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Google research: Quantum computers a “serious threat” to 6.7 million bitcoin, including Satoshi’s coins

“Their fast-clock architecture could crack a private key in 9 minutes, while bitcoin blocks take 10 minutes on average. That changes the threat model entirely.”

Google researchers sent a wake-up call to the cryptocurrency industry Tuesday, saying quantum machines will require fewer resources in the future to break classical cryptography such as those securing blockchains like bitcoin. That finding challenges conventional wisdom on the timeline of when the quantum threat to digital assets will materialize. 

Google showed a twentyfold reduction in the amount of resources needed by a quantum machine to break the cryptography backing blockchain networks, according to a Tuesday blog post. As a result, the researchers recommend beginning the migration process to post-quantum cryptography immediately. 

“The emergence of CRQCs [cryptographically relevant quantum computers] represents a serious threat to cryptocurrencies that demands a close examination of possible developments at the intersection of quantum computing and digital finance,” Google’s white paper says. 

“While the quantum computing and cryptocurrency communities have largely operated in isolation, the significant reduction in resource requirements detailed here necessitates a convergence of these two worlds.” 

Not only are 6.7 million bitcoin — including those believed to belong to bitcoin’s pseudonymous creator, Satoshi Nakamoto — vulnerable to future quantum attacks, but so are the protocols underlying the tokenization market of real-world assets, which, the paper projects, will exceed $16 trillion by 2030.

“Their fast-clock architecture could crack a private key in 9 minutes, while bitcoin blocks take 10 minutes on average. That changes the threat model entirely,” Alex Pruden, CEO and cofounder of quantum computing research firm Project Eleven, said to Sherwood News. “Every bitcoin transaction is at risk.”

“What this Google research shows is that the distance between today and that eventual ‘Q-day’ may be easier to traverse than previously thought,” Alex Thorn, head of firmwide research at Galaxy Digital, told Sherwood.

“The bottom line: odds are low of a quantum computer being able to attack bitcoin or blockchains in the next five years, but the Google research shows real progress,” Thorn continued. 

While a quantum computer capable of successfully exploiting a blockchain does not exist yet, Google researcher Craig Gidney has placed a 10% chance one will be built by 2030. Meanwhile, Google landed on a 2029 timeline to migrate its infrastructure to post-quantum cryptography. 

“Bitcoin has yet to present a fully fledged migration plan. That’s the gap that we need to close,” Pruden said.

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Ethereum looks likely to register first monthly green candle since August

Ethereum has increased nearly 4% in the last 24 hours, outpacing crypto majors in the period. 

If the asset can hold the current level, trading around $2,065, ethereum will record its first monthly green candle since August, helping the token outperform the broader market slump during the Iran War.

Amid the news, BitMine Immersion Technologies, the largest ethereum treasury firm and largest staking entity, announced acquiring 71,179 tokens, or $146.3 million, in the past week. 

“Crypto is demonstrating itself to be a good war time store of value, BitMine Chairman Tom Lee said in a press release

The inverse correlation of crypto (and equities) to oil has been increasing and is at the highest levels in the past year. This is logical. Until equity markets become comfortable with the future trajectory of oil prices, rising oil is a headwind for equities and crypto. And in a sense, the crypto winter likely ends when the upside risk to oil prices peaks,” Lee continued.

Meanwhile, ethereum ETFs suffered last week, with the investment vehicles registering $206.6 million in outflows, the third-most in the year, data from SoSoValue shows. 

In other ethereum news:

  • The Ethereum Foundation staked around $46.2 million worth of ethereum on Monday, according to on-chain data. “This is more ETH than they have EVER staked before,” Arkham Intelligence said on social media. 

  • Lido, the second-largest decentralized finance protocol and known for its liquid staking services, primarily for ethereum, is considering a $20 million buyback for its native token, LDO, which has plummeted nearly 96% since its all-time high of $7.30 set in 2021. 

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Altcoins have given back the majority of their gains since the Iran war began

While crypto altcoins outperformed for a long stretch after the outbreak of the US war with Iran, the asset class has retraced this past week.

XRP, solana, and ethereum have each dropped more than 6% in the past seven days as the total market capitalization for all of crypto (including bitcoin) has shed roughly $44 billion in the period, per CoinGecko.

Ethereum ETFs have also registered daily consecutive outflows for the past seven days, totaling more than $392.1 million. The last time these investment vehicles had such a streak was in December when ethereum decreased from $3,221 to $2,995, data from SoSoValue shows. 

The Iran war was at first a positioning shock that saw crypto thrive, in part because the asset class was “lightly owned,” according to Fredrick Collins, CEO of crypto analytics platform Velo.xyz

“Now as more concrete and persistent concerns about economic impacts have materialized, it’s not surprising to see crypto struggling as well,” Collins told Sherwood News. “In the face of cyclical (rather than transient) worries for risk assets in general, it’s not realistic to expect crypto to remain unscathed. And so we’ve unfortunately just not seen that initial relative strength in crypto continue to play out.”

Meanwhile, traders are expecting the price of ethereum to decline further this year. Prediction market-implied odds of the cryptocurrency sliding below $1,750 are at 81%, while the probability of the token tumbling under $1,500 stands at 68%, an increase from 52% on Monday. 

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

A drop to $1,457 would liquidate about 162,870 ethereum tokens’ worth of leveraged long positions, worth $323.3 million on Hyperliquid, per CoinGlass.

Slater Santer, a research analyst at trading firm GSR said, "Short term, the market likely remains flow-driven and headline-sensitive. Without a stabilization in ETF flows, a cooling in oil, or a renewed bid in equities, it's hard to argue for a sustained bounce in alts."

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Slater Santer, a research analyst at trading firm GSR said, "Short term, the market likely remains flow-driven and headline-sensitive. Without a stabilization in ETF flows, a cooling in oil, or a renewed bid in equities, it's hard to argue for a sustained bounce in alts."

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Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, Robinhood Derivatives, LLC, or Robinhood Money, LLC. Futures and event contracts are offered through Robinhood Derivatives, LLC.