What Does Google's Quantum Computing Chip Mean for Bitcoin?

CoinDesk ^ | Dec 10, 2024 | Shaurya Malwa|

[nickcarraway]

What does the uber-powerful Quantum supercomputer Willow mean for bitcoin and crypto security.

-Quantum computing does indeed pose significant threats to current security systems.

-Bitcoin uses algorithms like SHA-256 for mining and ECDSA for signatures, which might be vulnerable to quantum decryption.

-But don't sell your coins just yet.

Google’s new quantum computing chip could mean bitcoin (BTC) is finished. That was the sentiment for some on Monday as the internet giant unveiled Willow, a quantum supercomputer that can perform certain computational tasks in just five minutes that would take classical supercomputers an astronomical amount of time—specifically, 10 septillion years (or one followed by 24 zeroes; a trillion trillion).

10,000,000,000,000,000,000,000,000.

Such an amount of time is greater than the existence of the entire universe at 13.8 billion years. In superficial theory, such a powerful computer could mean no passwords are safe, encrypted messages are intercepted, nuclear weapons codes are found out, and almost anything can be unlocked by brute-forcing combinations of numbers and letters.

But it isn’t all a doom and gloom yet. While quantum computing does indeed pose significant threats to current security systems, it's not a master key to the universe, atleast not right now. And there is no looming threat to Bitcoin, either.

Quantum computing leverages the principles of quantum mechanics, using quantum bits or qubits instead of traditional bits.

Unlike bits which represent either a 0 or 1, qubits can represent both 0 and 1 simultaneously due to quantum phenomena like superposition and entanglement. This allows quantum computers to perform multiple calculations at once, potentially solving problems that are currently intractable for classical computers.

Willow uses 105 qubits and demonstrates an exponential error reduction as the number of qubits increases. This is a critical step towards building a practical, large-scale quantum computer, per CEO Sundar Pichai.

By signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy. Bitcoin uses algorithms like SHA-256 for mining and ECDSA for signatures, which might be vulnerable to quantum decryption. And the short answer is that quantum computers, even advanced ones like Google's Willow, do not possess the scale or error correction capabilities needed to immediately decrypt widely used encryption methods like RSA, ECC (used in Bitcoin transactions), or AES (used in securing data).

If quantum computers like Willow reach a scale where they can easily factor in large numbers, they could potentially break these encryption schemes, compromising wallet security and transaction integrity.

That would require quantum computers with millions or even billions of “qubits” with extremely low error rates, far beyond the current technology.

“Google claims to have demonstrated "below threshold" error correcting capabilities with their latest quantum chip,” said Chris Osborn, founder at Solana ecosystem project Dialect, in an X post.

"Below threshold" is industry jargon for turning physical qubits, which are noisy, shitty quantum bits that are basically useless, into "logical" qubits, which are multi-qubit abstractions that correct for errors & let you actually perform real computation.” he added.

“5,000-ish logical qubits are needed to run Shor's algorithm to break encryption. In other words, *millions* of physical qubits are needed to break encryption. Google's chip today: 105 physical qubits,” Osborn noted.

Until then, cryptocurrencies (and other sectors) have time to develop quantum-resistant algorithms. Ethereum co-founder Vitalik Buterin, among others, is part of an industry cohort that has been calling for updated security procedures and tools in a quantum computing world.

“Quantum computing experts such as Scott Aaronson have also recently started taking the possibility of quantum computers actually working in the medium term much more seriously,” Buterin wrote in an October technical blog. “This has consequences across the entire Ethereum roadmap: it means that each piece of the Ethereum protocol that currently depends on elliptic curves will need to have some hash-based or otherwise quantum-resistant replacement.”

“This justifies conservatism in the assumptions around performance of proof-of-stake designs, and also is a cause to be more proactive to develop quantum-resistant alternatives,” he added at the time.

Try another day, crypto naysayers.

[Jumper]

The numerous, very numerous Strategic Bitcoin Reserves, are going to explode BTC.

Texas, Pennsylvania, Flordia, Wyoming... North of the border.

Texas is the 8th largest “Country” sized economy in the world, and growing with the influx of industry as it flees Blue States. Flordia is the 13th largest Country sized economy.

The next biggest innovation in Crypto is that you will be able to put your BTC, Solona, etc., into an ETF and pull it out when you want!

The days of the Coinbases’ taking 7% on the in/out or buy/sell are going to disappear as financal houses scramble to get BTC on under their management.

[Revel]

I can’t wait for Windows Quantum.

[Drago]

You should probably read up on the BTC tech before setting straw men.

[zeestephen]

Re: "You should probably read up on the BTC tech before setting straw men."

Straw men?

