Bitcoin Faces Threat From Quantum Hacks

Bitcoin's rally faces a risk that isn't on the radar of most crypto investors: quantum computing.

- ALEXANDER OSIPOVICH

The nascent technology, which drew attention this month after Google claimed a breakthrough with its new Willow quantum-computing chip, could one day enable hackers to break the encryption that keeps bitcoin secure. Such a hack could torpedo bitcoin's price, by allowing thieves to swipe coins out of supposedly secure digital wallets.

Researchers say a quantum device powerful enough to crack bitcoin is likely a decade or more away. Still, advances in the technology pose a longterm risk, unless bitcoin's fractious community of developers beefs up its technology in a time-consuming upgrade.

A quantum-powered attack on bitcoin could have harmful spillover effects on traditional financial markets, analysts warn.

"What you've got here is a time bomb waiting to explode, if and when someone gets that ability to develop quantumcomputer hacking and decides to use that to target cryptocurrencies," said Arthur Herman, senior fellow at the Hudson Institute, a think tank based in Washington, D.C.

A 2022 Hudson Institute study estimated that a quantum hack of bitcoin would cause more than $3 trillion in losses across crypto and other markets and trigger a deep recession. Herman said the likely costs of a quantum hack have swelled since the study came out, as bitcoin has climbed to nearly $100,000 and grown into an increasingly mainstream investment asset.

President-elect Donald Trump has pledged to create a strategic reserve for the government's bitcoin holdings, a sort of digital Fort Knox.