Yesterday we started down the crypto rabbit hole. We looked at concerns that people have about crypto these days. It was prompted by a reader, Ron, and an article he’d read by Egon Von Greyerz.
If you missed yesterday’s Money Morning, I’d strongly suggest reading it first here.
But if you’re already up to speed, let’s crack on.
Von Greyerz’s article continues on with a number of other problems that he saw crypto facing:
‘One of the biggest threats to cryptos is Google’s and other technology firms ability to decrypt it. Most cryptos, including Bitcoin, uses 256-bit encryption. Google can already break 53-bit encryption and another firm 128-bit. Google expects to break 256-bit encryption within a couple of years maximum and then 400-bit etc.
‘With new Quantum Processors a computing task that would have taken 10,000 years on a supercomputer now takes a mere 200 seconds with a Quantum Computer.
‘Thus any method of encryption could be worthless within the next few years. It is obviously likely that encryption will become more advanced but so will Google’s Quantum processors ability to break these advanced systems.
‘So Bitcoin and other cryptos might be obsolete in the next couple of years and so will all other encryption including military and government secrets. Instead, Google will be ever more powerful controlling all systems and governments.’
However, there are plenty of reasons why quantum computing isn’t the threat people think it is.
The battle for supremacy
Two leaders of quantum computing are IBM [NYSE:IBM] and Alphabet [NASDAQ:GOOG] (Google).
In 2018 IBM unveiled its most advanced computer ever. It was their first quantum computer. But it wasn’t for the mass market. It lived in a lab and wasn’t fit for commercial use.
Then earlier this year it came out with the IBM Q System One. Yep, it must have spent a long time mulling over that name…
It was the world’s first circuit-based, commercial quantum computer. It had a capacity of 20 qubits. It still wasn’t exactly ready for the home market. It exists in a nine-foot cube.
|Ed note: Let’s quickly fill the gap on why quantum computing is such a game changer. It’s so advanced because it allows a machine to compute ‘superposition’. A normal computer computes in binary. It will compute a 1 or a 0, but individually, not together. It’s very logical.
A quantum computer can compute the grey area that exists in between the 1 and 0. It’s a third outcome which is the 1s and the 0s together and everything in between.
This quantum superposition allows it to compute incredibly hard calculations that would take a normal binary computation system a lot longer to do.
Sounds easy in principle, but it’s not. And to even get a qubit to exist you need to run the quantum chip at approximately minus 273 degrees Celsius. For comparison, that’s roughly the same temperature as space!
IBM isn’t alone in its pursuits. Google has also been frantically working on quantum computing. These tech giants are fighting for ‘quantum supremacy’.
Quantum supremacy is a term used to describe a quantum computer able to solve problems that no supercomputer on Earth can solve.
In other words, it would mark the dawn of a whole new level of computing power.
And it seems as though we’re on the cusp of ‘quantum supremacy’. Well according to Google in September, it had achieved quantum supremacy with its ‘Sycamore’ quantum computer.
The power of Google’s Sycamore computer
According to New Scientist:
‘Google’s quantum computer tackled a task called a random circuit sampling problem. In such a problem, after a series of calculations each qubit outputs a 1 or 0. The aim is to calculate the probability of each possible outcome occurring.’
Google says Sycamore was able to find the answer in just a few minutes. They estimate the task would take 10,000 years on the most powerful supercomputer. However, before we start losing our minds that Google is about to take over the world for real this time, let’s take a step back.
You see, Google’s quantum computer consisted of 56 qubits. IBM’s System One latest iteration is just 53 qubits.
These are the best they can do for now. In the lab they’re both getting over 70 qubits. Google’s ‘Bristlecone’ chip is getting 72 qubits to be precise. An impressive leap so far.
Now the fear is that quantum computing has the power and potential to completely destroy cryptocurrency. As Von Greyerz says, it will just crack the cryptography.
Well I’m here to let you know they’re still pretty rubbish at encryption cracking.
It’s estimated that in order to crack RSA encryption protocols in the space of a few hours,quantum computers will need in excess of 4,000 qubits. And even then factoring in error correction, IBM and Google computers could take as long as the year 2041 to have a quantum computer achieve the task.
That means it’s relatively safe to say that quantum computing isn’t about to tear down the walls of encryption tomorrow.
However, it is coming eventually. And we’d want to have things ready well before then. The good news is, that’s happening.
The world is already going ‘quantum-proof’
There are already a number of algorithms in the works or available now that are said to be quantum-resistant.
These include lamport signatures, ideal lattice cryptography, zk-SNARK cryptography, and even a migration to SHA-384 encryption. This all has the potential to be quantum-proof. And are just four current examples of known work in this field.
We also know that immense research is being directed toward quantum-cryptography.
And a lot of it is coming from the very companies building these new quantum computers.
For example, IBM has quantum-safe cryptography research in the works already. And the US National Institute of Standards and Technology (NIST) is actively working on a standardised method for quantum-proof encryption.
According to Alan Woodward, a professor of computer science at the University of Surrey in England, quoted in Scientific American:
‘People have kind of assumed that quantum computers are a generalized speedup of conventional computers—that they somehow can do everything a conventional computer can do but much faster. And that’s not actually true.’
And Vadim Lyubashevsky, a quantum-safe cryptography researcher at IBM Research Zurich, says:
‘While quantum computers can do some things better against a particular set of problems, there are tons of other things they just do not help with—almost at all… So these are the types of problems that people are trying to build cryptography on.’
And then there are other considerations to think about if we get to a point where quantum computers can crack our encryption and we’ve not prepared sufficient quantum-proof protection.
Such as, the entire global ‘traditional’ financial system.
If you think cryptocurrency is in trouble due to quantum computing, what about the ‘money’ in your online banking account? How much trust do you have that your bank’s encryption and security is quantum-proof?
At least we know the crypto world is actively working on quantum-proofing.
The thing is, we’re heading towards a quantum computing future. But we also have a decent lead-up time to develop quantum-proof encryption.
We don’t believe it’s going to have an impact on cryptocurrency. It’s a known risk that’s actively being worked on.
We’re more worried about the lax approach from the traditional financial system. The real threat is the money you think you know.
Maybe it’s time to ask your bank about their plans to become future ‘quantum-proof’…
Editor, Money Morning
PS: Want to learn how to buy crypto? Download this free report for everything you need to know.