Computers that exploit quantum mechanical phenomena have long posed a theoretical threat to the encryption that underpins the $3.8 trillion crypto industry.That threat edged closer on Wednesday after Google released new research which it claims brings quantum computing much closer to being used in real-world applications such as medicine and materials science — or swiping Bitcoin straight from holders’ wallets.“Google just keeps delivering milestones on schedule and that’s how the threat for Bitcoin will become increasingly more real,” Pierre-Luc Dallaire-Demers, a quantum computing researcher and founder of Pauli Group, a firm working on post-quantum cryptography for blockchains, told DL News.Four to five yearsDallaire-Demers said the breakthrough is consistent with his previous prediction that quantum computers will be able to crack the encryption behind Bitcoin within four to five years. Bitcoin uses a cryptographic algorithm for the digital signatures that mark transactions. The security of this system relies on the difficulty in unravelling the outputs of that algorithm.In the future, quantum computers could become powerful enough to do so, giving bad actors the ability to transfer Bitcoin out of vulnerable wallets at will. The impact of quantum computers capable of cracking advanced cryptography would be immense. About 25% of all Bitcoin in circulation — around $554 billion at current prices — is vulnerable to a quantum attack, according to a 2024 note from Deloitte, a consulting and risk management firm.And it’s not just cryptocurrencies that are at risk. Much of the internet, including websites, messaging services, and financial transactions, relies on encrypted communications that are also theoretically vulnerable to quantum attack. Impossible to knowOther experts are more conservative in their estimates of how much time Bitcoin in its current form has left.Paulo Viana, a quantum computing researcher, told DL News he believes quantum computers could pose a threat in around eight years’ time. But the few extra years of safety don’t make the threat any less unsettling.“Considering how complicated it is to transition to a quantum resistant option, eight years seems to be concerning at least,” he said. As Quantum computers become more powerful, the Bitcoin network won’t fall all at once.The first part to fall to quantum computers will be older Pay-To-Public-Key wallets created before 2012, which use a weaker form of encryption. For most users, avoiding this risk is as easy as transferring funds to a modern wallet, which hides the user’s public key behind a hash that quantum computers cannot break until a transaction is made.Satoshi’s $122bn stashBut wallets belonging to Bitcoin creator Satoshi Nakamoto — containing some 1.1 million Bitcoin worth $122 billion — are of the older, more vulnerable type.Nakamoto hasn’t been heard from for 14 years, making it appear unlikely that the pseudonymous developer will return to safeguard his stash any time soon.The biggest issue, Viana said, is that it will be impossible to know when quantum computers start cracking Bitcoin’s encryption. To those observing activity on the blockchain, such an unauthorised transaction would appear no different from an old Bitcoin wallet performing a routine transfer, something that happens frequently.“We are safe for now, but this could lead to a market crash if people don’t start to focus on solving this problem,” Viana said.Tim Craig is DL News’ Edinburgh-based DeFi correspondent. Reach out to him with tips at [email protected].Computers that exploit quantum mechanical phenomena have long posed a theoretical threat to the encryption that underpins the $3.8 trillion crypto industry.That threat edged closer on Wednesday after Google released new research which it claims brings quantum computing much closer to being used in real-world applications such as medicine and materials science — or swiping Bitcoin straight from holders’ wallets.“Google just keeps delivering milestones on schedule and that’s how the threat for Bitcoin will become increasingly more real,” Pierre-Luc Dallaire-Demers, a quantum computing researcher and founder of Pauli Group, a firm working on post-quantum cryptography for blockchains, told DL News.Four to five yearsDallaire-Demers said the breakthrough is consistent with his previous prediction that quantum computers will be able to crack the encryption behind Bitcoin within four to five years. Bitcoin uses a cryptographic algorithm for the digital signatures that mark transactions. The security of this system relies on the difficulty in unravelling the outputs of that algorithm.In the future, quantum computers could become powerful enough to do so, giving bad actors the ability to transfer Bitcoin out of vulnerable wallets at will. The impact of quantum computers capable of cracking advanced cryptography would be immense. About 25% of all Bitcoin in circulation — around $554 billion at current prices — is vulnerable to a quantum attack, according to a 2024 note from Deloitte, a consulting and risk management firm.And it’s not just cryptocurrencies that are at risk. Much of the internet, including websites, messaging services, and financial transactions, relies on encrypted communications that are also theoretically vulnerable to quantum attack. Impossible to knowOther experts are more conservative in their estimates of how much time Bitcoin in its current form has left.Paulo Viana, a quantum computing researcher, told DL News he believes quantum computers could pose a threat in around eight years’ time. But the few extra years of safety don’t make the threat any less unsettling.“Considering how complicated it is to transition to a quantum resistant option, eight years seems to be concerning at least,” he said. As Quantum computers become more powerful, the Bitcoin network won’t fall all at once.The first part to fall to quantum computers will be older Pay-To-Public-Key wallets created before 2012, which use a weaker form of encryption. For most users, avoiding this risk is as easy as transferring funds to a modern wallet, which hides the user’s public key behind a hash that quantum computers cannot break until a transaction is made.Satoshi’s $122bn stashBut wallets belonging to Bitcoin creator Satoshi Nakamoto — containing some 1.1 million Bitcoin worth $122 billion — are of the older, more vulnerable type.Nakamoto hasn’t been heard from for 14 years, making it appear unlikely that the pseudonymous developer will return to safeguard his stash any time soon.The biggest issue, Viana said, is that it will be impossible to know when quantum computers start cracking Bitcoin’s encryption. To those observing activity on the blockchain, such an unauthorised transaction would appear no different from an old Bitcoin wallet performing a routine transfer, something that happens frequently.“We are safe for now, but this could lead to a market crash if people don’t start to focus on solving this problem,” Viana said.Tim Craig is DL News’ Edinburgh-based DeFi correspondent. Reach out to him with tips at [email protected].

                                                                               Bitcoin’s market cycles may stretch longer as ISM manufacturing data remains weak, hinting at extended macro headwinds and slower business recovery.                     The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) has historically aligned with major peaks in Bitcoin’s market cycles — a pattern that, if repeated, could imply a longer-than-usual cycle this time around.The correlation between the ISM PMI and Bitcoin’s (BTC) price was first popularized by Real Vision’s Raoul Pal and has since gained traction among macro-focused crypto analysts.“All 3 past Bitcoin cycle tops have broadly aligned with this monthly, oscillating index,” analyst Colin Talks Crypto noted, referencing the recurring overlap between Bitcoin’s market highs and the PMI’s cyclical peaks.Read more