The rapid development of quantum computing that caused growing concern in the cryptocurrency sector late last year, especially regarding the long-term sustainability of Bitcoin seems to have resurfaced again.
CryptoQuant, an on-chain data analytics platform, recently highlighted these risks in a series of posts on X titled “Quantum Computing is a Growing Risk for Bitcoin”.
The discussion focuses on two important aspects: Bitcoin mining security and the vulnerability of private keys, both of which may face significant challenges as quantum technology advances.
Quantum Threats in Bitcoin Mining and Network Security
Bitcoin’s proof-of-work (PoW) system relies on computing power to verify transactions and secure the network. The SHA-256 hash function, which is part of Bitcoin mining, currently ensures strong security, by preventing malicious actors from tampering with the blockchain.
However, CryptoQuant warns that quantum algorithms, especially those using advanced algorithms like Grover’s, “can speed up hash-solving processes.”
If quantum computers can outperform traditional mining hardware, it could tip the balance of power in mining, allowing quantum-powered miners to control block verification. This dominance will not only disrupt the network’s consistency but may also jeopardize Bitcoin’s decentralized structure.
CryptoQuant emphasizes the importance of maintaining a significant share of non-quantum computing hash power in the network. A healthy and diverse mining ecosystem can mitigate the risks posed by any entity gaining unprecedented control over quantum technology.
Although quantum leaps in mining remain speculative at this stage, ongoing developments in the field require careful monitoring by stakeholders, including miners and developers.
Private Key Security: Vulnerabilities and Practices
Besides mining, quantum computing also presents a risk to BTC’s private encryption key. The Bitcoin network uses cryptographic systems to secure wallets and transactions, with public and private keys forming the basis of ownership.
According to CryptoQuant, Shor’s Algorithm can allow quantum computers to derive private keys from public keys, thereby compromising the security of the wallet.
The most vulnerable are Pay-to-Public-Key (P2PK) addresses, where the public key functions directly as a wallet address. In contrast, Pay-to-Public-Key-Hash (P2PKH) addresses provide an additional layer of security by hashing public keys.
Private Key Security and Quantum Hazards
Of particular concern is Shor’s Algorithm, which could, in theory, allow quantum computers to derive private keys from public keys. ‘Pay to public key’ (P2PK) addresses are highly vulnerable to quantum attacks, as the public key works directly… pic.twitter.com/q2NBvbwGLe
– CryptoQuant.com (@cryptoquant_com) January 7, 2025
However, when BTC from these addresses is transferred, the public key is exposed, increasing the likelihood of a quantum attack. CryptoQuant has also seen a significant increase in P2PKH address usage, up 14% in recent months.
Although the exact cause of this change is still unclear, it raises awareness and caution among Bitcoin holders about quantum vulnerability.
The featured image was created with DALL-E, a Chart from TradingView