Quantum computers can have an impact on cryptocurrencies that rely on hashing technology.
Quantum Computing is one of the top emerging and fast-growing sectors in the technology sector. It refers to extremely powerful computers that handle some of the most complex challenges in the world today. As a result, they are used by leading organizations like NASA and some of the largest companies like ExxonMobil, Alphabet, and IBM.
Therefore, these powerful computers have an important role in the biggest industries in the world like blockchain, artificial intelligence, and machine learning. For one, proof-of-work cryptocurrencies like BTC, Monero, and Kadena are mined using advanced computers that handle complex mathematical calculations. As such, it is possible for these powerful computers to be used to mine coins.
Most importantly, analysts believe that quantum computers can be used to undermine the substantial encryption that exists in cryptocurrencies. In this article, we will explain whether quantum computers can damage encryption standards and identify some of their benefits.
Can Quantum Computers Damage the Encryption Standards that Cryptocurrencies are Based On?
There are several types of cryptocurrencies. Bitcoin, the most popular of them, uses blockchain technology to help people send money from one person to another. These transactions are all available on the public ledger. As a result, Bitcoin does not rely on any encryption.
On the other hand, privacy-focused cryptocurrencies like Monero and Dash rely on advanced encryption to ensure that all their transactions cannot be tracked by anyone. For these types of digital coins, there is a possibility that quantum computers will be able to crack the code of some of these coins.
Another area where advanced computers have a role is in the technology that underpins the industry. This technology, known as smart contracts, are self-executing contracts that are written directly into a line of code.
Smart contract technology helps to run most parts of the blockchain industry like decentralized finance (DeFi), Non-Fungible Tokens (NFT), and the metaverse. This is another area where quantum computers can have a role as they get more advanced. Therefore, it is possible that these computers can crack these codes.
Another area where quantum computers can disrupt the industry is in cryptocurrency wallets that exist today. These wallets rely on advanced encryption to ensure that coins are secure. As such, these wallets can easily be vulnerable to powerful computers.
Finally, quantum computers can have an impact on cryptocurrencies that rely on hashing technology. In it, they can disrupt the hash rates. This challenge can be fixed through product upgrades.
Can Quantum Computing Work Closely to Cryptocurrencies Encryption?
However, computer scientists believe that this stage is not there yet. For one, these computers work by manipulating data stored in qubits that are subject to physics governing the ultrasmall. Therefore, to get to a level where they can easily crack this code, they will need to harness thousands of qubits. Existing quantum computers are not there yet.
At the same time, analysts believe that crypto developers can fix these challenges by embracing a post-quantum cryptography technology. This is a technology that aims to create cryptographic systems that are secure against today’s regular and advanced quantum computers. They can also interoperate with existing communications protocols.
This development is going on. For example, there is a concept known as the Quantum Resistant Ledger (QRL), which is an enterprise-grade blockchain platform that is secure from the present-time quantum computing advances and those of the future. In addition, companies like Hyperledger Foundation and Honeywell are building products that solve some of these challenges.
Regulations also have a role in this. For example, in 2022, American regulators sanctioned Tornado Cash, a crypto company that focused on privacy by mixing transactions. It ensured that transactions made by crypto users cannot be tracked.
As mentioned above, cracking a cryptocurrency or blockchain code is one of the biggest challenges that the industry faces. For example, a developer who manages to crack Ethereum’s code can affect an ecosystem that is valued at billions of dollars such as in DeFi, non-fungible tokens (NFT), and the metaverse.
Finally, some developers have also come up with cryptocurrency bots that leverage technologies like artificial intelligence and quantum computing. A good example of trading bots that claim to use quantum computing and artificial intelligence is Quantum AI. However, there are questions raised around the legitimacy of Quantum AI and whether it does function as well as claimed.
Final Thoughts
Quantum computing is an advanced technology that has made life much better. For example, airlines rely on it to handle their biggest challenges such as bookings and plane management. Similarly, weather forecasters use it to make near-accurate predictions.
Quantum computing has its benefits. However, it also has its challenges, especially in the capabilities that it can perform. In this article, we have seen that it could disrupt the cryptocurrency industry. However, we believe that developers in vulnerable industries will come up with solutions to keep safe. Also, in most cases, these computers have not yet had a major impact on these industries yet.
Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.
