Regulators Sound Quantum Alarm: Bitcoin Encryption at Risk

Europe's top financial regulators have identified quantum computing as a threat to markets and warned that Bitcoin's encryption could fail before quantum computers are even good enough to sell. The European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority added quantum computing to their systemic risk map alongside AI-driven cyber risk and private credit.

The warning targeted elliptic-curve cryptography that secures every Bitcoin and Ethereum wallet in existence, stating that advanced quantum computers could 'undermine some cryptography systems widely used to secure communications, transactions, databases and blockchains.' The threat may materialize earlier than any viable commercial application.

Security researchers call this scenario 'harvest now, decrypt later,' where attackers can harvest encrypted blockchain data right now and wait for a future quantum computer to break it. This poses a significant risk to wallets with exposed public keys, as roughly 6.9 million Bitcoin worth about $586 billion sit in such addresses.

While breaking a Bitcoin wallet remains theoretical due to the need for millions of stable qubits, researchers have narrowed the gap. Google Quantum AI published research suggesting that cracking 256-bit encryption might require 20 times fewer physical qubits than earlier estimates assumed.