Why Quantum Computing can Break Bitcoin and Ethereum Blockchain

Ishan Pandey: Hi Johann, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind ?

Johann Polecsak: Hi Ishan, thank you for the interview. Greetings to the gzht888.community. I am Johann Polecsak, the co-founder and CTO of QAN platform.

QAN platform is the Quantum-resistant hybrid blockchain platform. Our key mission is to build a future-proof blockchain platform, not just another one on the list. Quantum-resistant security is our USP, but we put an enormous focus on lowering the entry barrier for the developer community, so startups and enterprises can build their Proofs-of-Concept (PoC) and Minimum Viable Products (MVP) as fast as possible to accelerate mass adoption.

We solve this issue by building integrations for existing and widely used and loved programming languages (Rust), DevOps technologies (Docker, Kubernetes), and Cloud Platforms like Amazon AWS.

Ishan Pandey: Quantum computing is starting a new era in computer science that takes advantage of quantum phenomena such as superposition, entanglement, and interference to create great new possibilities in science and industries, but along with it, there are worries regarding new threats. According to you, what will be quantum computing’s impact on cryptography, especially post Google’s announcement?

Johann Polecsak: The most worrying and already proven part is that they will be able to break most asymmetric cryptography related schemes, including the digital signature scheme used by Bitcoin and Ethereum. In short, we trusted these algorithms because incrementing the key size would increase the hardness of breaking it exponentially. Quantum computers will linearly tackle this, meaning doubling the key size will only need double the qubits to break. Everything we considered safe so far is gone for this reason.

Ishan Pandey: Do you think that SHA-256 and X11 algorithms that underpin Bitcoin and Ethereum are quantum resistant?

Johann Polecsak: Quantum computing means a significantly smaller threat to hashing algorithms like SHA256 and X11. The problem is that these are NOT the algorithms that underpin Bitcoin/Ethereum or any other chain. It is more about the signature schemes which happen to be severely vulnerable on the other hand. So everyone saying that “my coins are safe because SHA256 is not affected by that much” is just plain wrong. Quantum computing attacks the signatures, not the hashes, which simply translates to “they are not trying to alter the past". They will steal your current account balance”. To put it in a simple sentence to make this clear once for all:

Hashing (SHA256, X11 etc.): Ensures integrity of data, makes sure past completed transactions can not be replaced.

Digital signatures (secp256k1, ed25519 etc.): Proves that the signer possesses the private key of a given public key and as thus, is authorized to execute a transaction on behalf of a wallet address.

Ishan Pandey: According to you, what can be the impact of quantum computing on the mining industry? Considering that quantum computing is very good at solving mathematical equations is at the core of mining cryptocurrencies.

Johann Polecsak: Mining relies heavily on hashing. Based on the previous paragraph, this is not a practical issue. The problem is that when Quantum computers break the digital signature scheme, on the other hand, people will be able to spend each others’ money. As a result, everybody will lose faith in non-quantum-resistant blockchains for good. So mining becomes obsolete for economic reasons, not directly technical ones, as no one will mine a coin that is broken for other reasons.

Ishan Pandey: Please tell us about how the layer-1 Defi ecosystem and the layer-2 scaling technology works?

Johann Polecsak: The Layer1 DeFi ecosystem is a beautiful beginning. However, problems with it became obvious soon enough. Malicious actors actively monitoring and/or tampering with the mempool can gain a significant unfair advantage. Solutions like libsubmarine.org mean a remedy, but the industry needs to adopt them rapidly, which I do believe will happen. There are many approaches to Layer2 scaling solutions, but the most general explanation is that transactions are “offloaded” through another snappier channel, settled there, and then the aggregated settlement proof is loaded back to Layer1. While this sounds (and is!) good, it comes with a lot of trade-offs. An efficient, high throughput Layer1 is still golden. Layer2 cannot compete with that.

Ishan Pandey: According to reports, AfriCrypt, a South African investment firm, scammed investors out of $3.6 billion in Bitcoin assets. Events like these have often deterred the public from investing in cryptocurrencies. Thus, according to you, what measures should be introduced globally to address such frauds in the crypto industry?

