Chinese scientists have made a breakthrough by using quantum computing to compromise cryptographic algorithms, posing a significant threat to modern encryption standards used in banking and cryptocurrency, according to a report from the South China Morning Post (SCMP) on October 11.
Researchers from Shanghai University, led by Wang Chao, achieved this feat by leveraging a quantum computer from Canada’s D-Wave Systems. Their experiment utilized quantum annealing, a process that seeks the most efficient solution by identifying the lowest energy state. This approach was used to target several algorithms, including Present, Gift-64, and Rectangle, which underpin many encryption structures such as the Advanced Encryption Standard (AES)
How Quantum Computing Threatens Encryption
The team focused on AES-256, one of the most secure encryption methods available today, widely used to safeguard cryptocurrency wallets. However, the researchers warned that advances in quantum technology could soon challenge the reliability of these systems.
Wang’s paper explains that quantum annealing works similarly to artificial intelligence algorithms, optimizing solutions more effectively than conventional methods. Unlike traditional computing, which tests all possibilities one by one, quantum systems rely on quantum tunneling—allowing particles to pass through obstacles rather than over them. This enables the computer to find optimal solutions much faster than classical algorithms.
“This is the first time a real quantum computer has posed a substantial threat to multiple SPN-structured algorithms currently in use,” the researchers stated.
Potential Impact on Cryptocurrencies and Blockchain Security
Quantum computing has long been viewed as a potential disruptor for the cryptocurrency industry. If encryption is cracked, hackers could gain access to vast amounts of digital assets at high speed. However, blockchain networks are not easily breached, as an attacker would need to control 51% of the network’s processing power—a nearly impossible task for now.
Ethereum co-founder Vitalik Buterin has already suggested a contingency plan to prepare for the risks posed by quantum computing. In a March post on X (formerly Twitter), Buterin proposed a hard fork of the Ethereum blockchain. This solution would require users to download updated wallet software, but Buterin assured that most funds would remain secure. He believes the infrastructure to execute this hard fork could start development immediately.
Challenges and Limitations of Quantum Attacks
Despite this significant milestone, the researchers acknowledged that quantum computers are not yet ready for large-scale hacking. Several barriers remain, including hardware constraints, environmental factors, and the difficulty of developing a single algorithm capable of breaching multiple encryption systems.
Additionally, the quantum computer used in the experiment did not fully decode the encrypted passcodes but still made more progress than previous attempts. The team stressed that while these results are promising, further research will be essential to uncover new vulnerabilities in existing cryptographic protocols.
