The advent of quantum computing has sparked significant concern in the blockchain community, with Google warning that a sufficiently powerful quantum machine could potentially exploit legacy blockchains with less computational power than previously thought. For XRP holders, the answer to the question of quantum vulnerability is nuanced, with experts suggesting that XRP's architecture may be better positioned to withstand quantum attacks than Bitcoin's. The XRP Ledger, an open-source and decentralized blockchain, is the platform on which XRP operates, and it is utilized by fintech firm Ripple to facilitate cross-border transactions. To understand the quantum threat, it's essential to grasp the fundamental cryptographic features shared by major blockchains, including private keys, which are used to sign and execute transactions on the distributed ledger.
A public key is mathematically derived from the private key, and this public key is used to generate a wallet address that can be shared with others to receive funds. However, a sufficiently powerful quantum machine running Shor's algorithm could theoretically reverse-engineer a private key from an exposed public key, allowing an attacker to drain funds from a wallet. Typically, a public key is exposed to the network when a transaction is sent, and when funds are received, only the wallet address is recorded on the blockchain. This means that account activity, such as sending funds, makes a user quantum-vulnerable, not the balance or the duration for which the address has been held.
Recently, a quantum vulnerability audit of the XRP Ledger found that around 300,000 XRP accounts, holding approximately 2.4 billion XRP, have never sent any funds and have only received funds, meaning their public keys have never been exposed to the network. These accounts are therefore quantum-safe by default. However, there are dormant whale accounts that have transacted in the past and exposed their public keys, but these transactions occurred at least five years ago. These accounts are essentially exposed and inactive, and if a quantum computer were to be developed tomorrow, these whales would be at risk.
The audit found two such accounts on the XRP Ledger, holding a total of 21 million XRP, which is approximately 0.03% of the circulating supply. It's worth noting that the vulnerability is based on the assumption that these accounts are dormant and not active for 'key rotation,' an XRP Ledger feature that allows users to swap their signing key without moving funds. This feature is available to all users, but the problem arises when people are not around to use it, such as long-dormant accounts that may have lost keys, passed away, or are simply not paying attention.
Mayukha Vadari, a staff software engineer at Ripple, pointed to the 'escrow feature' as another defense against quantum risk. She explained that funds locked in escrow with a time lock are safe not because of cryptography, but because of logic – a time lock simply prevents withdrawal until a specified time has passed. In comparison, the quantum threat to Bitcoin appears more significant than that to XRP for two reasons. Firstly, the scale of the problem is much larger, with a significant portion of early Bitcoin having been mined using a format called P2PK, which exposed public keys directly in the transaction output.
This includes Satoshi Nakamoto's 1 million BTC, which has never moved. According to Google, approximately 6.9 million BTC are vulnerable, which equates to nearly 35% of Bitcoin's circulating supply, a much larger figure than XRP's 0.03%. Secondly, Bitcoin's blockchain lacks a key rotation feature, leaving holders with only one option: move funds to a new address whose public key has never been seen. However, when funds are moved from an old to a new address, the transaction sits in the memory pool for about 10 minutes, during which time the public key of the old address is exposed.
A sufficiently strong quantum machine can exploit this public key within ten minutes, posing a significant risk to Bitcoin holders. While this risk is still largely theoretical, it highlights the relative structural vulnerability of Bitcoin compared to XRP.