Key Takeaways

• Quantum computing presents a significant future threat to Bitcoin due to its slow governance processes.
• Quantum computing operates on principles that allow it to perform tasks classical computers cannot, posing a threat to cryptographic algorithms.
• Experts predict a wide range of timelines for when quantum computing will become a threat to Bitcoin, from two to three years.
• Quantum computing may become viable sooner than expected, potentially within the next five years.
• Bitcoin’s cryptographic algorithms are vulnerable to quantum computing, necessitating proactive measures.
• Approximately 30-40% of Bitcoin is exposed to cybersecurity risks due to public keys being on-chain.
• Bitcoin’s UTXO model offers better wallet hygiene, reducing exposure to risks compared to Ethereum’s account-based model.
• Chains like Solana may find it easier to coordinate fixes due to their centralized structure.
• Protocols must migrate to new post-quantum cryptography, requiring a complete overhaul of existing systems.
• There needs to be a secure migration path for blockchain assets to protect against quantum computing threats.
• The risk of applying post-quantum cryptography incorrectly is a significant concern.
• Current cryptographic standards may not be secure indefinitely, necessitating agile systems that can adapt to new threats.
• Ethereum needs to prioritize decentralization and prepare for post-quantum cryptography.
• The potential for a fork in Bitcoin is high due to fundamentally different views within the community.

Guest intro

Alex Pruden is CEO and Co-Founder of Project Eleven, a post-quantum era focused blockchain builder that recently raised $20 million to address quantum threats to crypto networks. Previously, he served as CEO of Aleo, where he led development of zero-knowledge privacy solutions, and as an investing partner at Andreessen Horowitz specializing in blockchain and crypto protocols. Pruden brings nine years of US Army service as an Infantry and Special Forces officer, combined with deep expertise in cryptography and blockchain security.

Quantum computing’s threat to Bitcoin

• “Quantum computing poses a significant future threat to Bitcoin due to its slow governance.” – Alex Pruden
• “Nick Carter of Castle Island Ventures has been sounding the drum about the threat of quantum computing to Bitcoin.” – Alex Pruden
• Understanding the implications of quantum computing on cryptographic security is crucial.
• Quantum computing can perform tasks that classical computers cannot, using principles like superposition and entanglement.
• “Quantum computing is special because it can do certain things that classical computers can’t.” – Alex Pruden
• Quantum computing poses a potential threat to cryptographic algorithms used in Bitcoin.
• “Because this problem of factoring large numbers is the basis for security in many cryptographic algorithms.” – Alex Pruden
• Experts predict a wide range of timelines for when quantum computing will become a threat to Bitcoin, from two to three years.

The urgency of addressing quantum threats

• Quantum computing may become viable sooner than expected, potentially within the next five years.
• “I would say generally speaking what I tell people is it is not out of the realm of possibility this happens in the next five years.” – Alex Pruden
• Quantum computing can break the cryptographic algorithms that secure crypto.
• “Bitcoin and all crypto networks rely on broken cryptographic algorithms and quantum computing can break them.” – Alex Pruden
• Quantum computing poses a threat to Bitcoin through attacks on asymmetric cryptography.
• “There’s two categories of quantum attacks that could theoretically be relevant to Bitcoin.” – Alex Pruden
• As quantum capabilities advance, the public will likely become less informed about the state of the art in quantum technology.
• “I would fully expect us as a public to know less and less about what is the state of the art.” – Alex Pruden

Bitcoin’s vulnerabilities and public key exposure

• Grover’s algorithm poses a theoretical risk to Bitcoin’s hash function security, but its practical threat is minimal.
• “Grover’s algorithm is really just a quantum algorithm for structured search.” – Alex Pruden
• Bitcoin’s most vulnerable point is the long-lived nature of its public keys, which exposes ownership to potential attacks.
• “Bitcoin is special because the long-lived nature of these public keys makes blockchains especially vulnerable.” – Alex Pruden
• Approximately 30-40% of Bitcoin is exposed to cybersecurity risks due to public keys being on-chain.
• “The main area of concern is the public keys that are exposed on-chain.” – Alex Pruden
• Bitcoin’s UTXO model allows for better wallet hygiene, reducing exposure to risks compared to Ethereum’s account-based model.
• “For people that have wallets and follow these practices themselves, they’re not actually exposed to a quantum computer.” – Alex Pruden

Ethereum and blockchain security

• Exposing public keys is a critical vulnerability when using Ethereum and other blockchain technologies.
• “The addresses themselves are not vulnerable, but when you send from a given address, you need someone to verify your signature.” – Alex Pruden
• 30% of all Bitcoin is held under public keys that have been exposed.
• “That 30% number is 30% of all Bitcoin is under public keys that have been exposed.” – Alex Pruden
• Walrus enables fast reads and writes, which prevents lag in applications even with large files.
• “Reads and writes are extremely fast on Walrus, and this means that apps don’t lag even with really large files.” – Alex Pruden
• Walrus allows developers to encrypt data and control access on-chain.
• “Walrus lets developers encrypt data with our primitive called seal.” – Alex Pruden

