In the rapidly evolving field of technology, every breakthrough in quantum computing attracts significant attention. In December 2024, Google announced that its newly developed Willow chip had successfully overcome key challenges in quantum computing, instantly becoming a global focus in the tech world.
The Willow chip can operate with 105 qubits, demonstrating astonishing computational power. It can solve problems that would take traditional computers a billion years in just five minutes, an unimaginable speed advantage. This achievement was featured in the scientific journal Nature, undoubtedly marking a significant milestone in the field of quantum computing.
This progress in quantum computing has caused ripples in the cryptocurrency sector, especially concerning the security issues of Bitcoin. Theoretically, quantum computers could crack cryptographic algorithms, putting Bitcoin's encryption security under scrutiny. Bitcoin addresses come in various formats, with the early Pay-to-Public-Key (P2PK) format posing a special risk.
The characteristic of the P2PK format is that it directly exposes the public key. Under traditional computing systems, deriving the private key from the public key is nearly an impossible task, which has been a crucial basis for Bitcoin's security in the past. However, the development of quantum computers has broken this traditional security barrier. Quantum computing can use Shor's algorithm to derive private keys from public keys, thereby accessing the Bitcoins associated with those addresses.
Satoshi Nakamoto, the creator of Bitcoin, holds 1 million Bitcoins in P2PK format. This means that as quantum computing technology continues to advance, these 1 million Bitcoins could become a potential target for attacks. If these Bitcoins are cracked, a large influx of Bitcoins into the market could have an immeasurable impact on the entire Bitcoin market and the global cryptocurrency market.
Satoshi Nakamoto, a legendary figure in the Bitcoin world whose identity remains a mystery, left behind a vast fortune of 1 million Bitcoins. In the early days of Bitcoin, when the technology was not yet perfected, Nakamoto used the P2PK format to store Bitcoins. This format, under the conditions of that time, was a way to ensure the security of Bitcoin transactions and storage. However, with the development of quantum computing, it has become a significant vulnerability.
Quantum computing, utilizing the special properties of quantum bits, possesses computational capabilities far beyond traditional computers. Represented by Shor's algorithm, it can theoretically quickly derive private keys from the publicly exposed public keys in the P2PK format. This is akin to a seemingly robust lock becoming vulnerable in the face of quantum computing's "master key." Once attackers successfully obtain the private key, they can freely transfer the Bitcoins held by Nakamoto, undoubtedly causing a massive impact on the Bitcoin market.
From a market perspective, if these 1 million Bitcoins suddenly enter the market, it would greatly alter the supply-demand balance of Bitcoin. The price of Bitcoin has always been strongly influenced by market supply and demand, and a massive sell-off of Bitcoins would inevitably lead to a significant increase in market supply, while demand may not increase synchronously in the short term, potentially triggering a sharp fall in Bitcoin prices. Such price fluctuations not only affect the interests of Bitcoin investors but could also trigger a chain reaction in the entire cryptocurrency market, leading to a loss of market confidence. Many industries and investment projects that rely on the stability of Bitcoin prices would face significant risks.
Facing the potential crisis of Nakamoto's Bitcoins, industry opinions vary, forming a clear clash of views. As a representative of the pessimists, Paolo Ardoino, CEO of Tether, the world's largest issuer of the US dollar stablecoin, believes that as quantum computing technology steadily develops, it seems only a matter of time before Nakamoto's 1 million Bitcoin wallet is cracked and re-enters market circulation. Although he also acknowledges that there is still a considerable distance before quantum computers can crack Bitcoin encryption, and he suggests that Bitcoin is likely to introduce quantum-resistant addresses before quantum computing poses a serious threat, he still judges that those Bitcoins stored in lost wallets, including Nakamoto's (if Nakamoto is no longer alive), will eventually be cracked and re-circulated.
