Bitcoin developers have been forced to address a risk that has existed for some time: the effect of quantum computing.
Bitcoin Improvement Proposal No. 361 (BIP-361) introduced A group of researchers, including Jameson Lopp outlines a plan for migrating the network from legacy signature schemes to quantum-resistant alternatives. If the proposal is adopted, it would create a deadline which could eventually make unmigrated coins unspendable.
The proposal seeks to minimize Bitcoin’s risk in a scenario where sufficiently powerful quantum computers could break the elliptic curvature cryptography, which underlies its current system.
“Even if Bitcoin is not a primary initial target of a cryptographically relevant quantum computer, widespread knowledge that such a computer exists and is capable of breaking Bitcoin’s cryptography will damage faith in the network,” The BIP authors have written.
Bitcoin uses Schnorr and ECDSA signatures today to ensure the security of transactions. Although both are robust to classic computing, they could theoretically be vulnerable to Shor’s algorithms. An attacker may then be able to obtain private keys using exposed public keys. The network is not equally exposed to this risk. Public keys are revealed onchain by older address types. This includes pay-topublic-key and reused addresses.
According to the estimates cited in the proposal, more than a third of bitcoins currently in circulation is included within this group. This includes early Bitcoin holdings that were attributed by Satoshi Nakamoto. These funds may be compromised in a scenario of a quantum-attack, destabilizing the system and potentially distributing wealth amongst technologically sophisticated actors.
This proposal has transitional phases
BIP-361 implements a 3-phased transition to avoid this. The first phase, which is expected to take place roughly three years following activation, will prohibit the sending of funds from new transactions to old address types. Users can still transfer funds from vulnerable addresses but the restriction is designed to push services and wallets towards adopting quantum-resistant formats.
The Phase B phase, which begins about two more years from now, will accelerate the transition, invalidating legacy signatures on the consensus-level. Then, all bitcoins that have not yet been converted will be effectively frozen and unable to spend under the network’s rules.
Phase C would be a proposed recovery method that is currently under investigation. It would be based on seed phrases and zero-knowledge verifications, which allows users to show ownership without divulging private keys. It is unclear whether this stage will be feasible and when it might happen.
It is framed as more of a defensive than punitive measure. Authors argue that the freezing of coins that do not upgrade can help the network eliminate a large attack surface, before quantum technologies are developed.
The authors also point out that coins which are permanently unavailable would have a negative impact on the effective supply. This is a topic of discussion within Bitcoin’s economic model.
BIP-361 still remains in draft format.
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: bitcoinmagazine.com
