The rapid evolution of quantum computing is emerging as a significant threat to the crypto ecosystem. A recent report by Wall Street giant Citi highlights that recent advancements have increased security risks, not only for crypto assets but also for the underlying infrastructure of the internet.
Quantum computers undermine crypto security
In its report released on Friday, Citi underscored that quantum computers are weakening traditional cryptographic systems. Today’s blockchain projects, financial networks, and digital communications depend heavily on cryptographic algorithms regarded as mathematically secure. However, new breakthroughs in quantum technology possess the potential to upend these long-standing assumptions.
Cryptography experts point out that a sufficiently powerful quantum computer could crack the public key encryption algorithms widely used on networks such as Bitcoin and Ethereum. Key components of the ecosystem—digital wallets, crypto exchanges, and blockchain infrastructure—could all become increasingly vulnerable with the rise of this disruptive technology.
Bitcoin at elevated risk
The report argues that Bitcoin’s current governance structure and its slow pace of protocol updates make it especially susceptible to emerging threats. Particular attention is drawn to previously exposed public keys, dormant wallets, and legacy address types on the blockchain. Notably, this also includes wallets believed to belong to Bitcoin’s creator, Satoshi Nakamoto.
According to the latest estimates, between 6.5 and 6.9 million Bitcoin—about one-third of the total circulating supply—are at risk from quantum attacks due to exposed keys. At current market prices, this represents a staggering $450 billion in potential losses.
Experts caution that future quantum computers could quickly extract private keys before blockchain transactions are validated. They also warn that data encrypted and stored today may be targeted by malicious actors for decryption at a later date.
Ethereum and post-quantum strategies
The report notes that proof-of-stake blockchains like Ethereum are relatively nimble when it comes to implementing protocol updates. Nonetheless, if technological progress allows quantum computers to break validator keys, the integrity of even these advanced systems could be compromised.
While quantum attacks are not expected to become mainstream in the short term, experts advise that blockchain networks should proactively transition to post-quantum encryption. The crypto community is now debating proposals such as Bitcoin Improvement Proposals BIP-360 and BIP-361, which are intended to offer long-term security solutions.
Citi maintains that, despite these risks, cryptocurrencies can adapt to technological advancements over the long run. The bank emphasizes the importance of industry-wide implementation of quantum-resistant solutions and protocol updates.
