Quantum computing, heralded as the next transformative leap in technology, is advancing rapidly, with significant funding paving the way for its imminent reality.

While the idea of quantum computing may seem like science fiction, its arrival may be sooner than anticipated.

On January 11, 2024, the World Economic Forum identified artificial intelligence (AI) and quantum computing as emerging threats, shedding light on how quantum computing could disrupt the existing tech landscape.

Although computer scientists and developers agree that quantum computing is still in its developmental stages, research in this field is thriving.

Across the public sector, all G7 countries are actively engaged in quantum computing initiatives. In the private sector, seven of the top 10 tech companies are either vying for market dominance or involved in some capacity, according to Quantum Resistant Ledger.

So, when might quantum computing reach the point of threatening contemporary cryptography systems, such as those safeguarding cryptocurrencies?

According to a December 2023 report from Reuters, Tilo Kunz, executive vice president of cybersecurity firm Quantum Defen5e (QD5), warned officials at the Defense Information Systems Agency that "Q-day" — the day quantum computing could compromise current security standards — could arrive as soon as 2025.

The finance sector has taken note of these ominous forecasts. In June 2023, the Bank for International Settlements launched "Project Leap" in collaboration with the Bank of France and Deutsche Bundesbank, aiming to develop quantum-proof payment systems.

With such forecasts looming and central banks scrambling to fortify payment systems, how can the blockchain and crypto industry brace itself for Q-day? Is anyone truly prepared?

Why Quantum Computing Poses a Threat to Blockchains
Renowned computer scientist David Chaum, founder of the post-quantum resistant blockchain XX Network, explained to Cointelegraph how quantum computing could "vaporize" a blockchain.

Quantum computers have the potential to compromise the SHA-256 algorithm, the cryptographic hash function that serves as the primary defense for securing access to blockchain-based assets like cryptocurrencies.

As a result, quantum computers could disrupt the blockchain's consensus by generating counterfeit messages, thereby disrupting the consensus protocol. Chaum elaborated:

"Quantum computing could dismantle existing blockchains by forging the signatures of the nodes. You could take them down."

Furthermore, quantum computers could easily decrypt private keys, rendering funds susceptible to theft.

Vitalik Buterin's Proposal to Safeguard Ethereum
In response to the quantum challenge facing blockchains, Vitalik Buterin, co-founder of the Ethereum network, put forth a potential solution.

On March 9, 2024, Buterin proposed a solution involving a hard fork, igniting a debate on how to fortify the blockchain against a quantum emergency.

Buterin explained that quantum computers could compromise an Ethereum account and expose the private key using only the public key.

As Buterin elucidated, the only Ethereum accounts immune to a quantum attack would be wallets that have never engaged in a transaction, as they would not have exposed their public key.

However, this is an uncommon practice among crypto holders, leaving nearly all wallets vulnerable.

For Buterin, the technology required to make Ethereum resistant to a quantum attack could be developed "tomorrow":

"We are already well-positioned to implement a fairly straightforward recovery fork to address such a scenario."

Buterin's proposed solution revolves around proving ownership of crypto assets or a wallet by leveraging a backup key as a fallback.

This concept was introduced in 2021 in the paper "W-OTS(+) up my Sleeve! A Hidden Secure Fallback for Cryptocurrency Wallets" by cryptographers Chaum, Mario Larangeira, Mario Yaksetig, and William Carter. They proposed a key generation mechanism wherein users could generate a backup key securely nested inside the secret key of a signature scheme.

In the event of a secret key leak, the backup key would generate proof of ownership, allowing users to recover their funds on an updated quantum-resistant blockchain — essentially through a hard fork.

Hence, in the event of a quantum emergency, users would download new wallet software and prove their ownership with the fallback key. Buterin mentioned that only "a few users would lose their funds" in this process.

The hypothetical hard fork would revert the Ethereum network to the block where the large-scale theft occurred.

The Impact of the Quantum Solution on ETH Price
Chaum cautioned that Buterin's solution is not foolproof and could create some turbulence for Ethereum users.

As Chaum explained, if Ethereum fails to implement a mechanism for quantum resistance before a quantum attack occurs, Buterin's emergency solution would necessitate the reconstruction of the chain.

A new chain with quantum-resistant measures embedded at its core would need to be constructed. Once achieved, assets could be transferred to a new wallet on the new chain.

During this process, the Ethereum blockchain would need to be temporarily paused until it is restored to a new quantum-resistant blockchain. Chaum noted that this process could take years.

He emphasized that the ramifications of abruptly halting one of the most active blockchains should not be underestimated, warning that it could be catastrophic.

"There would be a significant time gap. I'm not sure if the price of Ether would survive that gap."

John Woods, chief technology officer at the Algorand Foundation, expressed confidence in Buterin's capabilities but suggested that Ethereum could take an additional step forward: "It is evident that this post represents an emergency action plan rather than an elegant transition into a post-quantum cryptography era for Ethereum."

Algorand has implemented a post-quantum mechanism using "Falcon" signatures, one of the three signing algorithms selected by the National Institute of Standards and Technology for standardization.

Woods encouraged Ethereum to adopt Falcon to promote interoperability, as its implementation "is not limited to Algorand and holds potential for adoption by various other distributed ledger technologies, blockchains, and related systems."

Ethereum appears to have formulated an emergency protocol to withstand a quantum emergency if detected.

However, the emergency solution comes with significant caveats, urging the Ethereum developer community to focus earnestly on developing quantum-resistant measures before Q-day arrives.