Compute limits, cryptography, keep Bitcoin safe
Bitcoin mining less lucrative and the cryptocurrency unlikely to go mainstream soon, says IITPSA Blockchain SIG
The complex ECDSA algorithm used to generate cryptographic signatures, along with the limited fault tolerance of quantum computers, means the codes protecting Bitcoin are likely to remain completely secure for years to come. This is according to John Singh, a senior systems analyst and head of the Institute of Information Technology Professionals South Africa (IITPSA) Blockchain Special Interest Group (SIG) in Kwazulu Natal.
Singh was addressing an IITPSA Kwazulu Natal chapter webinar on the basics of Bitcoin cryptography.
He noted that the Schnorr digital signature scheme invented by Claus-Peter Schnorr, a German cryptographer and academic, was now being mooted in the Bitcoin community and could enhance the already-secure system, if adopted.
“The thing about the elliptical curve multiplication currently in use is that it has never been mathematically proven that it can’t be reverse engineered, although there have been cases in the early days where it had been suspected that transactions were malleable,” said Singh.
“Schnorr signatures don’t have that problem. One advantage of Schnorr signatures is that in the current environment when you have multiple parties signing for a transaction, each of them has to produce a public key, and these are visible. So, it is easy to observe that this is a multiparty transaction. Fraudsters haven’t been able to use it to their advantage yet, nevertheless it is a security concern. Schnorr signatures are different in that even if you have multiple signatories, each has a public key but they are all aggregated into a combined public key, therefore an outside observer wouldn’t be able to determine that it was a multi-party transaction.”
Singh said he believed it was virtually impossible to crack the cryptographic keys used to protect Bitcoin, even using quantum computing. “You’d need at least 1000 qubits to crack cryptographic keys, which is a few years off. Plus, quantum computers don’t have the fault tolerance to run long enough to crack these codes,” he said.
In a poll conducted among the webinar participants on the expected impact of quantum computers on Bitcoin, 19% said they believed quantum computers would be a huge threat to Bitcoin, 47% believed cryptography would evolve and Bitcoin would be able to resist quantum computers, and 33% did not know.
Stumbling blocks in mainstream adoption
Singh said that while Bitcoin was gaining momentum and had grown significantly, the technology remained hard to understand and the tools around it did not make it easy to participate. “So things need to be streamlined before mass adoption takes place. Another stumbling block is that it is not in the interests of governments to adopt it. I believe it will take a number of years before it has a huge impact.”
Bitcoin mining less lucrative
The Bitcoin halving move in May this year, when the reward for mining Bitcoin transactions was cut in half, had impacted Bitcoin miners and made Bitcoin mining less viable for new entrants, Singh added.
“Bitcoin mining is a computer intensive process, requiring special rigs and consuming a lot of electricity. It is not as profitable as it used to be because of Bitcoin halving. For the larger players -those with massive mining farms – it could still be viable, but some have lost money and it has become difficult for new people entering the space to make a profit off it. The price of Bitcoin can be volatile, and part of the cost of mining is the electricity used, so only the very large pools and farms can take the volatility and knocks in their operations,” he said.
The IITPSA Blockchain special interest group forms part of a series of interactive industry webinars, hosted by the IITPSA to enhance communication and knowledge sharing among members.
For more information visit www.iitpsa.org.za or https://www.iitpsa.org.za/upcoming-events/
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