PARIS, FRANCE – JUNE 25: In this photo illustration, a visual representation of the digital …
Everyone was stunned when the new mayor of New York City Eric Adams announced he was planning to receive his first three paychecks in Bitcoin, the cryptocurrency that’s been dominating the financial headlines for the past year.
Of course, the history of markets teaches us that what goes up must eventually come down—especially a commodity like crypto, whose rise has been fueled as much by media hype as by financial realities.
But it’s also protected because after every transaction within the shared ledger; and once all the ledgers match for every computer in the network; the transaction is encrypted with the rest in what’s known as a block.
As I mentioned in a previous column, blockchain’s encryption is based on Elliptical Curve Cryptography, which will be vulnerable to factorization by quantum computers that can decrypt the complex algorithms used by asymmetric encryption systems to secure almost all electronic data, including blockchain.
Institutional investors account for 63% of trading in cryptos, compared to just 10% in 2017, which means a collapse of crypto value is bound to ripple through balance sheets all around Wall Street-and around the world.
That’s a calculation based on crypto’s current value.
Crypto exchanges have already drawn highly damaging attacks, like the one in 2018 on Bithumb, the South Korean crypto-currency exchange, which cost $30 million, or the assault on Poly Network this past August in which cyber thieves stole more than $600 million.
The National Institute for Standards and Technology is working on standards for post-quantum cryptography for rollout starting in 2024, but there is no reason to wait.