Johann Polecsak: First, people need to understand that exchanges are not banks. If you are not in control of your digital signature keys (private keys), you simply trust someone not to steal/mishandle your money. This is something people (unfortunately) are used because this is the way they trust banks. Now there is an enormous gap between banks and crypto exchanges, and many had to learn this the hard way. Exchanges are for exchanging digital assets, not holding (read: possibly losing / stealing) them. So if I have to summarize in one sentence: “If you hold more tokens on any exchange than you are willing to trade in the next 5 minutes, you are completely insane”. Make sure to remember that.

Ishan Pandey: President Nayib Bukele of El Salvador declared that the recently passed law making the bitcoin legal tender would take effect on September 7. Do you think this is a big step towards mass mainstream adoption of Blockchain technology?

Johann Polecsak: Yes, this is great news, in my opinion. I personally would not start implementing anything non-quantum-resistant, especially not on a government level, though. It will be quite steep to do the migration, which is already proven necessary in the upcoming few years.

Ishan Pandey: The Korean Ministry of Science and Technology, in collaboration with Korea’s Internet and Security Agency, intends to investigate the use of blockchain in online voting. How effective will blockchain be in the online voting ecosystem?

Johann Polecsak: It only depends on the consensus algorithm of the chain on which it will be implemented. If it is a Proof-of-Authority blockchain operated by the government, it is not a great breakthrough compared to current practice. If it will be implemented on a major trustless public network, it has a huge meaning and is a great step forward.

Ishan Pandey: The cryptocurrency ecosystem is evolving toward a cleaner, more environmentally friendly future. How will this impact the intense debate surrounding Bitcoin and its carbon footprint?

Johann Polecsak: The carbon footprint related to Bitcoin’s PoW (Proof-of-Work) algorithm is not that bad compared to other centralized financial solutions, but I was never the kid who scored badly on a test and then pointed at someone who scored worse to make up for it. This is why QAN developed the unique consensus algorithm called PoR (Proof-of-Randomness) because we do not think the other popular alternative PoS (Proof-of-Stake) is the solution for the mere reason you need to own tokens to get more. This means that with mining, you could plug your machine into the power socket and get tokens that you could use on the chain itself. With PoS you already need to own tokens that you can stake to earn more, meaning that most people will need to go through a centralized verification point like an exchange first, which is cumbersome for many and goes totally against the decentralized mindset are here for in the first place. QAN’s solution is the sweet spot in between and the only sane way to go.

Ishan Pandey: By 2025, the entire blockchain technology market is expected to be worth $39 billion. Do you think blockchain is revolutionizing the next generation of the Internet?

Johann Polecsak: If used right, yes, it is. How things are going now, definitely not. People trust exchanges with their money, use closed source wallet implementations, check transactions on public blockchain explorers (essentially binding their own IP addresses to wallet addresses), etc. Too many people are in it ONLY because of the get-rich-quick scheme and know absolutely nothing about how this amazing new technology is COMPLETELY different from anything else we’ve seen before. We are here to change that. My goal is to make quantum computing-based protocol just as an essential utility as electricity or water while enforcing correct usage without compromising on the comfort of usage. This should be the biggest goal of all decentralized projects instead of just implementing the software and hoping people will make an effort to use it properly. They won’t unless we make it a comfortable and joyful journey for them to do so.

Ishan Pandey: According to you, what does the post-pandemic era look like in terms of the blockchain industry’s evolution? Further, what does the roadmap ahead look like for the crypto industry?

Johann Polecsak: The pandemic / post-pandemic era has taught us that many business transactions and interactions can be executed remotely we did not previously think possible. Blockchain is a great solution for cutting intermediaries from any kind of remote transaction, reducing any multi-party agreement to the final participants who are truly essential for that given transaction. Because of this fact (and many other aspects), I am confident that blockchain will revolutionize many industries at a much faster pace than we previously projected.

Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Ishan Pandey