Wall Street Giant Sounds Alarm on Volatile Cryptocurrency Market

Citigroup has published a new report stating that recent advancements in quantum computing technologies pose a long-term but growing threat to the cryptocurrency market.

According to the bank, advancements in quantum computing have begun to threaten the encryption systems that secure crypto assets. A report prepared by Citi analyst Alex Saunders states that large-scale quantum attacks are still considered a medium-term risk, but the rapid pace of advancements in the technology has brought expectations forward. The report says, “While quantum attacks remain a medium-term concern, the speed of advancements has shortened the timeline and requires investors to pay closer attention to the issue.”

According to the report, quantum computers could target public-key cryptography systems based on ECDSA, particularly those used in networks like Bitcoin and Ethereum. It states that a sufficiently powerful quantum computer could theoretically derive private keys from public keys, generate fraudulent transactions, and steal assets from wallets. Citi added that Bitcoin may be more vulnerable to quantum threats, particularly due to its more conservative governance structure and slower implementation of protocol updates. The report stated that wallets with previously disclosed public keys, long-inactive addresses, and older pay-to-public-key (P2PK) wallets are at risk. This includes wallets allegedly belonging to Satoshi Nakamoto, the creator of Bitcoin.

According to the bank’s estimates, approximately 6.5 to 6.9 million BTC are currently exposed to quantum risk with their public keys disclosed. This amount represents roughly one-third of the total Bitcoin supply in circulation and, at current prices, represents a value of approximately $450 billion.

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The report also stated that future quantum computers could become fast enough to decrypt private keys before Bitcoin transactions are confirmed. Citi also drew attention to the attack model known as “collect now, decrypt later,” where attackers store encrypted data today, aiming to decrypt it in the future when quantum technology is sufficiently advanced.

On the other hand, Citi noted that proof-of-stake-based networks may be more resilient to quantum threats because they can perform more frequent protocol updates. However, the report warned that sufficiently advanced quantum systems could also compromise validator keys and disrupt network operations. Nevertheless, the bank maintains the view that the crypto sector can adapt to these threats in the long term with post-quantum cryptography solutions and new protocol designs. The report specifically notes that the proposed BIP-360 and BIP-361 upgrades for Bitcoin are among the developments that should be closely monitored.

*This is not investment advice.