Here’s Why Quantum Computing Will Not Break Cryptocurrencies

Here’s Why Quantum Computing Will Not Break Cryptocurrencies

Quantum computing isn’t going to suddenly end the security of cryptocurrencies and bitcoin. Here’s why. One of the most important aspects of cryptocurrencies from a civil liberties perspective is that they can provide privacy protections for their users. But EFF is concerned that the U.S. government has been increasingly taking steps to undermine the anonymity of cryptocurrency transactions and im … Ripple Price Analysis: XRP eases within a one-month falling channel XRP/USD drops to 0.5170 during the early Tuesday’s trading. The crypto major

Safe Deposit. Symbol of cryptocurrency safety. The man puts a physical bitcoin in small Residential … [+] Vault. Toned soft focus picture.

There’s a lurking fear in cryptocurrency communities about quantum computing. Could it break cryptocurrencies and the encryption that protects them? How close might that be? Do the headlines around “quantum supremacy” mean that my private keys are at risk?

The simple answer: no. But let’s dive deeper into this phenomenon and really try to understand why this is the case and how quantum computing will interact with cryptocurrencies.

To start off with, let’s define quantum computing and the classical computing we’re all used to, and seeing where the terms compare and contrast with one another. Quantum computing can be roughly placed in the same paradigm as “classical” pre-1900s physics and “modern” physics which comprises Einstein’s insights on relativity and quantum physics.

Classical computing is the kind of computers we’ve grown used to, the extensions of Turing’s theories on computation, the laptops or mobile phones that you carry around with you. Classical computing relies heavily on the manipulation of physical bits — the famous 0s and 1s.

Quantum computing relies on qubits, bits that are held in superposition and use quantum principles to complete calculations. The information captured or generated by a quantum system benefits from the ability of qubits to be in more than one physical state at a time (superposition), but there is information decay in capturing the state of the system.

We can think of this in terms of time scales from a computing perspective — there are some, but not all functions, that go from being impossible to accomplish in any meaningful human-level time period to ones that become slow but manageable with a large enough quantum computer.

In a way, you can think of Turing tests and quantum supremacy tests in much the same way. Designed at first to demonstrate the superiority of one system over another (in the case of Turing tests, artificial language generation vs. human language comprehension, in the case of quantum supremacy tests, quantum computing systems vs classical computers), they’ve become more gimmick than substance.

A quantum computer has to perform better at some minute and trivial task that might seem impressive but completely useless — in much the same way a Turing test of machine-generated English might fool a Ukrainian child with no fluency in the language.

This means that we have to narrow down to a function that quantum computers can be better on that would materially affect cryptocurrencies or the encryption they’re built on in order for “quantum supremacy” to matter.

One area of specific focus is Shor’s Algorithm, which can factor large prime numbers down into two smaller ones. This is a very useful property for breaking encryption, since the RSA family of encryption depends on factoring large prime numbers in exactly this manner. Shor’s Algorithm works in theory with a large enough quantum computer — and so it’s a practical concern that eventually, Shor’s Algorithm might come into play and among other things, RSA encryption might be broken.

On this front, the US National Institute of Standards and Technology (NIST) has already started gathering proposals for post-quantum cryptography, encryption that would operate and not be broken even with much larger quantum computers than the ones we’re currently able to build. They estimate that large enough quantum computers to disrupt classical encryption will potentially arrive in the next twenty years.

For cryptocurrencies, a fork in the future that might affect large parts of the chain, but it will be somewhat predictable — there is a lot of thought being placed on post-quantum encryption technology. Bitcoin would not be one of the first planks to fall if classical encryption were suddenly broken for a number of reasons. Yet, a soft fork (as opposed to a hard one) might be enough to help move crypto-assets from suddenly insecure keys to secure post-quantum encryption.

Even an efficient implementation of Shor’s Algorithm may not break some of the cryptography standards used in bitcoin. SHA-256 is theorized to be quantum-resistant.

The most efficient theoretical implementation of a quantum computer to detect a SHA-256 collision is actually less efficient than the theorized classical implementation for breaking the standard. The wallet file in the original Bitcoin client is using SHA-512 (a more secure version than SHA-256) to help encrypt private keys.

Most of the encryption in modern cryptocurrencies are built on elliptic curve cryptography rather than RSA — especially in the generation of signatures in bitcoin which requires ECDSA. This is largely due to the fact that elliptic curves are correspondingly harder to crack than RSA (sometimes exponentially so) from classical computers.

Thanks to Moore’s law and better classical computing, secure RSA key sizes have grown so large so as to be impractical compared to elliptic curve cryptography — so most people will opt for elliptic curve cryptography for performance reasons for their systems, which is the case with bitcoin.

However, quantum computers seem to flip this logic on its head: given a large enough quantum computer with enough qubits, you can break elliptic curve cryptography easier than you might break RSA.

