5 New Risks to Ethereum Just Surfaced. Is The Coin Still a Buy?

According to a new paper released by Alphabet's Google Quantum AI group on March 30, there are five distinct ways that a future quantum computer could attack Ethereum (CRYPTO: ETH) by breaking its encryption.

That certainly sounds alarming. If everything the new research says is true, would the coin still be a buy?

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The five risks the paper actually found

Ethereum is, at its heart, a collection of software. That software is secured by encryption. The point of the encryption is to make it very difficult for an attacker to perform actions like stealing or spending someone else's coins. And in terms of the risk posed by potential attackers equipped with normal computers, the encryption is successful at that goal.

The trouble is that quantum computers are, in theory, capable of breaking the encryption that Ethereum and most other blockchains use. In practice, no known quantum computers that actually exist are powerful enough to do that. But quantum computers are becoming more sophisticated all the time, and, per the research by Google Quantum AI, it's also possible to design the quantum circuits they use to be vastly more efficient at codebreaking.

The research was co-authored with Ethereum Foundation researcher Justin Drake and Stanford cryptographer Dan Boneh. In short, their paper is essentially a coordinated disclosure between the people building the quantum computers and the people running the blockchain, which is why their words carry a lot of weight.

The core finding is that with their newly discovered quantum circuits, breaking the cryptography securing Ethereum would require fewer than 500,000 physical qubits, which is in the ballpark of a 20X reduction from the field's prior estimates. Again, no such machine exists yet, but the gap between current capabilities and the finish line just shrank considerably -- and as a reminder, at the finish line, Ethereum's value would likely be extremely degraded once people realized its encryption was broken.

Per the authors, quantum computers could target five attack surfaces on Ethereum's network specifically.

The most straightforward risk is to individual wallets, which could become compromised; imagine if someone could simply transfer your coins without your permission. The second and third vectors target the admin keys governing the chain's smart contracts and other code relying on vulnerable cryptographic primitives; realizing those risks would make interacting with any smart contracts a recipe for losing your funds.

The remaining two risks are potentially existential.

A consensus attack on the chain could compromise its proof-of-stake (PoS) system, the mechanism by which validators (participants who lock up Ethereum as collateral and get a yield in return) vote on transaction legitimacy. Compromising enough validators could halt transaction finalization entirely and thereby paralyze the entire chain.

The fifth vector targets a one-time setup protocol behind Ethereum's data availability sampling system. A quantum computer could recover a hidden secret from public parameters and forge proofs indefinitely without needing quantum access again, thereby essentially subordinating critical functions of the network to the will of the attacker.

The defense is already being built

If this all sounds like bad news for Ethereum, it is, and the fact that there's now likely a lot less time to migrate the chain to quantum-resistant cryptography makes things a bit more fraught. Nonetheless, work is already underway to address the quantum threat.

The Ethereum Foundation launched a post-quantum security hub and mitigation roadmap one week before this paper dropped. The plan targets the core upgrades to be operational by 2029. While the network still needs to actually implement those fixes as envisioned, the plan itself has been hailed by at least one industry leader as being the best of any major cryptocurrency.

So with that context, it doesn't make much sense to panic-sell Ethereum.

Moreover, many researchers, including Ethereum's own team, estimate that a quantum computer threatening cryptography is still (very roughly) 10 years away. That's enough runway for an organized migration like what's on the docket currently, but another algorithmic leap like Google's could compress the window again. The main question is whether the chain finishes its defenses in time.

At this point, the odds favor Ethereum completing its preparations before quantum risk becomes a practical threat. It's still worth buying.

Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Alphabet and Ethereum. The Motley Fool has a disclosure policy.