, but miners and developers should keep a close eye on developments.
Beyond mining, quantum computing threatens the security of Bitcoin’s private key. Bitcoin wallets and transactions are secured by cryptography and public and private keys.
Shor's algorithm could enable quantum computers to extract private keys from public keys, undermining the security of the wallet.
Pay-to-public-key (P2PK) addresses, where the public key is the wallet address, are particularly vulnerable. However, Pay-to-public-key (P2PKH) addresses hash the public keys for added security.
When bitcoin is transferred from these addresses, the public key is exposed, making quantum attacks more likely. CryptoQuant has also seen a 14% growth in P2PKH address usage in recent months.