Quantum Advantage on Proof of Work
This work addresses the security and economic implications of quantum computing for blockchain cryptocurrencies, which is a critical issue for the entire cryptocurrency ecosystem, though it builds on prior observations about quantum advantage in Bitcoin.
The paper tackles the problem of quantum computational advantage in Proof-of-Work (PoW) mechanisms, showing that this advantage applies to all existing and possible PoW systems, with potential for immense economic payoff in mining and significant threats to blockchain integrity.
Proof-of-Work (PoW) is a fundamental underlying technology behind most major blockchain cryptocurrencies. It has been previously pointed out that quantum devices provide a computational advantage in performing PoW in the context of Bitcoin. Here we make the case that this quantum advantage extends not only to all existing PoW mechanisms, but to any possible PoW as well. This has strong consequences regarding both quantum-based attacks on the integrity of the entirety of the blockchain, as well as more legitimate uses of quantum computation for the purpose of mining Bitcoin and other cryptocurrencies. For the first case, we estimate when these quantum attacks will become feasible, for various cryptocurrencies, and discuss the impact of such attacks. For the latter, we derive a precise formula to calculate the economic incentive for switching to quantum-based cryptocurrency miners. Using this formula, we analyze several test scenarios, and conclude that investing in quantum hardware for cryptocurrency mining has the potential to pay off immensely.