I thought I was stating the obvious.

Every time a Bitcoin is bought or sold or mined, the old and new pass codes have to be entered at some point in the transaction.

When the prize is billions of dollars in untraceable Bitcoins, highly sophisticated hackers, scam artists, and state actors, will ALWAYS show up for work.

What happens if an angry spouse or girlfriend steals your Bitcoins and changes the pass codes. How do you prove the Bitcoins in her account belong to you?

What happens if someone dies and the pass codes cannot be found? Are the Bitcoins de-commissioned?

New questions about ownership will never end.

[EnderWiggin1970]

What do you mean by "pass code"? Do you realize your questions don't even make any sense? People are trying to reinterpret your question into a way that makes sense, but that involves some guesswork into what you even mean.

Suffice to say that Bitcoin did not reach a trillion-dollar plus market cap by being insecure like you imagine it to be.

[EnderWiggin1970]

It's worth pointing out that while cryptocurrencies have a finite number of vulnerabilities, their security situation is simple to fix in comparison with traditional banks and government/security databases. Most blockchains copy off Bitcoin's design or a handful of others, so a fix that works for one will be easily adapted to others (within a matter of hours from past experiences if need be.) And the protocol is not terribly complex, with a handful of things that need to be fixed.

The real issue for crypto would be centralized exchanges (securing login/account info), if those still exist. And banks and everyone else would have the same problem, except that banks also have all sorts of back end operations and financial interfaces (SWIFT, Zelle, ACH, etc.) that would also need to be locked down. So I expect there would be 1000X more chaos in the banking industry (and in governments dealing with their military/intelligence and other systems being compromised) if QC's suddenly showed up with malicious intent. Every community bank in the world would suddenly be clamoring to hire QC experts to fix their systems, and there would not be enough talent to go around. While most of the limited pool of QC experts are already involved with crypto in one fashion or another.

[palmer]

"Quantum proof" cryptocurrencies may have already been invented. I don't keep up and 99.9% of new crypto are pump and dump or just for kicks. But somewhere out there may be be new CC that will resist cracking with quantum or conventional brute force computing.

The problem is it will be really hard to figure out what's what. New CC will almost inevitably have flaws which makes them vulnerable to today's tech.

[palmer]

If someone steals a Bitcoin and changes the pass code, the only thing left in your account is fresh air.

There are only two ways to hold bitcoin: custodial and non-custodial. If people are speculating (as many people are), the account at the custodian can be hacked and the proceeds can be stolen.

But Bitcoin was designed to be held by people with a private key. It's true that your phone can be hacked but that private key will still be protected from theft. If your private key is in a hardware wallet then it's safe for most people.

[palmer]

So far, I still have no idea how I get my stolen Bitcoin back, or even how I prove it is my Bitcoin.

Very simple. If are not using an account like coinbase, then it's your private key and your bitcoin and cannot be "stolen".

[palmer]

Every time a Bitcoin is bought or sold or mined, the old and new pass codes have to be entered at some point in the transaction.

No.

Every time a bitcoin is transacted (or a mining reward is disbursed) the proceeds are assigned to a new address in the blockchain. There's no passcode. The address is simply the hash of a hash of public key derived from a random number. The random number is the private key created by a wallet.

Or, you can simply create a random address not associated with any private key. In that case it's nobody's bitcoin. Cannot be stolen, ever.

There's absolutely no difference between the two. Thus, neither can be stolen.

Of course anyone using coinbase or any other custodian doesn't own anything. And yes, those accounts have passwords or pass codes and can be hacked or accessed by an insider at that company or whateever. Those are not relevant because they aren't correct uses.

[cgbg]

“Suffice to say that Bitcoin did not reach a trillion-dollar plus market cap by being insecure”

Famous last words...lol.

Homo sapiens loves being scammed.

That is why it happens over and over and over again...

[zeestephen]

Re: What do you mean by "pass code?"

Everything I have read states that each individual Bitcoin has a unique 64 character pass code of letters and numbers, known only to the owner.

Also, every time that Bitcoin is sold, the new owner creates a new 64 character pass code, known only to the new owner.

If you are referring to investing in a Bitcoin ETF, which is like buying and selling stock, that means you are buying and selling shares of a financial instrument that represents the current price of the Bitcoins owned by the financial company that sponsors the ETF.

If you are buying and selling Stable Coins - same story. A Stable Coin is like a stock or currency option. You are buying or selling a financial instrument created by a company that probably does not even own Bitcoins.

Everything I have written about pass codes refers to the actual owners of Bitcoins.

[zeestephen]

OK - I admit I am not fluent in all the precise Bitcoin terms.

Two points...