The need for post-quantum cryptography

• Bitcoin is technically the least at risk but culturally the most at risk due to its high value and decentralization.
• “Bitcoin is kind of the least at risk for technical reasons but the most at risk because the value is highest.” – Alex Pruden
• Chains like Solana may find it easier to coordinate fixes due to their centralized structure.
• “There’s an advantage in the Solana ecosystem that it’s potentially easier to coordinate a fix.” – Alex Pruden
• Protocols must migrate to new post-quantum cryptography, requiring a complete overhaul of existing systems.
• “Every protocol must migrate to new cryptography.” – Alex Pruden
• The urgency of addressing quantum threats may already be too late for some systems.
• “Oh my god, it might already be too late if we’re starting now.” – Alex Pruden

Migration strategies for blockchain assets

• There needs to be a secure migration path for blockchain assets to protect against quantum computing threats.
• “There needs to be a new island we all go to… there needs to be a bridge or a path or a migration protocol to get you there.” – Alex Pruden
• The product ‘Yellow Pages’ allows users to generate post-quantum key pairs for Bitcoin.
• “What that is is basically it’s a tool that lets you generate a new post-quantum key pair.” – Alex Pruden
• As more people adopt post-quantum cryptography, it will eventually be integrated into various blockchain protocols.
• “Hopefully when enough people start doing that we’ll be able to start integrating that cryptography into various protocols.” – Alex Pruden
• The risk of applying post-quantum cryptography incorrectly is a significant concern.
• “Justin Taylor from a16z sees the bigger risk of people applying post-quantum cryptography wrong.” – Alex Pruden

The future of cryptographic standards

• Smart contract blockchains can implement post-quantum cryptography at the wallet or smart contract level, unlike Bitcoin.
• “It’s actually possible to implement post-quantum cryptography at the wallet or smart contract level in the blockchain like Ethereum or Solana.” – Alex Pruden
• Current cryptographic standards may not be secure indefinitely, necessitating agile systems that can adapt to new threats.
• “We should not be satisfied with having a new cryptographic standard that we just assume is going to be set for all time.” – Alex Pruden
• No blockchain has adequately prepared for future cryptographic challenges.
• “Really no one has started… that said I think I would highlight the work that’s being done at the Ethereum Foundation.” – Alex Pruden
• Ethereum needs to prioritize decentralization and prepare for post-quantum cryptography.
• “We need to make Ethereum decentralized and build for the hundred years, which includes post-quantum cryptography.” – Alex Pruden

Quantum computing’s impact on blockchain

• The perception of quantum computing threats is evolving positively within the blockchain community.
• “It’s been encouraging in the last year we’ve gone from ‘quantum computing is not real’ to ‘quantum computing is not to worry about now’.” – Alex Pruden
• The total addressable market for addressing quantum threats in blockchain is substantial.
• “The venture opportunity we have an entire ecosystem worth trillions of dollars that is theoretically zero if this problem is not solved.” – Alex Pruden
• Blockchains will become the foundation of all finance.
• “I believe blockchains will become the basis of all finance.” – Alex Pruden
• Quantum key distribution allows secure sharing of keys without transmitting them over the internet.
• “Quantum key distribution is a concept where you and I can share a key without actually ever transmitting it over the internet.” – Alex Pruden

Strategic responses to quantum threats

• Blockchains need to incorporate post-quantum cryptography to ensure durability.
• The emergence of quantum computers poses a significant risk to the security of Satoshi’s bitcoins.
• “I lose about $150 billion worth of assets there that could be gotten by a quantum computer.” – Alex Pruden
• There are three potential responses to the threat posed by quantum computers to Satoshi’s bitcoins: allowing them to be stolen, burning them, or reallocating them.
• “So basically let quantum computer steal, burn or reallocate those are your only three options.” – Alex Pruden
• The potential for a fork in Bitcoin is high due to fundamentally different views within the community.
• “My personal belief is unless this is resolved there will be a fork over these two things.” – Alex Pruden
• The divisive issues within the Bitcoin community could lead to a scenario worse than the block size wars.
• “I would call it like a Bitcoin civil war or whatever, just like yeah that will look like child’s play compared to this.” – Alex Pruden
• The Bitcoin community is becoming more diverse, leading to conflicting philosophies that complicate consensus.
• “The community is even bigger and more diverse with people who have wildly different philosophies involved.” – Alex Pruden