Well-known venture capitalist Chamath Palihapitiya also holds a pessimistic view. He once warned in a tweet that quantum computing poses a risk to the first generation of cryptographic technologies. Although the specific timing is not yet clear, and it is not likely to happen in the short term, he emphasizes that if he were a major holder of Bitcoin, he would fully consider the possibility of this risk occurring and prepare in advance. He even made a startling statement in a podcast, claiming that about 8,000 Google Willow chips could crack the SHA-256 underlying algorithm used by Bitcoin, and he also stated that the time left to re-implement a new hash algorithm in the blockchain might only be 2 to 5 years. Although he later argued that his comments were misinterpreted, he always believed that quantum computing would pose a threat to v1 encryption methods, and early p2pk addresses with exposed public keys are vulnerable to quantum computing attacks targeting elliptic curve digital signature algorithms.
On the optimistic side, several perspectives have been articulated regarding the current security of Bitcoin. Emin Gün Sirer, founder of Avalanche, believes that despite the latest advancements in quantum computing, it does not yet pose a threat to cryptocurrency security. From the perspective of computational differences, although quantum computing has significant advantages in operations such as factorization, it still faces significant challenges in reversing one-way hash functions. Additionally, the window for quantum computing attacks is very brief, making the attacks extremely difficult.
In terms of designing quantum resistance, Bitcoin and other systems only publicly disclose the hash value of the public key before a transaction, not the public key itself, thus protecting the security of static funds. The public key is only disclosed after the transaction is broadcast, and quantum attackers need to crack the key within a very short time. For example, this window is about 5 to 30 minutes for Bitcoin, which greatly increases the difficulty of attacks. Emin Gün Sirer also mentioned that Avalanche has submitted a request on GitHub to introduce quantum-resistant Lattice encryption. Although the signature size is larger, the technical preparations are relatively well-prepared, providing a solution for addressing potential future quantum threats.
Jeffrey Hu, Director of Technology and Investment Research at HashKey Capital, also pointed out that attacking Bitcoin currently requires millions of physical quantum bits, while the Google Willow chip only has 105 physical quantum bits, far from reaching a threatening level. Although Grover's algorithm in quantum computing can accelerate hash collisions, it does not break the hash rules; its effect is merely similar to a more powerful mining machine and does not fundamentally threaten the security of Bitcoin. In terms of signature security, although the old P2PK and the latest P2TR need to be cautious, hash-based formats such as P2PKH and P2SH are relatively safe. He also advised users to develop good usage habits, such as using a one-time pad and transferring assets to more secure segregated witness addresses.
Facing the potential threats posed by quantum computing, the Bitcoin community is not sitting idly by but is actively exploring various response strategies, striving to continue ensuring the security and stability of Bitcoin in the future quantum era.
In terms of technological upgrades, introducing quantum-resistant encryption technology has become an important direction. Many blockchain projects and research institutions are investing efforts in developing quantum-resistant encryption algorithms, such as lattice-based cryptographic schemes (Lattice encryption). This type of encryption is considered more resistant to quantum attacks compared to most current encryption methods. Avalanche has submitted a request on GitHub to introduce quantum-resistant Lattice encryption. Although the signature size is larger, it also shows a proactive attitude in technical preparations. Introducing these new encryption technologies through a soft fork allows for enhancing Bitcoin's quantum resistance without changing too much of the basic Bitcoin protocol. However, technological upgrades also face many challenges.
On the one hand, new encryption technologies require extensive testing and verification to ensure their security and stability, which requires a significant amount of time and resources; on the other hand, the Bitcoin community is a decentralized group, and achieving broad consensus among global users to adopt new encryption technologies is extremely challenging, and the process may be full of controversy and disagreement.