Both elliptic curve cryptography are widely used in a bunch of other industries and use cases as well — RSA-2048 and higher are standards in the conventional banking system to send encrypted information, for example.

Yet, even with a large enough quantum computer, you would still have to reveal or find somebody’s public keys so they could be subject to attack. With cryptocurrency wallet reuse being frowned upon, and a general encouragement of good privacy practices, the likelihood of this attack is already being reduced.

Another area of attack could be Grover’s algorithm, which can exponentially speed up mining with a large enough quantum computer — though it’s probable that ASICs, the specialized classical computers mostly used to mine bitcoin now, would be faster compared to the earliest versions of more complete quantum computers.

This poses more of a stronger threat when it comes to the state of cryptocurrencies: the ability to mine quickly in a sudden quantum speedup could lead to destabilization of prices and more importantly control of the chain itself — an unexpected quantum speedup could, if hidden, lead to vast centralization of mining and possible 51% attacks. Yet the most likely case is that larger systems of quantum computing will be treated like any kind of hardware, similar to the transition for miners between GPUs, FGPAs and ASICs — a slow economic transition to better tooling.

It’s conceivable that these avenues of attack and perhaps other more unpredictable ones might emerge, yet post-quantum encryption planning is already in process — and through the mechanism of forks, cryptocurrencies can be updated to use post-quantum encryption standards and defend against these weaknesses.

Bitcoin and even other cryptocurrencies and their history are filled with examples of hardware and software changes that had to be made to make the network more secure and performant — and good security practices in the present (avoiding wallet reuse) can help prepare for a more uncertain future.

So quantum computers being added to the mix won’t suddenly render classical modes of encryption useless or mining trivial — “quantum supremacy” now doesn’t mean that your encryption or the security of bitcoin is at risk right at this moment.

The real threat is when quantum computers become many scales larger than they currently are — by which point planning for post-quantum encryption, which is already well on the way would come to the fore, and at which point bitcoin and other cryptocurrencies can soft fork — and use both decentralized governance and dynamism when needed in the face of new existential threats to defeat the threat of “quantum supremacy”.


Author: Roger Huang

The U.S. Government Is Targeting Cryptocurrency to Expand the Reach of Its Financial Surveillance | Libertarian Hub

The U.S. Government Is Targeting Cryptocurrency to Expand the Reach of Its Financial Surveillance | Libertarian Hub

One of the most important aspects of cryptocurrencies from a civil liberties perspective is that they can provide privacy protections for their users. But EFF is concerned that the U.S. government has been increasingly taking steps to undermine the anonymity of cryptocurrency transactions and importing the widespread financial surveillance of the traditional banking system to cryptocurrencies.  

On Friday, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a proposed regulation that would require money service businesses (which includes, for example, cryptocurrency exchanges) to collect identity data about people who transact with their customers using self-hosted cryptocurrency wallets or foreign exchanges. The proposed regulation would require them to keep that data and turn it over to the government in some circumstances (such as when the dollar amount of transactions in a day exceeds a certain threshold). 

The proposal appears designed to be a midnight regulation pushed through before the end of the current presidential administration, as its 15-day comment period is unusually short and coincides with the winter holiday. The regulation’s authors write that this abbreviated comment period is required to deal with the “threats to United States national interests” posed by these technologies, but they provide no factual basis for this claim. 

Although EFF is still reviewing the proposal, we have several initial concerns. First, the regulation would mean that people who store cryptocurrency in their own wallets (rather than using a professional service) would effectively be unable to transact anonymously with people who store their cryptocurrency with a money service business. The regulation will likely chill the ability to use self-hosted wallets to transact with the privacy of cash.

Second, for some cryptocurrencies like Bitcoin, transaction data—including users’ Bitcoin addresses—is permanently recorded on a public blockchain. That means that if you know the name of the user associated with a particular Bitcoin address, you can glean information about all of their Bitcoin transactions that use that address. Thus, the proposed regulation’s requirement that money service businesses collect identifying information associated with wallet addresses means that the government may  have access to a massive amount of data beyond just what the regulation purports to cover.

Third, the regulation could hamper broader adoption of self-hosted wallets and technologies that rely on them, or at least make it difficult to integrate these technologies with intermediaries like exchanges. The regulations make it significantly more difficult for self-hosted wallet users to seamlessly interact with other users who have wallets provided by a service subject to the regulations. Under the proposed rules, these hosted wallet services would have to collect certain information about self-hosted wallet users who transact with their customers in some circumstances. That may complicate certain automated transactions, such as smart contracts, or be difficult to implement in scenarios involving decentralized exchanges. Despite the name, “wallets” are not just personal stores of currency: they are a way for individuals and computing systems to hold and dispense money without relying on institutions. Adding friction to these types of transactions undermines the technology’s importance in giving individuals control over their finances. It could also chill the ability of innovators to create decentralized financial platforms with a wide range of lawful uses.

