Could Google’s New Quantum Chip Mean Your Bitcoin Could Soon Be Hacked?

Now that Google, owned by Alphabet Inc. (GOOG), has unveiled its powerful new Willow quantum chip, cryptocurrency holders face an uncomfortable truth: the technology that makes their digital assets secure today could become their biggest vulnerability tomorrow.

This is because the foundation of modern cryptography—which tokens like bitcoin and ether require to function—are based on mathematical problems that are extremely difficult for traditional computers to solve (like factoring large numbers), but which quantum computers might be able to crack.

Key Takeaways

• In December 2024, Google announced what it said was a major breakthrough in quantum computing.
• This raises some concerns that such quantum chips could break the encryption securing cryptocurrencies.
• Still, crypto proponents say these concerns are overblown, at least for the time being.

The Quantum Threat Explained

A tiny chip the size of a breath mint may have demonstrated that cryptocurrency‘s encryption systems might be living on borrowed time. In December 2024, Google said its new Willow processor achieved what researchers are calling a “mindboggling” breakthrough in quantum computing speed—and it might be only the beginning.

While today’s most powerful computers would need billions of years to crack cryptocurrency encryption, quantum computers operate in a fundamentally different way. The Willow chip harnesses quantum mechanics—where matter can exist in multiple states simultaneously—to perform calculations at almost inconceivable speeds. The chip can solve certain computational problems in under five minutes that would take the world’s best supercomputers about 10 septillion years to complete—a timespan that greatly exceeds the age of the universe.

The problem for holders of crypto? If you think of your crypto wallet’s security like a massive combination lock, regular computers would have to try combinations one at a time. Quantum computers? They can test millions of combinations simultaneously.

That’s why, even though experts say there’s likely a good amount of time left for Bitcoin and other blockchains to build better defenses for themselves, a Deloitte analysis found that about a quarter of Bitcoins now in circulation would be vulnerable to hackers with quantum computing.

Important

If a recent Deloitte analysis is correct, quantum computing could soon make about 25% of Bitcoins vulnerable to hacks, which would involve assets with about $500 billion in value as of late 2024.

Why Your Crypto Isn’t in Danger (Yet)

Even with these advances, your crypto assets are safe for now. Breaking Bitcoin’s encryption would seem to require about 13 million qubits—far beyond Willow’s current 105 qubits, according, at least, to the crypto proponents at CoinDesk. But ending a recent piece with dismissing concerns arising from quantum computing—”Try another day, crypto naysayers”—the site’s article laid out some real dangers.

The article notes that Google’s Willow doesn’t yet have the scale or ability to correct for its errors so it can get around encryption methods used in Bitcoin transactions (RSA, ECC, and AES). But that’s right after this sentence: “Bitcoin uses algorithms like SHA-256 for mining and ECDSA for signatures, which might be vulnerable to quantum decryption.”

This is like saying the cash registers in a store are safe, but thieves could just walk out the front with any of the stuff on the shelves.

Here’s why: Mining and signatures are crucial to how the Bitcoin system functions. Mining is how new Bitcoins are created, and transactions are verified and added to the blockchain. If a quantum computer could crack the SHA-256 algorithm used in mining, it could take over that process, tampering with transaction history or preventing new ones from being confirmed. In addition, if it could tamper with the ECDSA encryption for signatures, an attacker could steal Bitcoins by forging transactions to appear legitimate or impersonate users by taking over Bitcoin wallets.  

How Crypto Systems Might Defend Themselves

The crypto community isn’t sitting idle. Ethereum‘s co-founder Vitalik Buterin hasn’t been as sanguine as others in the crypto world about what quantum computing might be able to pull off.

Since quantum computers excel at finding hidden patterns in current cryptographic signatures, he’s suggested quantum-resistant systems could use completely random, one-time-use keys with no patterns to discover. Buterin said that including this as part of a hard fork—a permanent divergence in a blockchain that creates two separate and incompatible chains—could mitigate the risks from quantum computing.

The Bottom Line

While Google’s Willow chip represents a remarkable leap forward in quantum computing technology, we’re likely still some time away from quantum computers threatening crypto encryption. Nevertheless, the industry is already preparing for a quantum future and the threats it might pose, with some platforms exploring quantum-resistant algorithms.