Kevin O'Leary: Quantum threat curbs institution's crypto exposure
One of the main selling points of bitcoin as an alternative currency has been the security built into the asset through its complex encryption that is essentially impossible to break.
However, one caveat to this security is that bitcoin's encryption is impossible to break on classical computers where it was developed - but quantum computers are a different matter.
In fact, while quantum computing is still years away from commercialization, a growing number of experts see its power as a looming long-term threat to cryptocurrencies.
Kevin O'Leary, the Canadian venture capitalist, television personality and now actor who is also known as "Mr. Wonderful," is the latest to weigh in, indicating in an interview with Fox Business that the potential security threat posed by quantum computers is already impacting how much institutional investors are willing to allocate to bitcoin.
"There's a new concern that's kind of floating around for 10% of the people out there and that's quantum, and the idea that a quantum computer can break the chain," O'Leary said "So until that gets resolved there will be some resistance at the institutional level to go past 3%."
The reason quantum computers are seen as a potential threat is because while classical computers will test a combination of numbers sequentially, a quantum computer uses qubits in superposition to test a vast number of possible number combinations simultaneously, which is seen as giving it much greater potential to break bitcoin's encryption.
Théau Peronnin, the CEO of Alice & Bob, a startup that is building a fault-tolerant quantum computing system with Nvidia (NVDA), told Fortune at its Web Summit in November that he thinks quantum computers will be able to crack bitcoin’s encryption sometime in the next decade.
Peronnin noted that a quantum computer is “not any more powerful than your smartphone at the moment,” but within the next couple of years “it will be more powerful than the largest supercomputer ever.”
“You should have a few good years ahead of you, but I wouldn’t hold my bitcoin,” he said. “They need to fork by 2030, basically. Quantum computers will be ready to be a threat a bit later than that.”
Crypto leaders are being proactive
The crypto industry is already taking the potential security risks caused by quantum computers seriously.
In January, Coinbase Global (COIN) announced that it had formed an independent advisory board on quantum computing and blockchain made up of leading researchers in quantum computing, cryptography, consensus, and blockchain systems.
The company pointed out that most blockchains - including bitcoin and Ethereum - rely on elliptic-curve cryptography that ensures only the owner of a private key can gain access to their assets.
"While these systems remain secure today, the arrival of large-scale quantum computers could eventually weaken or break them," Coinbase said. "Preparing for that future requires collaboration across disciplines, rigorous cryptographic research, and proactive planning well before quantum computers become practical."
Meanwhile, Strategy (MSRT) founder and bitcoin maximalist Michael Saylor spoke during the company’s fourth-quarter earnings call earlier this month about a new initiative. He said Strategy will be initiating a bitcoin security program.
The effort will coordinate with the global cyber security community, the global crypto security community, and the global bitcoin security community “in order to help and contribute to consensus and solutions to address the quantum computing threat as well as any other emergent security threats that evolve.”
"There's a significant global investment going into building quantum-resistant protocols, not just in the bitcoin community, across all communities," Saylor said. "The bitcoin community in specific is engaged in research and development in these efforts and there’s good work that's taking place."
He added that if bitcoin "requires an upgrade, there will be global consensus. Right now, there isn't global consensus that existing cryptographic libraries are at risk."