Will quantum computing become a Bitcoin killer? Experts from ARK Invest and Unchained classify the technological risks of the coming decades.
• Will quantum computing pose a risk for Bitcoin & Co?
• 5-step plan: Quantum progress as a step-by-step process
• Time scenarios and risk management in view
The quantum challenge
Modern cryptography has been the foundation of Bitcoin security for over a decade. But accelerating progress in quantum computing raises questions about whether future technological breakthroughs could undermine the network’s protections. Although today’s quantum computers are still far from posing a real threat to Bitcoin, there is a growing need among researchers, developers and investors to systematically assess the potential risk. At the heart of the debate is the speed of technological development, the specific milestones that would signal a serious threat, and how the network can proactively respond to such scenarios.
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In a joint analysis, experts from ARK Invest and the financial service provider Unchained – including Dhruv Bansal, Tom Honzik and David Puell – examine the current state of the art and the prerequisites for compromising cryptographic security. Rather than viewing quantum risk as an abrupt, hypothetical event, the white paper analyzes the topic as a process with identifiable stages of development. By defining clear technological stages and potential warning signals, it is possible to determine how resilient digital assets actually are to future technological paradigm shifts and which paths are open for a timely adaptation of the protocol.
The 5-step plan: From commercial use to existential threat
According to the white paper from ARK Invest and Unchained, which is available to BeInCrypto, the development of quantum computers will not be a sudden shock, but rather a gradual process. The model presented divides this progress into five stages. The technology is currently in “Step 0” (the NISQ era), where quantum systems exist but have no commercial use yet.
“Today’s systems operate in the so-called ‘NISQ era’ – with around 100 logical qubits and a circuit depth in the triple digits – both well below the thresholds required to crack Bitcoin’s elliptic curve cryptography (ECC). This would require at least 2,330 logical qubits and tens of millions to billions of quantum gates,” the authors write.
The transition to step 1 then marks the first commercial breakthrough in which quantum computers solve specific problems in materials science or chemistry. The cryptographic relevance only begins with step 2: In this phase, quantum systems will be able to crack weak keys or outdated security protocols.
“Before a sophisticated CRQC attack can crack Bitcoin’s strong 256-bit ECC encryption, there will be simpler CRQC attacks that attack weaker cryptosystems – those with shorter keys or faulty implementations. Therefore, CRQC attacks are expected to hit the most vulnerable systems first before moving on to stronger systems like Bitcoin,” the white paper says.
Step 3 represents the first serious technological hurdle for Bitcoin. Here, quantum computers could theoretically attack the ECC algorithm that protects the private keys. However, this process would still be extremely time-consuming and inefficient at this point.
“Essentially, Bitcoin deposits made before 2011 are quantum safe due to the address type (P2PK) used at the time, while later systems tend to be quantum resistant. The good news is that Bitcoin owners can use quantum safe addresses in many different wallets and with multiple custody solutions.
According to the report, the critical escalation level will finally be reached in step 4. In this scenario, quantum technology is so advanced that it can extract a private key in less than ten minutes – the average block time for Bitcoin. Without timely protocol upgrades at the post-quantum cryptography (PQC) level, this would pose an existential threat to Bitcoin’s viability as a currency.
“If nothing is done at the protocol level in Step 4, Bitcoin as a usable monetary system is at serious risk – an existential threat to the protocol. For Bitcoin to function as a currency, fully quantum-safe addresses must exist before quantum computers reach Step 4.”
Before Bitcoin comes into focus, weaker encryption systems in industries such as materials science or chemistry would initially be targeted in the intermediate stages, according to the report. The critical threshold would therefore only be reached in “Step 4”.
Looking into the future: three time scenarios
The white paper also outlines different timelines to make the potential risks to the network tangible, as BeInCrypto explains.
In the pessimistic scenario, there would be an abrupt technological breakthrough that would catch the crypto community unprepared. But even in this case, the authors emphasize the survivability of Bitcoin: Since various proposals for post-quantum cryptography (PQC) already exist, these could be implemented more quickly in an emergency in order to harden the protocol.
This contrasts with the optimistic scenario in which the hardware development of quantum computers stagnates due to technical hurdles. This would give the Bitcoin ecosystem a maximum window of opportunity to research, test, and roll out upgrades at their leisure without market turmoil.
The balanced scenario, which corresponds to the forecasts of leading institutions, places the achievement of the critical development stage 3 in a period of ten to 20 years. The experts at ARK Invest and Unchained are convinced that this corridor is completely sufficient to gradually optimize algorithms, virtual machines and the entire infrastructure of the network.
Risk management and affected stocks
Although the all-clear is given, the report also identifies specific vulnerabilities, according to CoinDesk: Around 35 percent of the total Bitcoin supply is currently in address types that would theoretically be vulnerable to future quantum attacks. Of this, around 1.7 million BTC are probably lost stocks and another 5.2 million BTC are coins that could be migrated to more modern, secure wallet structures in a timely manner – including the assets of Bitcoin creator Satoshi Nakamoto.
However, the core message of the white paper remains clear: Despite the media attention on quantum advances, there is no acute risk for Bitcoin. The technological gap between the current state of research and the computing power required to crack encryption remains huge. Since the development of defense mechanisms (PQC) is progressing in parallel and sometimes faster, the network is well positioned to proactively meet future challenges.
Evelyn Schmal, editorial team at finanzen.net
