Who when Eric Adams, the new mayor of New York City, announced that he plans to receive the first three salaries in Bitcoin, the cryptocurrency that has dominated the financial headlines over the past year. I was surprised. Miami Mayor Francis Suarez has already announced that he will accept 100% of his first salary in Bitcoin.
The mayor’s announcement is more of a sign that cryptocurrencies are no longer an esoteric investment for the ultra-rich (or ultra-scammers), but have entered the mainstream of finance. In May, Deutsche Bank announced Bitcoin as the third largest world currency in terms of distribution. Only the euro and the US dollar are big.
Mayor Adams himself states that he intends to make New York City the “center of the cryptocurrency industry.”
Of course, market history teaches us that what goes up must eventually go down. In particular, the rise is a crypto-like commodity that has been driven by media hype as much as the financial reality. It is impossible to say whether the current crypto boom turned out to be a crypto bubble. What Bitcoin and other cryptocurrencies do for them is two advantages.
At first they No It is a national currency and has been found to be incompetent, corrupt, or both in the world’s heads.
Second, cryptocurrencies rely on blockchain or distributed ledger technology (DLT) to protect and authenticate transactions. The ledger of cryptocurrency transactions in progress is never stored in a single location. That is, there is no centralized version for hackers to break. The data is hosted simultaneously by millions of computers and can be accessed by anyone on the Internet. However, it is protected after all transactions in the shared ledger. And when all ledgers match all the computers in the network, the transaction is encrypted with the rest, called blocks. The new block is then added to the existing previous block to form a chain of blocks. Therefore, the term blockchain is used.
Overall, blockchain is a built-in security system that prevents hackers and attackers from forcibly opening a distributed ledger without anyone knowing.
As tech guru George Gilder argues in his book, Life after googleSharing as well as protecting data using blockchain poses a greater threat to the control of Big Tech on the Internet than government regulations and laws. Just as cryptocurrencies pose a useful challenge for the elite who manage state-denominated currencies.
But as always, there are pitfalls. Blockchain is a good safeguard against existing cyber threats, but not a future threat posed by large-scale quantum computers.
As mentioned in the previous column, blockchain encryption is based on elliptic curve cryptography. It is vulnerable to quantum computer factorization that can decrypt complex algorithms used in asymmetric cryptosystems to protect almost all electronic data, including blockchains. Quantum attackers only look like another member of a shared ledger in an undetectable and persistent cyberattack.
How vulnerable are cryptocurrencies like Bitcoin?
Think about it: The market capitalization of cryptocurrencies in 2020 was $ 330 billion. Today it is approaching $ 2 trillion. Institutional investors account for 63% of cryptocurrency transactions, compared to only 10% in 2017. In short, the collapse of cryptocurrency value will spread to balance sheets throughout Wall Street and around the world.
A quantum attack on cryptography that causes a 99.2% value collapse causes an immediate loss of $ 1.86 trillion to owners, according to the latest study conducted at the Quantum Alliance Initiative in collaboration with econometrics firm Oxford Economics. It brings nearly $ 1.5 trillion indirect losses to the economy as a whole due to its collapse.
Overall, we expect it to hit the US economy by $ 3.3 trillion.
This is a calculation based on the current value of the cipher. By the time large-scale quantum computers are introduced, by around 2030, cryptocurrencies will be further incorporated into the world’s financial system, and losses will be even greater.
Fortunately, there is a solution. The most direct is post-quantum cryptography. In other words, it deploys algorithm-based encryption that cannot penetrate not only future quantum attacks but also current classical attacks. Cryptocurrency has already done a lot of damage, including the 2018 Bithumb attack, the $ 30 million Korean cryptocurrency exchange, or the August Poly Network attack where a cyber thief stole more than $ 600 million. Is causing an attack to give.
The National Institute of Standards and Technology (NIST) is working on a post-quantum cryptography standard that will roll out from 2024, but there is no reason to wait. While US and Canadian companies are now able to offer solutions that include hybrid solutions that offer the strengths of both post-quantum and quantum-based technologies, others have built-in versions of DLT from the beginning. Is being created.
There is no mistake. Regardless of the ups and downs of Bitcoin and Ethereum in the current market, cryptocurrencies will stay here even if the Bitcoin bubble bursts. Quantum Safe Solutions will continue to ensure stability and safety over the long term.