My impression is that 90% of the impassioned Bitcoin advocates on these Free Republic threads do not own Bitcoins.

They own financial instruments - created by people and companies that do own Bitcoins.

If you owned 10 real mined Bitcoins and decided to sell them, tell me exactly how you would do that.

Thanks.

[palmer]

If you owned 10 real mined Bitcoins and decided to sell them, tell me exactly how you would do that.

Had about 12 at my peak. Quite a while ago now. Mostly they were physical private keys (printed but hidden under a tamperproof seal) Gave away a bunch. Bought stuff including digital services with others. The ones I sold for cash were transacted to accounts at Bitstamp and Coinbase. As soon as those were transacted I no longer owned anything. Those companies had some amount of bitcoin or cash they were holding or pretending to hold in my name. But that's against the entire philosophy of bitcoin as it's own currency. That use is practically dead.

Here are my steps for spending the bitcoin:

1. scratch off the tamper proof seal
2. scan the private key into my phone using an app that allows import
3. find something I want to buy online (e.g. a new web3 domain)
4. point my phone app at the QR code provided by the vendor
5. I give permission for the app to use the private key
6. my phone app signs a transaction with that private key
7. the app sends the transaction to the bitcoin network to be validated and consummated

One thing that should be fairly clear is that with the above steps the only thing that can be stolen is that private key in the app on my phone (hard to hack and even harder to transact without my explicit permission in step 5). Or the same private key printed on the paper (hidden camera in my house) Or that piece of paper from my safe. That's very difficult. That means nobody can steal my bitcoin. But as you point out the people that own financial instruments based on bitcoin own nothing. They have shares or an account or something.

Not much different from silver or gold. I can have a stack of silver in my safe. Or I can have shares in a precious metals ETF. In the former case I actually own something. In the latter case there's some gold in a vault somewhere probably, hopefully, and their server has my account in its database saying that I hopefully maybe probably own some small amount of that gold. But the fine print in the contract probably says I own nothing but they will do their best to send me my money if I ask them to.

[NoLibZone]

https://www.coindesk.com/tech/2024/12/10/what-does-googles-quantum-computing-chip-mean-for-bitcoin

[Wildbill22]

This chip probably is more a threat to banks and financial security which would more easily be cracked.

What I think is something to think about is if you combine this level of chip and computing power with AI. It will outsmart us without us even knowing it happened.

[zeestephen]

Thanks for your helpful comments, palmer.

Until a couple days ago, I had the clear impression that a Bitcoin could be electronically divided into fractions, and that every fraction could be traced back to the original Bitcoin.

I assumed that most of the Bitcoin traders at Free Republic were trading Bitcoin Fractions.

That looked like a fatal flaw in security to me.

Whoops!

Instead, most Bitcoin traders are trading financial derivatives of Bitcoin.

I could not understand how Sam Bankman-Fried and FTX crashed and burned if no Bitcoins were stolen or compromised.

Obvious now - most of his customers were trading cash derivatives.

When the Ferris Wheel stopped, everyone tried to withdraw their cash at the same time.

Just an old fashioned Run On The Bank - and FTC collapsed.

By the way, Bitcoin almost hit $108,000 today.

[palmer]

Bitcoins are almost always traded in fractions since near the very beginning. The original mining rewards were non-fractional. But starting already in 2016 there were fractions given out as mining rewards.

Out of those non-fractional rewards at the beginning there were fractions transacted. Every address in the blockchain is some number of Bitcoins, mostly with fractions. So the transacting is fractional no matter whether people are trading (speculating) or transacting for digital services or physical goods.

Yes FTX collapsed by a bank run, mostly transacting Bitcoin out. People also tried to withdraw dollars but I believe that was in the form of US dollar tokens. I'm not sure if people linked their bank accounts and did transfers out that way. My guess is the majority of withdrawals were Bitcoin.

The main point is those "traders" (I call them speculators) owned nothing. You can say they traded derivatives, but I think makes it sound more formalized than it really was. All the users of that exchange (and almost all exchanges that deal with real money) had accounts in a database on a server. The FTX server said they "owned" certain amounts of certain cryptocurrencies which they could trade for other amounts of other CC in other accounts.

The problem was the FTX didn't actually have the crypto in their possession either. They "loaned" it to Sam's girlfriend who ran another company. The run was inevitable when Bitcoin dropped because the Bitcoin wasn't there for people to withdraw and turn into something else (like cash).

When Bitcoin drops again there will be more runs. Unlike FTX, exchanges *should* own Bitcoin to give out to the account holder (speculators). But we don't know for sure. The main problem will be margin calls or their equivalent on people who are doing leverage speculation (borrowing real money to buy the speculative money).