Alex Beath, a Toronto-based physicist and pension fund analyst, is skeptical about Bitcoin but sees one useful purpose for the crypto-currency: It may detect when someone creates a working quantum computer.
“The second someone creates a viable quantum computer, the NP-complete math problems at the heart of Bitcoin mining tech become instantly solvable,” Beath notes. “In other words, one answer to the question ‘what’s the first thing you’d do with a quantum computer?’ is ‘mine all of the remaining Bitcoin instantly.’ Until that happens, nobody has a quantum computer.”
Beath’s off-the-cuff observation, which he made in response to a Fortune query about the security of bitcoin, is amusing. But it also underscores a serious problem: Namely, a new era of computing is fast-approaching and when it arrives, the system that gave rise to many crypto-currency fortunes will collapse.
This threat to Bitcoin and other software systems that use the same underlying encryption technique—a technique likely to crumble in the face of a quantum-based attack—is not new. Indeed, it was predicted decades ago, and Ethereum founder (and former journalist) Vitalik Buterin wrote about how to defend it in 2013.
Right now, engineers are stymied over how to deploy enough “qubits” (a quantum version of the binary bit system used in traditional computers that lets a unit be a 0 and 1 simultaneously) in a stable fashion.
According to CEO Louis Parks of SecureRF, which is developing quantum-resistant security systems, the number of qubits in a machine has recently soared from 16 to 50. This is far from the 4,000 to 10,000 that would likely be needed to crack Bitcoin’s cryptography but, at this point, Parks says quantum computing is now at stage akin to when the Wright brothers began showing airplanes were viable.
In other words, it’s not too soon for crypto-currency “hodlers” to worry about the security of their fortune. The good news is that both Beath and Buterin think it will be possible to modify digital wallets to defend against quantum attacks, though doing the same for mining will be a bigger task.
The bigger issue in all this, however, is Bitcoin’s future vulnerability is just a microcosm of what the entire world will face when quantum computing arrives. That’s because the same vulnerabilities are present in our online banking and shopping systems, and in many of the computers all around us. As chip maven and Fortune alum Stacey Higginbotham put it when I asked about the threat to digital currency:
“As for the end of Bitcoin, I’d worry more about the end of cryptography and AES [Advanced Encryption Standard] encryption itself.”
Lots to chew on there — thanks for reading, and enjoy more security and fin-tech tidbits below.
Jeff John Roberts
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
ARM-maggedon. Well, more like Intel-maggedon. The discovery that every processor in the world is exposed to so-called “Meltdown” and “Spectre” attacks is, um, not good. But ordinary consumers may misconstrue the vulnerability and the risk it poses (very low for now) without simple, well-written explanations.
Ripple, are you for real? Ripple’s rapid rise to number two in the crypto-currency scene (and its co-founder’s ascent to top 10 on the world’s rich-guy list), is bringing out the doubters. Check out this Twitter throwdown between Ripple’s CEO and the NYT’s crypto-reporter.
Criminals break from Bitcoin. It’s a bad sign when a product loses a core customer base. But in the case of Bitcoin it’s probably a mixed blessing that ransomware extortionists and drug dealers—both longtime clients—are ditching it in favor of Monero, a rival crypto-currency that’s harder to trace.
Shady flashlight apps for Android are so 2010. But they’re making a comeback.
Share today’s Data Sheet with a friend:
Looking for previous Data Sheets? Click here.
—Fortune’s Aaron Pressman explains how to prevent your web browsers being exploited for a Spectre attack. It’s a long-shot risk but better safe than sorry.
Black Mirror and Why Tech Should Be Feared by Andrew Nusca
Blockchain May Provide a Sustainable Solution for Fishing by Jeff John Roberts
Why Smart Lock Startup Otto Has Suspended Operations by Jonathan Vanian
Why the $29 iPhone Replacement Deal Could Hurt Apple’s Stock by Aaron Pressman
Apple Watch is Impervious to Spectre and Meltdown, Experts Say by Jonathan Vanian
Intel Says Major Security Bug Also Affects ARM and AMD by Aaron Pressman