Researchers in China have reportedly breached several encryption algorithms used in banking and cryptocurrency, claiming a quantum computer posed a real and significant threat to traditional cryptography. The breakthrough, which occurred through a quantum computing process known as quantum annealing, has raised alarms over the potential future risks to cryptographic security systems used in industries like finance and blockchain.
Quantum Computer Breakthrough in Cryptography
The study, conducted by Shanghai University researchers led by Wang Chao, utilized a quantum computer from D-Wave Systems (a Canadian company specializing in quantum computing) to breach commonly used encryption algorithms. These algorithms are the bedrock of advanced encryption standards (AES), which are widely used in securing digital information, including cryptocurrency wallets.
The researchers targeted three specific encryption algorithms — Present, Gift-64, and Rectangle — that are part of the Substitution-Permutation Network (SPN) structure, which forms the foundation of AES encryption. AES-256, considered one of the most secure encryption methods available, has long been thought to be resistant to attacks, but this new development suggests that quantum computers could eventually undermine that security.
Quantum Annealing and Its Potential
Quantum annealing is a process where a quantum computer seeks out the lowest energy state of a system, effectively finding the optimal solution to complex problems. This differs from traditional algorithms, which explore every possible path. In quantum computing, quantum tunneling allows particles to pass through barriers rather than over them, enabling the quantum computer to bypass obstacles that classical computers might struggle to handle.
This technique, according to the researchers, has now made it possible to breach full-scale encryption systems like those used in cryptocurrency and banking, posing a tangible threat. The researchers described their method as similar to artificial intelligence (AI) algorithms that are designed to optimize solutions at a global scale.
Implications for Crypto and Encryption
While the achievement marks a significant step forward in quantum computing, the quantum attack did not reveal the specific passcodes or full encryption keys used in the algorithms tested. This means the researchers made notable advancements in terms of the quantum computer’s ability to find vulnerabilities in cryptographic systems, but limitations in hardware, environmental factors, and the complexity of creating a single attack algorithm capable of breaching multiple encryption systems still prevent a full-scale hack.
Despite the current limitations, the fact that quantum computers were able to breach certain algorithms suggests that, as technology advances, the security of digital currencies and other encrypted data could be at risk in the future. The crypto industry has long feared that the development of quantum computing could be an inflection point, where traditional cryptographic defenses no longer provide sufficient protection.
Potential Future Quantum Threats
Researchers have cautioned that while the current quantum attack was a breakthrough, there is still a long way to go before quantum computers can fully compromise cryptographic systems. However, the progress made so far suggests that future developments could lead to more robust quantum attacks and the identification of new vulnerabilities in existing cryptographic protocols.
The findings were published in a peer-reviewed paper on Sept. 30, 2024, in the China Computer Federation (CCF) Chinese Journal of Computers, which outlines the team’s approach to breaking the AES algorithms and the potential implications for the security of encryption methods currently used in blockchain and other digital systems.
Ethereum’s Vitalik Buterin Addresses Quantum Threat
The idea of quantum computing breaking cryptographic encryption has been a long-standing concern within the crypto community, and the threat has not gone unnoticed. Ethereum co-founder Vitalik Buterin has already proposed potential solutions for mitigating the future risks posed by quantum computing.
In a post on X (formerly Twitter) in March 2024, Buterin suggested that a hard fork of the Ethereum blockchain could be a viable solution. In his proposal, Buterin explained that a simple hard fork could allow the blockchain to adapt to quantum threats. This would involve users downloading new wallet software, ensuring that their funds would remain safe despite the introduction of quantum-capable attack vectors.
Buterin also noted that the infrastructure needed to implement such a hard fork on the Ethereum blockchain could theoretically be built “tomorrow,” but it would require collaboration across the ecosystem and broader community support.
The Future of Cryptographic Security
As quantum computing advances, it’s clear that cryptography as we know it will need to evolve. While current encryption systems, like AES-256, remain robust against classical computing threats, quantum computers could soon render these protections obsolete, requiring new methods to secure digital assets.
The developments from the Shanghai University researchers have prompted calls for reassessing encryption standards and preparing the blockchain ecosystem for the coming quantum age. For now, the industry remains focused on mitigating risks and finding solutions that will keep data and funds safe in a world where quantum computing could soon pose a very real challenge.
In the meantime, it’s expected that governments, researchers, and blockchain developers will continue working on quantum-resistant algorithms and other technologies to safeguard the future of cryptocurrency and other digital assets.
