Quantum Computing Panic: Can It Crack the Blockchain?

As if Bitcoin hasn’t been through enough the last few days, with prices plummeting to historic lows following record outflows, now there are questions about its security.

Panic-inducing headlines about the safety of the market-leading token hit the internet hot on the heels of Saudi Arabia's announcement that it had acquired its first quantum computer from French tech company Pasqal.

Does Quantum Computing Pose a Real Threat?

When it comes to gambling with the world’s online safety, quantum computing is one area of development that shifts the odds dramatically - and not in a good way.

The 200-qubit machine, which Saudi Aramco, an energy and chemical company operated by the Saudi government, installed, is considered to be one of Pasqal’s most powerful systems to date.

While the French quantum computing company touts this as a landmark event, many other companies warn that the increasing capacity of these devices poses a very real threat to our most robust encryption system, the blockchain.

Commenting on a US Federal Reserve study, analysts Jillian Mascelli and Megan Rodden noted:

“Increasingly fault-tolerant and stable quantum computers will threaten existing public-key cryptography” - “(this) shift may present future operational and security risks, we highlight a present, active, and in some circumstances unavoidable data privacy risk posed by future-state quantum computers.”

The Public Nature of Decentralisation Becomes a Weakness

One of the core risks this technological innovation poses is the creation of an attack vector known as HNDL (harvest now, decrypt later).

While decentralisation was one of the key selling points for cryptocurrencies and the blockchain in the past - who didn’t want to gamble online in blissful anonymity - it becomes an exploitable weakness in a world dominated by quantum computing.

This is because the transaction histories of tokens like Bitcoin are stored in public ledgers. These ledgers are available for download to anyone on the internet, allowing all historical transaction data to be stored and decrypted at their leisure, potentially exposing the underlying digital signatures and crypto wallet ownership.

An excerpt from the Fed reports notes:

“HNDL means the real risk starts long before Q-Day. Anyone who has already copied a blockchain ledger or intercepted encrypted traffic could later decrypt it, turning past communications, financial transactions, and private records into readable text.”

While institutions are working to secure future contracts and transactions, these fixes will not apply to historical transactions, especially those that have been downloaded and stored on private servers.

Should Crypto Security be the Most Pressing Concern?

While interested parties are looking at the day when quantum computing can consistently crack blockchain encryption, a moment referred to as ‘Q-Day, it is not the only present danger presented by this burgeoning AI-enhanced tech/

Bolts Technologies founder, Yoon Auh, warns:

“Quantum computing is the first technology that could become a global digital weapon not controlled by any political system.” - “Nobody knows when, but the threat is no longer theoretical. It still can’t break ECC or RSA today, but progress is steady.”

American theoretical computer scientist and mathematician, Peter Shor, predicted in 1994 that quantum algorithms would easily defeat RSA (Rivest–Shamir–Adleman) and ECC (Elliptic Curve Cryptography), the methods that currently underpin the blockchain and most of the internet.

In theory, this means that not only your crypto wallet but every aspect of modern life, be it your Amazon cart, your Netflix logins, or your mobile casino and sports betting accounts, is available at the click of a button.

Not only that, but fiat banking, which is already notoriously open to scams and hacks, will essentially become an open book in a future where Q-Day runs amok unchecked.

Is There a Silver Lining in This Story?

Yes, there is a silver lining. As with any emerging technology where one side of the industry seeks to exploit its potential, there are those working tirelessly to harness its power for good.

With RSA and ECC not up to the task any longer, mathematicians at organisations like the National Institute of Standards and Technology are working on new post-quantum cryptography (PQC) algorithms.

According to its reports, it has already developed a number of standardised methods that have proven effective, and several federal agencies have been instructed to migrate to them by no later than 2035.

PQC specifically addresses the danger posed by HNDL: once a transaction is encoded, it cannot be decrypted later if it is recorded on Bitcoin’s public ledger. Securing the chain in this manner would require what is known as a hard fork, but it would enable the creation of a new and improved, quantum-resistant blockchain.

With a future-proof solution insight, the conversation now turns to the challenge of “crypto-agility”, which is the ability to protect existing records (some as far back as 1994).

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Are There Upsides to Advanced Quantum Computing?

While we can only theorise what doors quantum computing will open for online casinos and virtual gaming, the UAE is already seeing some tangible benefits:

1. Faster problem-solving for tasks that overwhelm today’s computers, especially in optimisation, simulation, and complex modelling.
2. Breakthroughs in medicine, such as speeding up drug discovery and helping researchers understand how molecules behave at the quantum level.
3. Stronger cybersecurity, including new encryption methods that could resist future hacking threats.
4. More innovative logistics and transport, improving things like traffic flow, delivery routes, and supply chain efficiency.
5. More accurate climate modelling, supporting better predictions and more effective environmental planning.
6. Energy system improvements, such as optimising power grid performance and accelerating the design of better batteries and solar materials.
7. Advances in AI, where quantum processors could train machine-learning models far faster than classical systems.
8. Financial modelling improvements that help organisations analyse risk, detect anomalies, and simulate economic scenarios more effectively.

Be sure to check back regularly as we follow the ongoing advancements in this and other innovation and technology sectors.