Quantum Computers May Need Only 10,000 Qubits to Break Crypto Wallet Encryption, Researchers Say

What to Know

• Researchers suggest Bitcoin and Ethereum wallet encryption could be broken with as few as 10,000 qubits, far fewer than previous estimates.
• A quantum computer with about 26,000 qubits could crack ECC-256 encryption in roughly 10 days, potentially exposing blockchain wallets.
• The findings intensify calls for quantum-resistant cryptography across the crypto industry.
• The biggest question now is whether blockchains can upgrade their security before quantum attacks become economically feasible.

New Research Suggests Quantum Threat Is Closer Than Expected

The theoretical threat that quantum computing poses to cryptocurrencies may be closer than previously believed.

A new research paper from scientists affiliated with the California Institute of Technology and quantum startup Oratomic suggests that far fewer quantum bits, or qubits, may be required to break the cryptographic systems protecting major blockchains such as Bitcoin and Ethereum.

According to the research, the encryption used to secure cryptocurrency wallets could potentially be compromised using as few as 10,000 physical qubits, dramatically lower than earlier projections that estimated hundreds of thousands or even millions of qubits would be required.

The findings raise fresh concerns about the long-term security of digital assets and intensify the debate over how quickly the crypto industry must transition to quantum-resistant security standards.

The paper, published Monday on the arXiv preprint server, arrived alongside a Google Quantum AI whitepaper that placed the estimated threshold at under 500,000 physical qubits.

Understanding Qubits and Quantum Computing

Quantum computers differ fundamentally from traditional computers.

Conventional computers rely on binary bits, which represent either a 0 or a 1. Quantum computers, however, use qubits, which can represent multiple states simultaneously through a principle known as superposition.

This capability allows quantum machines to process enormous numbers of possibilities at once, enabling them to solve certain problems exponentially faster than classical computers.

When it comes to cryptography, this advantage becomes particularly significant. Many modern encryption systems rely on mathematical problems that are extremely difficult for traditional computers to solve but could potentially be solved much faster using quantum algorithms.

One of the most well-known examples is Shor’s algorithm, a quantum algorithm capable of breaking widely used public-key encryption methods.

Breaking ECC-256 Encryption

The encryption system used by most major cryptocurrencies relies on elliptic curve cryptography (ECC).

Specifically, Bitcoin and Ethereum use a standard known as ECC-256, which protects wallet addresses by making it computationally infeasible to derive private keys from public keys.

However, the new research suggests that a sufficiently advanced quantum computer could break this protection far more efficiently than previously estimated.

According to the paper, a neutral-atom quantum computer with around 26,000 qubits could theoretically run the necessary algorithms to break ECC-256 encryption in approximately 10 days.

If such an attack were possible, it could allow an attacker to derive private keys associated with public wallet addresses, potentially giving them control over the funds stored in those wallets.

RSA Encryption Remains Harder to Break

Interestingly, the study also compared the difficulty of breaking other commonly used encryption systems.

For example, RSA-2048 encryption, widely used by banks and financial institutions to secure web platforms, would require significantly more computing power.

The researchers estimate that breaking RSA-2048 would require roughly 102,000 qubits and about three months of computation in a highly parallelized quantum system.

This difference exists because elliptic curve cryptography achieves comparable security with much smaller keys, making it more efficient for classical computers but potentially easier for quantum machines to attack.

Why Crypto Wallets Could Be Vulnerable

If a quantum computer were capable of breaking ECC encryption, certain cryptocurrency wallets could become vulnerable.

The risk primarily applies to wallets where public keys are exposed on the blockchain, which happens after funds are spent or when addresses are reused.

Some estimates suggest that millions of Bitcoin may already be stored in wallets with exposed keys, including coins associated with early Bitcoin addresses that have remained dormant for years.

Researchers estimate that roughly 6.9 million BTC may fall into this category, representing a significant portion of the total supply.

In theory, a sufficiently powerful quantum computer could derive the private keys for these wallets and gain control of the funds.

Rapid Attacks May Still Be Difficult

Despite the concerning findings, not all potential attack scenarios appear immediately feasible.

For example, one previously discussed threat involves a rapid “on-spend” attack, where a quantum computer cracks a wallet’s private key in minutes and steals funds during a live transaction.

Under the assumptions presented in the research paper, this type of instant attack would likely remain difficult.

Instead, the larger threat may be to long-dormant wallets or reused addresses, where attackers would have sufficient time to run quantum algorithms to extract private keys.

Conflict of Interest Raises Some Questions

While the findings are technically significant, they come with an important caveat.

All nine authors of the study are shareholders in Oratomic, and six of them are employed by the company.

This relationship means the research also functions as a demonstration of the potential capabilities of the company’s quantum hardware approach.

However, the broader trend remains clear across the industry: estimates for the computing power required to break modern cryptography are steadily declining.

Over the past two decades, estimates for running Shor’s algorithm against common encryption standards have dropped dramatically.

Earlier projections suggested billions of qubits might be needed, but newer models suggest the requirement could fall closer to tens of thousands.

The Race Toward Quantum-Resistant Crypto

As quantum computing research advances, the crypto industry is increasingly discussing the need for post-quantum cryptography.

This refers to encryption systems specifically designed to resist attacks from quantum computers.

Several potential approaches are already under development, including lattice-based cryptography and other mathematical systems believed to be resistant to quantum algorithms.

However, implementing such upgrades across decentralized blockchain networks is complex.

Changes to cryptographic standards typically require major protocol upgrades, community consensus, and significant technical coordination.

The Real Question Facing the Crypto Industry

For now, quantum computers capable of breaking blockchain encryption remain theoretical.

Current quantum machines are still far smaller and less stable than what would be required to perform such attacks in practice.

However, the direction of progress is clear.

As quantum computing technology advances and hardware becomes more powerful, the cost and feasibility of breaking current encryption systems could continue to decline.

The critical question for the cryptocurrency industry is no longer whether quantum computers will eventually pose a threat.

Instead, the question is whether blockchains can transition to quantum-resistant security systems before those attacks become economically viable.

Frequently Asked Questions (FAQs)

Can quantum computers really break Bitcoin encryption?

In theory, yes. Quantum computers running advanced algorithms such as Shor’s algorithm could potentially break the elliptic curve cryptography (ECC) used by Bitcoin and many other cryptocurrencies. However, the quantum hardware required to perform such attacks does not yet exist at a practical scale.

What are qubits and why are they important?

Qubits are the fundamental units of quantum computers, similar to bits in classical computers. Unlike traditional bits that represent either 0 or 1, qubits can exist in multiple states simultaneously. This allows quantum computers to process complex calculations much faster than traditional machines.

How many qubits would be needed to break crypto wallets?

Recent research suggests that breaking the cryptography securing Bitcoin and Ethereum wallets could theoretically require as few as 10,000 physical qubits. A system with around 26,000 qubits might be able to crack ECC-256 encryption in about 10 days.

Are Bitcoin and Ethereum currently at risk?

At the moment, no. Existing quantum computers are far smaller and less powerful than what would be required to break blockchain encryption. However, researchers warn that as quantum technology advances, the crypto industry may eventually need to transition to quantum-resistant security systems.

What is post-quantum cryptography?

Post-quantum cryptography refers to encryption methods designed to remain secure even against attacks from quantum computers. Many researchers and developers are already working on implementing these systems to ensure long-term blockchain security.

Could dormant Bitcoin wallets be vulnerable in the future?

Potentially, yes. Wallets with publicly exposed keys — such as those that have reused addresses or have already made transactions — could theoretically become vulnerable to quantum attacks if powerful enough quantum computers are developed.