Week of woe sends digital currencies down $250bn

Could Quantum Computing Sink Cryptocurrencies?

Evangelists for cryptocurrency insist it’s the financial technology  of the future. Secure, untraceable, and uncontrollable by central banks, advocates say crypto will return monetary power to the people.  However, there’s a major problem on the horizon which could threaten the very existence of Bitcoin, Ethereum, and all the other cryptocurrency variants available today.

Strong Encryption Technology

As the name suggests, cryptocurrency is underpinned by strong encryption technology to keep both transactions and the currency itself secure. This isn’t an individual feature of Bitcoin or any other of today’s currencies — it’s the basis of every single tradable coin out there.

However, a new form of computing may be just around the corner. Quantum computing  is based on the spooky effects of quantum mechanics, and can solve many, many calculations at once. In theory, there’s no limit to the number of calculations a functional quantum device could solve in the blink of an eye. This would render the 256-bit private key encryption technology used by Bitcoin obsolete overnight.

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By John Baxter, john.baxter@leadeconomics.org

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