World Economic Forum (WEF) recently issued a warning regarding the potential vulnerability of central bank digital currencies (CBDC) to attacks by quantum computers.
As of now, quantum computers are primarily experimental. While there have been instances of successful concepts and announcements from laboratories solving problems beyond the capabilities of traditional computers, there is still time before the hypothetical “Q-day” when standard encryption can be breached by quantum computers.
However, the risks posed to traditional encryption methods could impact various industries, particularly digital assets. The WEF has raised concerns about the possible impact on CBDCs, suggesting that this threat could potentially compromise digital currencies.
In a blog post on May 21, WEF representatives emphasized the need for central banks to incorporate cryptographic flexibility into CBDC systems to defend against quantum cyber attacks targeting payment infrastructure.
The post also highlighted that “more than 98% of the world’s central banks are exploring the capabilities of CBDCs, while the private sector is developing scalable quantum computers that could incur costs of $1.3 trillion by 2025.”
There is no consensus among scientists about when quantum computers will reach a level where they pose a significant threat to current encryption methods, with forecasts ranging from a few years to several decades.
The WEF has identified three specific threats that quantum computers could pose to CBDCs:
- Quantum computers could potentially intercept transactions in real-time by hacking encryption “in motion.”
- There is a threat of impersonation through the use of quantum encryption systems to manipulate identity verification systems, enabling hackers to use fraudulent credentials.
- The common threat of “Collect now, decrypt later” involves attackers stealing encrypted data for decryption using future quantum systems.
To address these threats, the WEF recommends that central banks implement CBDCs with integrated protection against quantum attacks using the concept of “cryptographic flexibility.”
“Cryptographic flexibility” involves the ability to adapt and change cryptographic algorithms in response to evolving threats in real-time to effectively combat emerging attacks, according to the WEF.
Central banks are advised to update their systems to mitigate these threats and develop protective measures to safeguard digital currencies in the future.