While it can be very entertaining to follow the daily perturbations of Bitcoin and its altcoin rivals, there is always a very visible grey cloud that hangs over the horizon, threatening a wave of risky situations that could wreak havoc on the crypto-verse. What comprises this cloud of doom? In a word – security, the overriding concern that keeps many of the industry’s exchange executives and cryptographers awake at night.
It may seem that exchange breaches have diminished this year, but the issue of endpoint security is always present. While the loss of personal keys are also a continuing problem, cryptographers are constantly fearing the rise of new quantum computers that could theoretically unravel the secrets of both the blockchain, as well as everything else that is encrypted on the planet according to the 128-bit Advanced Encryption Standard (AES).
Crypto Endpoint Security
After the loss of billions of dollars to professional hacking gangs, the executives operating the 200+ crypto exchanges across the globe have moved to beef up firewalls and anti-compromise security tactics. The upgrades, however, are anything but consistent across the far-flung network of exchange platforms, but customers do have options to protect themselves – offline cold wallets. Many exchanges have adopted institutional-grade custodial services, but on an individual basis, only “accredited investors” have access to these avenues.
The wallet industry has grown geometrically, but there is always room for improvement. During a Yahoo Finance interview covered by Cryptoglobe, Pascal Gauthier, CEO of hardware wallet producer Ledger, discussed what his firm is doing to improve endpoint security and why it is such a concern:
Ledger Vault is the product that we are taking to the market and it brings something very good to the industry. It’s not just security but also governance: how do you touch those coins, like many people at the same time? What are the rules, what are the business rules?
Gauthier added:
We believe that this is a very important step for the industry… Security needs to be taken very seriously, much more than it has been in the past. Exchanges are being hacked still every day and every month, that needs to change in the future and we’re here to help… Bitcoin, cryptocurrencies and blockchain are great technologically, but the one flaw, the one big problem is the security of the endpoint. Once a user loses his private key, his funds are gone.
Quantum Computing Threat
But what happens if crooks can compromise the cryptographic algorithms that rule over private keys and how the blockchain operates? Google stoked these fears when it recently announced that it had made a significant breakthrough in what is called “Quantum Computing”. The news, as reported by the Financial Times, was that Google researchers had performed a transaction in three minutes that would have taken the world’s best supercomputers over 10,000 years to compile.
If such a process does exist and the criminal element of society had free access to it, then every element of security that is based upon algorithmic encryption techniques would suddenly be at risk. Could crooks actually begin minting a multitude of Bitcoins before anyone would know about it? Such nightmarish scenarios keep cryptologists trying to keep one step ahead of the latest advancements in technology. This silent “arms race” is a reality of the world we live in. It is continual and an absolute necessity.
Are 128-bit AES standards and the blockchain really at risk? Yes, but not today and not anything that better standards cannot mitigate. Chris Pacia, a crypto expert that has been quoted as an expert by Bitcoin.com, explains:
Quantum computing would likely double the size of a key that could be effectively brute-forced. That might cause AES-128 to fall, but AES-192 and AES-256 should still be safe.
Other experts in the field are convinced that the hype surrounding quantum computing has been overstated. Per Sabine Hossenfelder:
I’m not very optimistic that quantum computers will have practical applications any time soon. I’m quite worried that quantum computing will go the same way as nuclear fusion: that it will remain forever promising but never quite work. Nevertheless, quantum supremacy is going to be a super exciting event.