Fourth, although the proposed rules purport to simply apply pre-existing regulations involving cash transactions to cryptocurrencies, they ignore that these digital financial tools exist in part to afford financial privacy and anonymity equal to and perhaps beyond that of traditional cash. In this respect, the proposed regulations are part of a larger troubling trend of the U.S. government extending the financial surveillance of the traditional banking system to cryptocurrencies. This proposal comes just two months after the Department of Justice published its Cryptocurrency Enforcement Framework, which made it abundantly clear that the DOJ wants to undermine the ability of cryptocurrency users to transact anonymously. 

The Framework says, and this regulation repeats, that merely using privacy coins like Zcash and Monero is “indicative of possible criminal conduct.” The Framework also says that people operating mixers and tumblers, which make cryptocurrency transactions harder to trace, can be criminally liable for money laundering. Financial regulators, much like the NSA, apparently suspect that anyone attempting to protect their financial privacy is doing something illegal.

That Framework also targeted decentralized exchanges. Decentralized exchanges are typically open-source software allowing people to exchange cryptocurrency directly with each other, with no other party involved. The DOJ said that those projects have to register with FinCEN and have to “collect and maintain customer and transactional data” or else be subject to civil and criminal penalties.  

Other concerning developments this year include the 5th Circuit’s decision that law enforcement does not need to get a warrant in order to obtain financial transaction data from cryptocurrency exchanges, and FinCEN’s proposal to lower the threshold at which institutions must collect and store transaction data from $3,000 to $250 (in cryptocurrency or fiat currency) to satisfy “Travel Rule” obligations. 

These developments are an assault on the ability to transact privately online and an attempt to extend the widespread financial surveillance of the traditional banking system to cryptocurrency. Financial records contain a trove of sensitive information about people’s personal lives, beliefs, and affiliations. Nonetheless, courts and lawmakers have allowed widespread warrantless financial surveillance in the traditional banking system. The Bank Secrecy Act requires banks to maintain financial records because of their usefulness in investigations, and in 1976, the Supreme Court (in U.S. v. Miller) allowed the government to obtain bank customers’ data without a warrant. EFF is concerned about the U.S. government’s attempts to expand this surveillance to encompass cryptocurrency transactions. 

Cryptocurrency is important for civil liberties because—like cash—it allows for anonymous transactions. Photos from the Hong Kong protests showed long lines at subway stations as protestors waited to purchase tickets with cash so that their electronic purchases would not place them at the scene of the protest. These photos underscore that a cashless society is a surveillance society—and the importance of importing the anonymity of cash to the digital world.

Cryptocurrency is also important because it is censorship resistant. Many traditional financial intermediaries have engaged in arbitrary financial censorship, cutting off access to financial institutions for adult social networks, adult booksellers, and controversial websites, even when these services have not violated the law.

U.S. regulators’ recent actions, including this new proposed rulemaking, threaten to undermine the privacy and civil liberties protections afforded by peer-to-peer technologies. The rulemaking requests comments from the public by January 4, 2021. EFF hopes that the civil liberties community and individuals who want to protect their financial privacy will submit comments opposing this proposed rule, despite—indeed, partly because of—its abrupt deadline.

This post has been republished with permission from a publicly-available RSS feed found on EFF. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.


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Cryptocurrencies Price Prediction: Ripple, Dash & Cardano – Asian Wrap 22 Dec

Cryptocurrencies Price Prediction: Ripple, Dash & Cardano – Asian Wrap 22 Dec

XRP/USD drops to 0.5170 during the early Tuesday’s trading. The crypto major dropped below 200-bar SMA the previous day before bouncing off 0.4980. The latest moves have been confined between 0.5100 and 0.5300 while bearish MACD suggests further weakness.

As a result, short-term XRP/USD sellers can eye support line of a descending trend channel formation established since November 26, at 0.4308 now, during the further downside. Though, the 0.5000 threshold may offer immediate support.

Dash was trading as high as $120 on December 21 before a massive sell-off down to $101.97. The digital asset is now trying to hold a critical support level to see a rebound as most on-chain metrics are still positive.

On the 4-hour chart, Dash price slipped towards the 50-SMA at $104 but managed to hold this critical support level for now. It seems that the digital asset is ready for a rebound as long as the bulls continue defending this level. 

dash price

Cardano attempted to crack the 2020-high of $0.182 on December 17, but bulls came off short and only managed to push ADA to $0.176 before a violent sell-off in the next four days. It seems that bears are pushing Cardano price towards $0.14. 

ADA has formed a symmetrical triangle pattern on the 12-hour chart and it’s trading at $0.152 at the time of writing. Bulls have lost the 50-SMA support level and it seems that the next bearish price target is the lower trendline of the pattern at $0.14. 

ada price


Author: FX Street


Here’s Why Quantum Computing Will Not Break Cryptocurrencies

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