Finance’s biggest disruptor is in a race to escape the same fate

By Fergus Halliday

November 15 2021
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Quantum computers aren’t a problem that crypto investors need to worry about yet, but they will be.

Breakthroughs in quantum technologies might be the biggest threat that cryptocurrency investors aren’t thinking about.

According to KAZ founder Peter Kazacos, advances in technology are the biggest risk for bitcoin, “particularly with the advent of quantum computing, which could break current implementations of cryptography”.

Speaking to nestegg, Mr Kazacos suggested that quantum computing, if left unchecked, could be “apocalyptic” to the crypto world.

Quantum computing remains a niche and nascent field, but innovation in it is rapidly accelerating.

CSIRO estimates suggest that quantum technologies could become a $86 billion global industry by 2040.

Combining the complex sciences of information technology, chemistry and physics, quantum computers are unlikely to replace traditional computers in the mainstream. They aren’t so much better computers as they are computers that are exponentially better at very specific things.

Unfortunately, the capability of quantum computers to solve problems that traditional computing systems currently cannot is as exciting as it is problematic.

It’s not yet known how many fields or sectors could benefit from this kind of exponential speed-up that quantum computers promise, but the implications of quantum advancements on cryptography are something that those with money in cryptocurrency markets may want to keep an eye on.

Mr Kazacos noted that the cryptography upon which many blockchain protocols are based rely on are ultimately deterministic, making it vulnerable to breakthroughs in quantum computing.

“These algorithms, whilst complicated are prone to deconstruction by quantum computers, which will have the ability to determine patterns and operate in combinations and speeds not currently possible on conventional computing systems,” he explained.

Even in a world where functional quantum computers remain incredibly rare, the possibility of the technology being able to crack the previously-uncrackable algorithms protecting the most popular blockchains at all would have an enormously disruptive impact on cryptocurrency markets.

In preparation for the day when this possibility becomes a reality, Mr Kazacos advocates for combining today’s blockchain technologies with the emerging practice of quantum cryptography to create more secure and quantum-proof protocols.

“Quantum cryptography cannot be hacked by any computer system, quantum or otherwise,” Mr Kazacos explained.

For example, KAZ’s own quantum tech uses the tunnelling of electrons to produce quantum cryptographic keys. Since these keys are truly random, rather than algorithmically random, they are unable to be reverse-engineered by regular and quantum computers.

“This technology can change the very future of crypto security now and remove the threat posed by quantum computers,” he said.

For now though, quantum-protected blockchains remain scarce.

Mr Kazacos said that the only cryptocurrency currently using quantum technology is Quantum Assets on the Binance Smart Chain.

Despite the slow uptake, he maintains that the threat posed by quantum computers is all too real. He noted that quantum computers like IBM’s Quantum System One already exist, with more and more innovations being made every day.

“It’s not a problem for the future; it’s a problem for now,” he said.

Mr Kazacos said that taking advantage of the opportunity to be proactive about the problem quantum poses, as opposed to being reactive and attempting to mop up the mess once the damage is done, is critical.

“Investors should pick cryptos based on their plans for protecting their cryptography from attacks from quantum systems,” he said.

In the future, he predicted that there would be “immense” demand for quantum cryptography to protect against quantum computing.

“Being on the right side of the quantum revolution will mean huge profits and windfalls for those investors who back the right projects,” he said.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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