The emergence of quantum computing has sparked significant interest, particularly after Google's announcement that a sufficiently powerful quantum machine could potentially exploit legacy blockchains with less computational power than initially thought. For holders of XRP, the digital token that operates on the XRP Ledger (XRPL), an open-source and decentralized blockchain, experts suggest that its architecture offers better protection against quantum threats than Bitcoin's. Ripple, a fintech company, utilizes XRP to facilitate cross-border transactions, leveraging the XRPL's capabilities. To understand this, let's break down the quantum threat and how XRP's design mitigates it.
Every major blockchain, including Bitcoin and the XRP Ledger, relies on fundamental cryptographic features such as private keys, which are essentially secret passwords used to sign and execute transactions on the distributed ledger. From these private keys, public keys are mathematically derived, and wallet addresses are generated for receiving funds.
The quantum vulnerability stems from the possibility that a sufficiently powerful machine, using Shor's algorithm, could theoretically reverse-engineer a private key from an exposed public key, thereby draining funds. Typically, a public key is exposed to the network during a transaction, and when receiving funds, only the wallet address is visible on the blockchain. This means that account activity, such as sending funds, makes an account quantum-vulnerable, not the balance or the duration the address has been held. Recently, a quantum vulnerability audit of the XRP Ledger found that approximately 300,000 XRP accounts, holding about 2.4 billion XRP, have never sent any funds and have only received them.
As a result, these accounts have never exposed their public keys to the network, making them quantum-safe by default. However, there are dormant 'whale' accounts that have transacted in the past, exposing their public keys, but these transactions occurred at least five years ago. These accounts are essentially exposed and inactive. If a quantum computer were to emerge tomorrow, these whales would be at risk.
The audit identified two such accounts on the XRP Ledger, collectively holding 21 million XRP, which, although significant, accounts for only 0.03% of the circulating supply. It's worth noting that this vulnerability assumes these accounts are dormant and have not utilized 'key rotation,' an XRPL feature that allows users to swap their signing key without moving funds.
This feature is akin to changing the lock on a house without having to move, ensuring the funds remain safe, and the old key becomes obsolete. While this feature is technically available to all users, the challenge arises with long-dormant accounts that may have lost access to their keys, are no longer active, or have simply neglected their accounts, making them vulnerable. Mayukha Vadari, a staff software engineer at Ripple, highlighted the 'escrow feature' as another defense mechanism against quantum risks. According to Vadari, funds locked in escrow with a time lock are protected not by cryptography, but by logic, as the time lock prevents withdrawal until a specified time has passed.
It's crucial to note that while the time lock safeguards the funds, the account that locked those funds can still carry quantum risks, similar to any other XRPL account. Therefore, an attacker could potentially gain control of the account, cancel or modify the escrow, or wait for the time lock to expire.
In comparison, the quantum threat to Bitcoin appears more severe for two primary reasons. Firstly, the scale of the issue is larger.
A significant portion of early Bitcoin was mined using a format called P2PK, which directly exposed public keys in transaction outputs without requiring a spend transaction. This includes Satoshi Nakamoto's 1 million BTC, which has never been moved. Google estimates that about 6.9 million BTC are vulnerable, equating to nearly 35% of Bitcoin's circulating supply, a substantially larger figure compared to XRP's 0.03%.
All of these Bitcoins are potentially at risk from a quantum attacker. Furthermore, Bitcoin holders who recognize the threat and wish to protect their funds face a structural issue that XRP holders do not. Bitcoin's blockchain lacks a key rotation feature, leaving holders with only one option: moving funds to a new address whose public key has never been exposed.
However, when transferring funds from an old to a new address, the transaction is temporarily stored in the memory pool for about 10 minutes, during which the public key of the old address is exposed. A sufficiently powerful quantum machine could exploit this public key within those ten minutes, although this risk remains largely theoretical.
It's worth mentioning that Bitcoin developers have already begun proposing solutions to develop quantum resistance.