Bitcoin faces outsized quantum threat as computing breakthroughs accelerate, Citi says
TL;DR
Citi warns that advancements in quantum computing pose an increasing threat to cryptocurrency security, potentially compromising cryptographic systems. While large-scale quantum attacks are still a medium-term concern, investors should pay closer attention to this evolving risk.
Key points
- Citi warns of quantum computing risks for digital assets
- Quantum advancements threaten cryptographic systems of cryptocurrencies
- Large-scale quantum attacks are a medium-term concern
Mentioned in this story
Citi
Quantum computing is emerging as a growing risk for digital assets, with Wall Street bank Citi (C) warning that recent breakthroughs are accelerating the timeline for potential threats to crypto security and internet infrastructure.
In a Friday report, the bank said advances in quantum computing are challenging the cryptographic systems underpinning cryptocurrencies, financial networks and online communications.
"While large-scale quantum attacks remain a medium-term concern, the pace of progress has shortened the horizon and warrants closer attention from investors," wrote analyst Alex Saunders.
Quantum computing is a long-term threat to crypto because a sufficiently powerful quantum computer could break the cryptographic systems that protect wallets, exchanges, and blockchains, especially public-key cryptography like ECDSA used by Bitcoin and Ethereum.
In theory, a quantum attacker could derive private keys from exposed public keys, forge transactions, and steal funds. Still, the risk is not immediate. Experts believe the hardware needed to do this at scale is still years away, and blockchains can likely migrate to post-quantum cryptography before then.
The analyst highlighted Bitcoin as particularly exposed because of its conservative governance model and slower ability to implement protocol upgrades.
Saunders pointed to vulnerabilities tied to public keys exposed on-chain, dormant wallets and early pay-to-public-key (P2PK) addresses, including wallets believed to belong to Bitcoin creator Satoshi Nakamoto.
Latest estimates put around 6.5–6.9 million bitcoin at quantum risk due to already-exposed public keys. This is about one-third of circulating supply, or roughly $450 billion worth depending on the BTC price.
The report said future quantum computers could eventually derive private keys quickly enough to interfere with Bitcoin transactions before confirmation, it also flagged “harvest now, decrypt later” risks, where attackers collect encrypted data today for future quantum-enabled attacks.
Proof-of-stake networks such as Ethereum may be better positioned to respond because they can upgrade protocols more frequently, the analyst said. Still, he warned that sufficiently advanced quantum systems could potentially compromise validator keys and disrupt network operations.
Despite the risks, the bank remains constructive on crypto’s long-term ability to adapt through post-quantum cryptography and protocol redesigns and proposed Bitcoin upgrades, including BIP-360 and BIP-361, are developments to watch.
Read more: Bitcoin faces near-term pressure as liquidity tightens, Hilbert Group CIO says
Q&A
What recent breakthroughs in quantum computing threaten Bitcoin?
Recent advancements in quantum computing challenge the cryptographic systems that secure Bitcoin and other cryptocurrencies.
How could quantum computing affect cryptocurrency security?
Quantum computing could enable attackers to derive private keys from public keys, potentially allowing them to forge transactions and steal funds.
When are large-scale quantum attacks expected to become a threat to crypto?
Experts believe that while large-scale quantum attacks are a medium-term concern, the necessary hardware is still years away from being developed.
