Chinese researchers have reported the potential to breach encryption algorithms using quantum computing. This discovery poses a threat to banking and cryptocurrency systems.

Vulnerable Encryption Methods

The algorithms targeted in the study, such as Present, Gift-64, and Rectangle, are vital components of the Substitution-Permutation Network (SPN) structure, which supports advanced encryption standards (AES) widely used in securing cryptocurrency wallets. AES-256, one of the most secure encryption methods today, might now face new vulnerabilities due to this breakthrough, which experts say could soon pose a real threat to password-protected systems.

Quantum Annealing vs. Traditional Encryption

Quantum annealing, the technique applied by Wang's team, searches for solutions by finding the lowest energy state. Unlike traditional algorithms that explore every potential path, quantum computers can bypass obstacles by using a phenomenon known as quantum tunneling. This allows them to reach the most optimized solution far faster than classical methods.

Crypto Industry Weighs the Risk

Quantum computing has long been viewed as a looming danger to the crypto industry. A machine capable of breaking through current encryption standards could open the floodgates to large-scale hacks, potentially exposing billions of dollars in user funds. In response to the potential risk, Ethereum co-founder Vitalik Buterin suggested earlier this year that a hard fork of the blockchain could mitigate such a threat. In a March post, Buterin explained that users could install new wallet software to maintain security, and the process could start as early as tomorrow if necessary.

The breakthrough by Chinese researchers has shown a real vulnerability of modern cryptographic methods in the face of quantum technologies. This raises important questions about the future security of digital data and assets.