During the recent RSAC Conference held in San Francisco, a significant critique of cryptocurrencies was delivered by one of the world’s leading cryptographers. Adi Shamir, recognized as the “S” in the RSA cryptosystem, voiced his opinions during the Cryptographers’ Panel, stating that cryptocurrencies have substantially failed to meet their initial promises. This declaration sparked interest and concern among industry experts and attendees.

Shamir’s assertion, which resonated with many in the audience, suggested that society might be better off without cryptocurrencies. This viewpoint was articulated against a backdrop of discussions on various pressing topics within the cybersecurity landscape, including the security of artificial intelligence, breakthroughs in quantum computing, and the British government’s attempts to challenge Apple’s end-to-end encryption offerings. The panel emphasized the societal implications of blockchain technology and cryptocurrencies, probing their potential benefits and highlighting the numerous criticisms they have faced.

Ed Felten, another distinguished panelist and chief scientist at Offchain Labs, remarked that it would be imprudent to defend every cryptocurrency or individual involved in this complex domain. He compared the current cryptocurrency landscape to the early days of the internet, where a mix of individuals were engaged in frivolous, dangerous, and, in some cases, innovative pursuits. Felten acknowledged that while some entities work on unremarkable or harmful projects, others are dedicated to genuinely beneficial endeavors.

Cryptocurrency Shortcomings

Shamir specified his criticisms towards cryptocurrencies characterized by anonymity, which can be transacted globally without oversight or control. He pointed out that the real-world application of cryptocurrency diverges significantly from the vision outlined by Satoshi Nakamoto in the original Bitcoin white paper. According to Shamir, today’s cryptocurrency ecosystem is predominantly centralized, with activities heavily concentrated in a few major exchanges. Individuals are gravitating towards cryptocurrencies more as speculative assets rather than as legitimate payment methods.

Furthermore, the role of cryptocurrency has expanded into enabling cybercriminals to monetize their illicit activities. Ransomware attacks often see extortion payments made in cryptocurrencies, exacerbating the already pressing issues surrounding cyber threats and financial crime.

Quantum Computing

As the conversation advanced, moderator Tal Rabin, a senior principal applied scientist at Amazon Web Services and a professor at the University of Pennsylvania, turned the focus to quantum computing. The timing for a fully functional quantum computer remains widely debated, with predictions ranging from imminent potential to ambiguous prospects never coming to fruition.

Raluca Ada Popa, an applied cryptography expert from the University of California, Berkeley, and a senior staff research scientist at Google DeepMind, brought attention to the looming “harvest now, decrypt later” threat posed by quantum capabilities. She suggested that various intelligence agencies may be intercepting encrypted communications today, anticipating future decryption possibilities. Whitfield Diffie, a pioneer of public-key cryptography, identified this interception dynamic as a central tenet of signals intelligence.

However, amidst these concerns, Vinod Vaikuntanathan from the Massachusetts Institute of Technology reassured the audience by highlighting that the U.S. National Institute of Standards and Technology has already standardized multiple post-quantum algorithms. He recommended the adoption of hybrid encryption methods for data security, which involve simultaneous encryption with traditional systems like RSA alongside quantum-resistant algorithms. This approach serves to bolster security against potential future threats posed by quantum computing advancements.

Popa echoed Vaikuntanathan’s recommendations, particularly emphasizing their relevance to digital signatures as well. Shamir expressed alignment with the stance of employing hybrid systems immediately, asserting that the reluctance to transition could result in adverse consequences.

Blockchains in a Post-Quantum World

Felten highlighted the impending necessity for blockchain systems to transition to quantum-resistant algorithms. While he noted that the reliance on encryption for confidentiality is not as prevalent in blockchain technology compared to traditional systems, a challenge lies in achieving consensus among all network participants. This consensus is essential for a successful transition to new cryptographic standards before quantum computers develop the capacity to undermine current security frameworks.

To facilitate a smooth transition, Felten outlined that key management systems will require significant updates, including the potential temporary freezing of funds to secure a checkpoint state during the switchover. He acknowledged the complexity of this process, predicting that it might present considerable operational challenges for many in the blockchain ecosystem.