Beyond technological upgrades, a more radical strategy has been proposed, which is to freeze Nakamoto's Bitcoins and other old-format Bitcoin assets that may be threatened by quantum computing through a hard fork. A hard fork means that the Bitcoin blockchain will permanently diverge, forming two different chains. This method can completely isolate assets at risk, preventing them from entering the market after being cracked by quantum computing and causing an impact. Hu Yilin, an associate professor at Tsinghua University, pointed out that Bitcoin's quantum-resistant upgrade is difficult to fully solve through a soft fork. Balance addresses that have exposed public keys may not be transferred in time due to users losing private keys or negligence, causing a large amount of "resurrected" coins to impact the market. At this time, a hard fork is needed to permanently seal these old coins. However, a hard fork also faces challenges; it requires the support and cooperation of most nodes within the Bitcoin community. If problems occur during the implementation process, it may lead to a split in the Bitcoin community, causing market chaos, and Bitcoin's value and reputation may also be severely affected.
Once Nakamoto's 1 million Bitcoins are cracked, the market turmoil it triggers will be multifaceted. From the perspective of Bitcoin price trends, this will be a huge impact. The price of Bitcoin largely depends on the market supply-demand relationship and investor confidence. Currently, the market circulation of Bitcoin is relatively stable, and the price is fluctuating upward or adjusting steadily under the influence of various factors.
However, if these 1 million Bitcoins suddenly flood the market, the sudden increase in supply will disrupt the existing supply-demand balance. Taking the data from December 2024 as an example, the market value of Bitcoin has already reached a high level. Such a large-scale sell-off of Bitcoins is likely to trigger market panic selling, leading to a sharp decline in Bitcoin prices, and possibly even a crash.
From the perspective of the entire Bitcoin ecosystem, various aspects such as Bitcoin mining, trading, and storage may be affected. In terms of mining, a sharp decline in Bitcoin prices could lead to a significant reduction in mining profits, causing many small miners to exit the market due to inability to cover costs, which would change the landscape of Bitcoin mining and make the mining industry more centralized. In the trading segment, market instability may cause investors to fear and doubt transactions, leading to a significant decrease in trading volume, and trading platforms may also face tremendous pressure. Regarding Bitcoin storage, users may become more concerned about the security of their assets, possibly prompting more people to seek safer storage methods or simply choose to sell Bitcoins, further exacerbating market instability.
From a broader perspective of the cryptocurrency market, as the leader of cryptocurrencies, Bitcoin's price crash and ecosystem instability will inevitably trigger a chain reaction. Other cryptocurrencies have a certain correlation with Bitcoin, and a sharp decline in Bitcoin prices may lead to a downturn in the entire cryptocurrency market, hindering the development of many cryptocurrency projects. Venture capital institutions may adopt a more cautious attitude towards the cryptocurrency sector, reducing investments in cryptocurrency startups, which will suppress innovation and development in the entire industry.
Moreover, market instability in the cryptocurrency sector may also attract further attention and intervention from regulatory authorities, leading to the introduction of stricter regulatory policies that restrict cryptocurrency trading and development. This would undoubtedly add insult to injury for the entire cryptocurrency market.
Whether Nakamoto's Bitcoins will be cracked by quantum computing remains a topic full of controversy and uncertainty. Optimists and pessimists each hold their views, and the Bitcoin community is actively exploring response strategies, but each strategy faces different levels of challenges.
In the context of the rapid development of quantum computing technology, the security issue of Bitcoin is particularly important. It not only concerns the immediate interests of Bitcoin investors but also affects the stability and development of the entire cryptocurrency market. In the future, whether Bitcoin can successfully resist the potential threats of quantum computing and achieve technological upgrades and transformations is a focus of attention in the cryptocurrency field and the global financial technology sector.
This also triggers deep reflections on the future development of cryptocurrencies. Since its inception, cryptocurrency has attracted widespread attention and investment globally due to its decentralized and anonymous nature, demonstrating significant innovative potential. However, it also faces many issues, such as regulatory uncertainty, high market volatility, and technological security risks. The threat of quantum computing to Bitcoin's security is just one example.
In the future, for cryptocurrencies to achieve broader applications and sustainable development, continuous efforts must be made in technological innovation, security assurance, and compliant operations. Only in this way can cryptocurrencies find their rightful place in the global financial system and contribute more to economic development and financial innovation.
