G7 Urges Crypto Industry to Switch to Post-Quantum Encryption

The Group of Seven (G7) is encouraging organizations to commence preparations for a future in which quantum computers could break the encryption used to protect digital systems. The warning, issued by the G7 working group on cybersecurity on Sept. 3, has important implications for the cryptocurrency industry, even though the report does not mention crypto directly. 

Quantum computers are being developed to solve certain problems much faster than today’s computers. If they become powerful enough, they could break some of the public-key cryptography used to protect digital wallets and authorize blockchain transactions. This could put funds and sensitive information at risk. 

The G7 is therefore calling for an early move to post-quantum cryptography, which is designed to resist attacks from quantum computers. The group says organizations should not wait until the technology becomes a direct threat before beginning the transition. 

One concern is the “harvest now, decrypt later” strategy. Attackers can collect encrypted information today and store it until quantum computers become powerful enough to unlock it. For blockchains, the risk is more serious because public keys as well as transaction records remain visible on the network. Older wallets could become targets if their exposed keys can eventually be used to access funds. 

The European Union has already taken steps in this direction. Its post-quantum cryptography roadmap requires member states to begin their shift by this year’s end, while high-risk entities are expected to complete the process before 2030. These deadlines could increase pressure on crypto exchanges, custody providers and other financial companies to demonstrate that they are preparing for the change. 

Bitcoin and Ethereum developers are exploring different ways to respond. Bitcoin developers are considering BIP-360, a proposal intended to reduce long-term quantum vulnerabilities. Ethereum has a broader plan that includes upgrades to validator signatures, account signatures as well as other parts of its network. The platform is targeting core post-quantum infrastructure by 2029. 

However, the transition will not be simple. Current ECDSA signatures are approximately 64 bytes, yet some post-quantum signatures are roughly 4,600 bytes. This large increase could raise storage costs, consume more network bandwidth and make transactions more expensive. 

The G7’s message is that the industry must begin planning now. Moving to quantum-safe encryption will require cooperation between developers, exchanges, miners, businesses and users. Although the timing of a major quantum breakthrough remains uncertain, delaying preparation could make the eventual transition more difficult and costly. 

For the crypto industry, the challenge is not only surviving the arrival of quantum computers. It is making sure that the networks, wallets and services people rely on today are ready for that future. 

The concerns being raised by the G7 are, in a way, recognition that companies like D-Wave Quantum Inc. (NYSE: QBTS) on the frontline of quantum computing development are on course to deliver the hardware and software that will make this technology go mainstream in a much shorter time than had initially been anticipated. 

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