Get new posts by email:
  

Will Quantum Computers Crack Bitcoin?

When I was on The Wealthy Barber podcast, the last question David Chilton asked me that I think needs a fuller answer takes me back to my working career as a cryptographer:  “Will quantum computers crack bitcoin?”  The short answer is probably not, but it’s not impossible.

Quantum computers work differently from regular computers that we’re familiar with. A fully-functioning quantum computer can try many combinations of inputs simultaneously, rather than trying them one at a time.  In some cases, secret keys used in cryptography are vulnerable; a quantum computer can try all possible secret keys simultaneously when breaking a system.  This could affect the digital signatures used in bitcoin, but not the coin mining.

However, we don’t have fully-functioning quantum computers yet.  Engineers are having great difficulty making larger quantum computers work.  The main problem is called decoherence.  Regular computers have bits, and quantum computers have qubits.  A challenge is to get a large group of qubits into a stable enough state for long enough to solve a task.  

A minority of experts believe quantum computers large enough to break the cryptographic systems we use will never be possible.  Most experts think it’s just a matter of time, but that we’re not close yet.

Even if quantum computers get close to becoming a threat, new cryptographic algorithms have been developed that cannot be broken by quantum computing.  Cryptography tends to be deeply embedded in systems, so migrating to new standards takes time and effort.  Those who control bitcoin could migrate to these new standards over the course of years.  

Doing the hard work to migrate bitcoin to new cryptography standards only makes sense if the interest level in bitcoin remains high.  If people begin to lose interest as they realize that bitcoin isn’t useful for much, bitcoin might just fade away before quantum computers become a threat.

<< Previous Post

Comments

Post a Comment

Popular posts from this blog

Deducting Mortgage Interest on Rental Properties

A colleague I’ll call Andy came up against a curious barrier to deducting mortgage interest on a rental property. Canada Revenue Agency (CRA) likes to see a straight line between the mortgage lump sum and the purchase of the property that will generate rental income. Unfortunately, it seems that Andy cannot easily draw a line that would satisfy CRA. Andy owns a small home free and clear. He plans to move to a new larger home soon. He had hoped to rent out his old home to make some rental income. His plan had been to take out a mortgage on the old home and use this money to reduce the size of the mortgage on his new home. A side benefit Andy hoped for was using the interest on the mortgage on the old house once it becomes a rental property as a deduction against the rental income. Unfortunately, CRA won’t allow this. From CRA’s point of view, the borrowed money wouldn’t be used to purchase an investment, but would be used to buy Andy’s new home. The following Q and A on page...
Read more

Updated Currency Exchange Method at BMO InvestorLine

There is now a more recent update of the method I use for exchanging currency at BMO OnvestorLine . I recently changed the procedure I use to convert large sums between Canadian and U.S. dollars at BMO InvestorLine. The method I use saves a lot of money compared to using the InvestorLine foreign exchange system. The latest change I made eliminated an annoying interest charge that I had to ask to be reversed. Most people don’t realize how expensive it can be to exchange currency. The extra charge banks and brokerages add gets hidden in the exchange rate. To see this extra charge, start by taking a sum in Canadian dollars, say C$10,000, and finding out how many U.S. dollars you can get. Then see what this U.S. amount would get going back to Canadian dollars. Many people might guess they’d get their original C$10,000 back, but they’d be wrong. In a recent test I did at BMO InvestorLine, I’d get back C$9754, for a loss of C$246 in two currency exchanges. That’s $123 per excha...
Read more

Book Review: The Wealthy Barber

Many aspects of personal finance have changed in the 36 years since The Wealthy Barber classic book first appeared.  To update it, author David Chilton had to not only do an extensive rewrite, but he had to come up with new advice.  He did a great job of making The Wealthy Barber  2025 update fully relevant to Canadians today.  Chilton takes important topics that are usually dry and hard to understand and brings them alive in an entertaining story format. But this book is much more than just a fun take on personal finances; the advice is excellent.  Chilton gives insights you won’t find elsewhere.  The book is like a course on personal finance requiring no previous knowledge, and even discussions of insurance and wills are funny and compelling enough to be page-turners. The bulk of the book is a set of financial lessons mainly aimed at Canadians between 20 and 45.  The early chapters introduce the characters, make it clear that the lessons require no ...
Read more

Archive

Show more