With so much of the modern business world being run on the internet, data security has become a critical topic for both companies and individuals.
The prevalence of encryption methods offer a level of protection for online users when transmitting confidential or sensitive information, such as financial records or passwords.
If a digital transmission is not encrypted, it is left vulnerable to attacks from outside threats. For example, if you make a credit card purchase on an unsecured website when connected to a public wi-fi hotspot, then any hacker connected to the same network can easily intercept and steal the data.
Blockchain technology, the foundation on which cryptocurrencies like Bitcoin were built, has been praised for being highly secure. Each transaction in a blockchain is linked to surrounding ones, which make it very difficult for a hacker to manipulate the records.
But of course the blockchain’s security structure has only been tested against a current-day set of computing power. Those who are invested in cryptocurrencies need to be aware of what is coming in the future, specifically the rise of quantum computers.
Given the radical performance shift between normal computers and quantum computers, there is reason to be concerned with how cybersecurity could be impacted. This article will provide an overview of quantum computing and how blockchain technology will react to it.
How key encryption works
Cryptocurrencies like Bitcoin operate in a fundamentally different way than banks, credit cards, and other traditional financial institutions. With a blockchain system, there is no central authority or government that manages and regulates the flow of currency.
Instead, the blockchain is built on a wide network of distributed nodes, each of which run a series of algorithms that maintain the integrity of all transactions. Each time you trade a share of Bitcoin or execute a purchase with a digital wallet, the record of the transaction is replicated across the globe.
At the core of blockchain’s security structure is the concept of key encryption. When you create a new cryptocurrency account, you’ll gain access to a digital wallet that has both a private key and a public key. Like the names suggest, you should never share your private key with any other individual. Every transaction you make will have your wallet’s private key embedded in it, and the recipient will use the public key to verify your identity.
By the way, if you own cryptocurrency and don’t want someone to take it from you like happened to the unfortunate souls who lost hundreds of millions of dollars during the Mt. Gox and Coincheck incidents, now would be the perfect time to become familiar with the different versions of digital wallets (cold, hot, free). The feature to pay attention to is whether or not the wallet is connected to the internet. That way lies danger!
Overview of quantum computers
The blockchain’s encryption method is secure against most traditional hacking attempts thanks to the peer-to-peer (P2P) network of distributed nodes. In a traditional banking system, an attacker could infiltrate a central database and gain access to your account numbers and balances.
If a hacker attempts to modify a block of cryptocurrency and redirect the private key, the other nodes on the network will halt the action. In theory, a hacker could only make such a change if he or she was able to modify more than 50 percent of blockchain nodes at the exact same time.
Today’s computers don’t have the power to execute such a timed attack, but quantum computers could pose a new threat. Quantum computing operates on what’s known as qubits, which allow the systems to process values between 0 and 1 and offer an exponential step in performance power.
In order to be able to manipulate a blockchain, quantum computers would have to run an algorithm that’s capable of calculating prime values and factors of very large numbers. If done fast enough, this kind of algorithm could crack the private key encryption on blockchain elements and make the whole system vulnerable.
Importance of hashing
The good news for cryptocurrency enthusiasts is that blockchain technology has a second layer of security beyond its key encryption. Thanks to secure hashing algorithms, also known as SHA, blockchain elements become much harder to crack and expose.
Many online companies use SHA systems for storing sensitive information in databases, especially passwords. When you enter a password on one of these sites, the algorithm stores a hash value in the database instead of the original text. This will prevent both internal administrators and external hackers from seeing passwords. SHA is designed to be a one-way function, which means that a hashed value can never be converted back to its original input string.
Bitcoin and many of the other top cryptocurrencies use the SHA-256 algorithm on all transactions. This level of hashing is considered to be a strong shield against quantum-based hacks, although it does not completely rule out the chance that a supercomputer could execute a successful attack.
A user’s digital private key is only used at the exact moment when a blockchain exchange occurs. For a quantum computer to interject itself in the transaction and bypass both the encryption and hashing, it would have to modify the hash values in the small span of time between when the transaction begins and is validated by other nodes on the network.
The concern of a quantum-powered attack on the blockchain is minimal at this point, given the way that validation is performed on the network. In order for a hacked hash value to be successfully added to the blockchain, the attacker would need to have control over more than 50 percent of all nodes.
SEE ALSO: “For blockchain to be really successful, we have to understand where and why to deploy it”
Quantum level protection
There’s more good news for investors in cryptocurrency markets. Experts in the field are already hard at work at designing blockchain updates that specifically protect against quantum computing attacks. The Quantum Resistant Ledger is the most mature so far and is currently undergoing a security audit.
In the meantime, the smartest thing to do is only invest in cryptocurrencies that are well established. Platforms like Bitcoin have such a widespread network of nodes that present and future security threats are minimal. Remember to protect your own blockchain wallets as much as possible, since hackers will always look for ways to expose individual accounts.
Quantum vs. classic internet
The quadrillion dollar question the average web user might be asking is “What is this new internet powered by quantum computers going to look like?” Here’s the thing. In the short run, the quantum internet, when it gets here in full force, will largely look the same to those of us staring at screens. Most websites will still be created and designed according to tried and true fundamentals. The real change lies in the computers themselves, which will be (are already) incredibly, mind-bogglingly fast, able to perform calculations at a rate that makes classic computers envious.
The long run could be a different story.
The bottom line
When computers showed up fifty years ago, did we expect to be carrying their powerful descendants around in our pockets? Maybe Isaac Asimov, but few others. No one is exactly sure how quantum computers will change computing and society when we look years into the future or if it or blockchain will survive or be replaced by something else entirely.
The one certainty is that the online landscape will be altered. Check back with us in about five decades and we’ll finish up this article. Until then, hold on tight.