The CEO of Social Capital predicts when Bitcoin security will be hacked
This forecast comes after Google's parent company Alphabet announced Willow, a quantum computer chip that runs on 105 qubits
Palihapitiya believes that the encryption system that underlies Bitcoin - SHA-256 - can be broken in the next 2-5 years thanks to advances in quantum computing, as he explained during the All-In podcast published on December 13.
"I had to figure out how long it would take us to break the encryption standards we use for Bitcoin. We need about 8000 chips to crack SHA-256. We are in a two- to five-year window in which blockchains will need to implement new hashing algorithms,” Palihapitiya said.
Willow, which the billionaire says could accelerate the breakthrough of cryptographic standards protecting BTC and other digital currencies, is a major development in this space.
Although the technology to achieve this level of quantum computing is still in its early stages, Palihapitiya suggested that the chip represents a significant step toward achieving this capability. However, he acknowledged that there are still many challenges ahead, particularly in scaling the technology.
The investor noted that Bitcoin and other blockchain networks need to adapt quickly by adopting new encryption algorithms to ensure their security.
At the same time, Palihapitiya is optimistic about the future of cryptocurrencies. He believes that the development of quantum computing can stimulate the development of new encryption methods that can withstand all attacks.
Discussion about Bitcoin hacking
Interestingly, not all crypto market experts agree that quantum computing poses a serious threat to Bitcoin. CryptoQuant platform founder Ki Young Ju, for example, believes it is unlikely that Bitcoin will be hacked before the end of this decade.
If Bitcoin's modern encryption is compromised, the community has a plan of action proposed by its creator Satoshi Nakamoto. Back in 2010, he wrote in a post on BitcoinTalk that users can negotiate the latest secure state of the blockchain and switch to a new algorithm if the SHA-256 algorithm becomes unreliable.
“If SHA-256 were broken completely, I think we could agree on the correct state of the blockchain before the problems started, commit it, and move forward with a new hash function,” Satoshi noted.
Some experts see another potential threat – early Satoshi coins. They use the old Pay-To-Public Key (P2PK) format, which exposes the public key and can be vulnerable to attacks. Avalanche founder Emin Gün Sirer warns that the community may consider freezing or setting an expiration date for these coins.
Market Reaction to Advances in Quantum Computing
News about Google's development caused panic in the cryptocurrency market. This led to the liquidation of about $1.6 billion in assets in just 24 hours.
However, Bitcoin quickly recovered and crossed the $100,000 mark again.Additionally, the coin hit a new all-time high of $106,000 today, December 16th.
