Blockchain and Quantum Computers

Blockchain and Quantum Computers

Due to the rapid growth of the amounts of data, standard algorithms and computers may not be enough to process and protect all the information in the world. Here comes need for quantum computers – machines that operate not with bits, like their classical counterparts, but with qubits. Unlike bits that can only be in one state - 0 or 1, the qubits can be in two states simultaneously (in their superposition), just like Schrodinger's cat that is both alive and dead. This property allows us to use quantum algorithms, which solve certain problems faster than the standard algorithms. At the same time, the high speed of quantum algorithms poses a threat to modern methods of information protection, which leads us to creation of quantum and post-quantum cryptography. The difference between these two concepts is that quantum cryptography is a new kind of cryptography, in which information is protected by the methods of quantum physics, and post-quantum cryptography is the part of cryptography that remains valid even when quantum computers appear. Both of these technologies are relevant for blockchain technologies and cryptocurrencies.


What is quantum cryptography? It would take millions of years to find decryption keys for a classical computer. However, for quantum computers, there are algorithms that make it possible to break standard cryptographic systems during the polynomial time performing factorization. The most famous one is called Shor’s algorithm. The new kind of cryptography is able to protect data based on the principles of quantum physics. Encryption keys are transmitted by "quantum communications" – i.e. using objects of quantum mechanics, for example, photons. In such a system, it is possible to identify attempted hacks by observing the noise level during transmission, which is increased in case of a third-party interference. When the hack is discovered, data transmission can be stopped for security reasons, and thus the system can become completely invulnerable.


When it comes to blockchain, transition to new cryptographic methods means the replacement of electronic digital signature with a quantum key distribution (QKD), which makes the system invulnerable. This is the method used in the well-known project of quantum blockchain, which in 2017 (for the first time ever) was created by the Russian Quantum Center. Interestingly, this invention has already been tested on the communication network of Gazprombank. Also, quantum communication technologies are being explored by 42 start-ups, among which are MagiQ Technologies and QuantumCTek. Governments are not left behind, too - in 2017, the National Institute of Standards (USA) announced a competition to develop new standards for cryptography, and in 2016 the Chinese Academy of Sciences launched a quantum satellite.


Another direction for research is post-quantum cryptography, i.e. methods that are effective as a protection against both conventional and quantum attacks. Although a universal quantum computer is still a hypothetical device, experts believe that it will be created as soon as in 2027 and quantum attacks on crypto-currencies will be possible. Distributed ledgers and crypto-currencies, protected by post-quantum cryptography are already being developed and many of them even launch ICO.


QRL (Quantum Resistant Ledger) is the most prominent of such projects. It raised the hardcap ($ 4 million) and at the moment of writing demonstrates 300% return. The founders use the algorithm of the extended signature of Winternica (while many known cryptocurrencies, including Bitcoin and Ethereum, are built on another algorithm, ECDSA). Moreover, for a long time there have been crypto-currencies that use quantum-stable methods of protection - for example, IOTA (the same algorithm Winternitsa) and Nexus.


Research in the field of hardware and software for quantum computing is carried out by both large companies (IBM, Google, Alibaba, Atos), and start-ups (Rigetti, ID Quantique, QuintessenceLabs). A number of blockchain projects uses utility tokens to pay for the access to platforms for quantum computing and to reward developers. Of course, there are some difficulties. First of all, these are problems with regulation and the transition to new cryptographic standards on a national level. Also, the reliability of quantum cryptography can be used to provide anonymity for criminal purposes. However, given the future development of the technology, even transition to a new financial system is possible. There may emerge quantum money, protected from forgery by the methods of quantum cryptography.