Why a Hidden Public Key Still Can't Protect Your Bitcoin From Quantum Computing

Transcript

So I now have a question for both of you. um because you know so we already talked about the challenges of just dealing with multiple chains and how they're you know you know coming up with different solutions all those things but then I also imagine that um they're all working on different timelines and when it gets close to uh you know when it seems more likely that actually quantum computing could be a reality there could be um you know these people that are privately harvesting uh some you uh like like an attack basically. I forget what what what the phrase is that they're I guess they're harvesting seed phrases or something in order to >> just ju just just to shame on this one.

So the harvest now and decrypt later applies for the rest of the internet because like you can capture the traffic of the internet and decrypt it later but it doesn't apply for blockchain because this threat doesn't exist for blockchain because on blockchain we don't really use like symmetric encryption. Oh. Oh, okay. Okay. >> So, so there's few things where where uh this might be referring to. One is the addresses on Ethereum are are a hash of a public key. So there is actually and it's like and it's like truncated. So there's not always visible public key available on Ethereum. And so there's a little bit of

a challenge around that. But yeah, there is ways to effectively get the public key in most cases. And so like I think that may be referring to collecting those public keys. >> Yeah. And and about that, I'd like to just mention something because sometimes I hear this argument saying that if your public key is not on chain, then an attacker cannot compute your private key with your public key with a quantum computer. And theoretically, this is true. The thing is a public key is not meant to be private. It's public. It's maybe it's not onchain but it's public.

So that means that it it is many different back end, many different logs, many different so you cannot assume that your public key is not known by the hacker. That would be that would be a terrible idea because sometimes I hear that only like I don't know five millions of bitcoin are vulnerable because their public key is on chain. This is a very bad argument. All the public key that are related to bitcoins are somewhere in the world and they are not assumed to be private. So they they should be um like treated as vulnerable as well.

>> Yeah. And then maybe to use a specific most of the cases you send this public key to RPCs and to other like services and that networking traffic right now is encrypted with a vulnerable cryptography. So if anyone is you know doing this collect now decrypt later effectively collecting traffic to RPC endpoints is a way to actually get a lot of this information out later when they're able to. >> That's a great >> Okay. So so then I'm wondering um and actually maybe it matters more for ledger. I'm not I'm not sure. Uh you tell me. But so, okay, so let's say we're, you know, like four years out from now or five years or or whatever

and um there is this possibility of this attack actually happening in the background that nobody knows about. You know, both of you are um leading companies that are uh you know, kind of dealing with multiple different chains that have multiple different solutions to face the quantum thread and you have to support all of them. like what would it take for you to say we're no longer going to support this chain or you know like like we believe the danger is to or or would you not do that or like how I I'm just trying to fast forward to think ahead to what different problems might surface at that time and like what you think would be the best way to deal with

those >> so to to this specific point like I would say that if like for instance let's say You have coins on a blockchain A that is not postconum resistant uh and coins on the blockchain b that is post confirm resistant um as long as uh the fact that a that data didn't migrate doesn't affect the security of the other coins. I would say that we would continue to support both of them and it's up to the user to decide if he wants to continue to hold this vulnerable coin. I I think that would be the the decision that we would follow because at at the end this is like at le

Switzerland of crypto like you as a user if you prefer like holding Bitcoin, Ethereum on or near it's up to you like on on our side we will secure the three of them. Um, as long as like holding one doesn't affect the security of the others. But I I I I think that would be the the idea. >> Ilia. >> Yeah. Yeah, I mean on our side it's it's a bit more uh complicated because we're allowing to trade between these different assets and so obviously assuming you know there's like not a very like not even low but like reasonable probability that one of the

chains is compromised then people can you know trade off stolen coins into something that is postquantum and so this will affect kind of the overall balance and uh for context we're already doing a lot not not even postquantum hacks effectively. But with regular hacks, right, we're doing a lot of anomaly detection scanning to effectively prevent stolen uh crypto from traveling across chains, right? Because uh we we're kind of constantly under attack by uh everyone from North Korea to h to regular hackers trying to uh launder money. And so generally we we are trying to kind of prevent and stop crosschain crime as part of this. And so

uh yeah for us it will be a little bit different decision- making. Uh that's why we kind of trying to be really ahead and and kind of be the proponents get synthesization make it easy for everyone. If you you know if there's already APIs there's already support if there's already kind of drop in replacement. um at least adding that support and then uh as an optionality and then kind of through through that you can drive people to actually uh to actually uh migrate. I think the the the real question goes back. Yeah. What what happens like at what time and what conditions do you say like cool we we kind of just

need to burn whatever is not migrated right uh I I would note that there is one cryptographic approach where if you can zero have a zero knowledge proof that you have a seed phrase for a particular private key which you you cannot presumably uh recover just through quantum computing from public key and So that right now seems like a default people want to use as a kind of when you know you turn turn off the de like default private key support but if you have a zero knowledge proof that you have a seed phrase you are still able to use your uh uh account >> but it doesn't work for Satoshi coins

for instance. >> Yeah. So a lot of the early day uh we didn't have a seat phrase like it didn't exist right bip bip 38 is like not you know not bip one um but yeah like it and and obviously a lot of people may have lost it or didn't didn't have it but um at least like that is a escape hatch I think that that ecosystem also converging >> and and that's for bitcoin or or just >> it works for everything okay >> for any chain yeah because like the link between your 24 words and your private keys cannot be broken by a control computer. What what can be broken is only the link between your public key and your private key. Uh and if the attacker is able to uh to to compute

