A growing number of crypto-focused investors are keenly aware that quantum computing is coming along and might threaten the current crypto space. This fear is so prevalent that even Coinbase has addressed it.
Here, Ape Hopium takes a look at the current risks and opportunities in the market.
Quantum Computing Interest Jumps
Quantum computing stocks jumped in H2 2024, after a flurry of announced breakthroughs in the sector, as well as the AI boom. The market leader’s -IonQ – run started at $7 and topped out at $54, with their smaller competitor’s seeing even higher gains: Riggetti Computing’s started at $0.7 and ended at $21.3.
As the investment into artificial intelligence boomed, AI developers realised that they had an issue with the hardware and energy required to service users and upgrade their models. Quantum computing would theoretically solve the constraints of space and energy by simply bending physics.
Of particular note was D-Wave. In October 2024, a research team led by Wang Chao at Shanghai University reported using a quantum computer developed by Canada’s D-Wave Systems to break encryption algorithms that resemble those used in the Advanced Encryption Standard (AES). The algorithms targeted — Present, Gift 64, and Rectangle — share a substitution-permutation network (SPN) structure, which is also the basis of AES. AES 256 is widely regarded as a form of military-grade encryption.
The researchers described their work as a pioneering example of a quantum attack on encryption protocols currently used in sensitive areas such as banking and defence. They called the result a “real and substantial threat.”
Crypto vs Quantum Encryptions
Speaking with Presto Research, UC Davis Assistant Professor of Computer Science Isaac Kim noted that a key early indicator of risk would be the appearance of a quantum computer featuring approximately 100 logical qubits and a logical error rate under 10⁻⁵. Google’s Willow already has 105 physical qubits, whilst IBM seeks to create a 1,000-qubit chip by 2026 and a million-qubit system by the early 2030s. According to the National Institute of Standards and Technology, quantum machines with the potential to compromise existing cryptographic protocols are not expected until at least the 2030s.
Bitcoin uses 256-bit ECDSA (Elliptic Curve Digital Signature Algorithm) keys on the secp256k1 curve for wallet security and SHA-256 for the integrity of transactions and mining. Experts estimate that it would take between 10 million and 300 million fault-tolerant qubits to break Bitcoin’s ECDSA encryption. The stability of the atoms in quantum computers – the ‘fault tolerance’ – and their error rate has drastically improved in recent years. On 29th July, scientists achieved an error rate of just 0.000015%.
This quantum worry has led to a small but growing number of crypto projects being released, or adapting their encryptions, that are claiming to be ‘Quantum computing-proof’. These include Quantum Resistant Ledger (QRL), Nervos Network (CKB), Cellframe (CELL) and Algorand (ALGO). Some projects’ communities have been seeking to address the quantum threat – such as the Internet Computer (ICP) community – that have been discussing how to move forward with the protocol, with quantum in mind, since 2021.
A new challenge is offering one Bitcoin to anyone who can use a quantum computer to break elliptic curve cryptography — without relying on shortcuts or workarounds. Organised by Project Eleven, an open science initiative dedicated to quantum and cryptographic research, the QDay Prize is designed to gauge how close quantum computing is to breaking one of the most widely adopted encryption methods. The competition is open until 5 April 2026.
The encryption arms race is truly on.
A Quantum on Crypto Scenario
It would be highly unlikely that quantum computing’s first attack on blockchain-based assets would be a coin or token. There is little financial incentive. Quantum computing operations have an extremely high cash burn rate as of the moment, and companies have very little reason to attack crypto projects.
However, as the blockchain revolution began in earnest in the 2020 bull run euphoria, multiple governments (more than 50) have begun to explore the use cases and benefits of crypto. Many of these were CBDCs, but mostly digital architecture.
As with most things in the retail market, driven by the madness of crowds, a successful attack on one blockchain – even a private chain used in basic document administration (such as Vietnam’s keeping of records and digital identities) – could lead to a flash-crash. As the Shanghai University demonstrated, quantum can be used on the offense.
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