your private key, he can like spend your coins. Uh and he doesn't need the private key the the 24 to spend your coins. So this is really how it works. >> Okay. Okay. So, let's actually now talk about this issue with Satoshi's coins because to to my mind that is easily like quite possibly the biggest uh issue. I mean, well, yeah, it's hard to say. It's hard to say this the social consensus issue is obviously also huge for Bitcoin, but you know, I'm curious to hear your opinion. You know, I heard Charles what you uh proposed to do on another podcast, but um actually, so why don't we start? We'll start with what you think should be done with Satoshi's coins and then we'll go to Ilia and

he'll explain what he thinks Bitcoin should do about Satoshi's coins. But yeah, that to me is a really interesting problem. >> Yeah. Yeah, it is definitely. So at the end there are like three main option. Either you don't do anything and if you do that as soon as there is the quantum computer capable of working cryptography, they will be stolen and that create like a liquidity problem that create the market problem. um and so on or you have or you freeze them you say that there's coins cannot be uh cannot be spent by anyone anymore.

Um and in this case that can be seen as like a private property problem like the people that are very strong on this one uh will will be um against this one. And the third option uh is the same. And if you do that, you don't have like a 21 million bitcoin anymore, but something like 16 millions or something like this. Uh or there is a third option which is um all the coins that have not migrated uh you you freeze them but not only you freeze them, you tail emit them uh on the consensus for bitcoin. So instead of um tail instead of emitting only 1

million bitcoin until 2,176 uh you will uh you will emit like four to five million bitcoin um that that were that were not migrated. So there are the three different options. They they are all bad because um because the first one is bad for the market the and the second one the third one is bad for the uh private property uh private property um thing um but I would tend to prefer the last one uh because um because first of all like we cannot I I I'm not sure we can afford an attacker

to put on the market millions of bitcoin that would that would simply destroy the project. Um and and also if you tail limit them uh it also helps uh solving the security budget uh discussion uh that sometimes people is think it's not a problem but on the long run if you don't do anything you um you might have an issue for having enough money to uh reward the miners that are securing the chain. So uh choosing the third option uh is also uh helping solving this uh this last problem. But I know plenty of plenty of people disagree

with me. I don't have a very strong opinion. I'm just saying that first of all we need to decide. We need to settle and I really think the first one is very very dangerous. Even if I'm a big proponent for private property, it's very important for me and and so on. However, it creates a too big problem for for for Bitcoin especially. >> Ilia, what do you think? >> Yeah, I mean I agree. A this indeed is probably the biggest issue in general because like even even for other blockchains the problem obviously if Bitcoin is um get quote unquote attacked in this way, right? uh this will kind of bring

all of the I mean crypto down in the sense that like I mean cryp crypto is built on trust into the technology right like not everyone individually reviewing all the code right it's kind of the the system of trust that like hey a lot of people looked at every layer and uh this trust you know will be will be broken if there is like a massive uh massive effectively uh effectively theft in this format. Uh it's also you know they'll probably sell that bitcoin and so that will be massive as well. So so I think like across the board this is a massive issue for the whole space. um as you said like I ideally they would have a plan and kind

of early on. The challenge is like Bitcoin's government governance right is a very um fluid let's say uh and so like I I don't think they have a way to have a consensus until you know until this is actually like miners making an a proper you know which which binary we select right that that that will be at the end uh state and like they will try to postpone it as as as far as possible right so Uh yeah big >> and there is there is another there is another worst alternative which would be like not doing anything because we don't reach the the social consensus but and and in this case that would be even

worse because I think we might start to see like half forks and some and when the f would be so high uh some people would would start choosing one of the half for so this is also one of the possibility and I I think that would be the worst one. So I really I strongly um like um um I I strongly think that we should as a community like settle solution and and implement it as soon as possible and stop discussing too much. >> Yeah. I mean it's it's like hurting cats. Um, so Ilia, like you know, Charles kind of stated a preference for one of the options, but do you do you

think that one is better than another? >> Um, I mean, I think the like freezing is probably like the most likely like I I don't think like remitting is is a a likely a big likelihood. Uh I do agree that like Bitcoin has a security budget problem which is like another problem uh to deal with a bit a bit later. Um so it it is a great solution. I just I just don't think it's a very likely solution that people will take.

>> I agree. >> I agree. >> Yeah. But I'm a third. I think that that would be a good way of killing two birds with one stone. Um I don't know. I mean, yeah, Bitcoin does have a security budget problem. So, I don't know. So, listeners, you you heard it here. Like, like if you agree, make your make your opinion known. The three of us all think that that is actually probably the smartest way to handle it. But yeah, it is going to be controversial. So, um, okay. Well, why don't we leave it on that note, that controversial note. Um you guys, it's been such a pleasure chatting with you both and it's been super interesting learning about

how you're resolving this and um yeah, and you know, thanks for updating us on what's going on in this quantum world because um it's definitely something that we all know is like on the horizon and it's probably going to happen faster than we anticipate. So, you just caught a piece of Unchained. I'm host Laura Shin and the full conversation is in the description below. We go live every Monday and Thursday. Subscribe so you never miss it. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the DeFi TVL if you're wondering. That's according to

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