Digital Dollar Diving: Exploring for Lost Bitcoin

There is buried treasure in cyberspace.

San José was a 62-cannon, three-masted galleon that was sunk by the British with 600 people on board during the Spanish Succession War (1701-1714). At the time, the British were trying to prevent Spanish galleons from returning to Europe loaded with bullion and jewels that could be used to finance the war. San José sailed from Portobelo, Panama as the flagship of a tax fleet of 14 merchant ships and three warships. It was tracked near Cartagena by the English Commodore Charles Wager and attacked on June 8, 1708. Wager intended to capture the ship and prey, but the galleon’s gunpowder supplies exploded and it sank in deep water.

A few years ago, the Colombian Navy discovered the wreck, thanks in part to the Woods Hole Oceanographic Institution (WHOI), which used its REMUS 6000 autonomous submarine (AUV) to locate the remains at a depth of about 2,000 feet. They did not do this out of curiosity, because San José carried a couple of hundred tons of gold, silver, emeralds and the like that are worth an estimated $ 17 billion in today’s money. Yep, that’s not a typo. It is the world’s richest shipwreck. Right now, the Latin American fungible tokens are worth billions of dollars from the 18th century lying on the seabed waiting to be picked up.

(Colombia estimates that it will cost around $ 70 million to salvage what it calls a “national treasure”, and they want to show it off in a museum to be built in Cartagena, but it is an interesting dispute appears around the wreck, which is in Colombian waters. Spain insists that the taxes are theirs, since they were on board a Spanish ship, while Bolivia’s native Qhara Qhara nation says that the Spaniards forced the people of society to extract precious metals, so the taxes should belong to them.)

I was thinking about the fate of this seabed fortune because I read a story about another cryptocurrency mess that happened recently when someone entered the wrong destination address for a token transfer and sent frictionless digital money worth $ 36 million of the future into oblivion.

There must be a lot of cryptocurrency that has sunk under the waves of the web because the USB stick / hard drive / post-it note with the key on it has been broken (remember the poor thing searching through Welsh landfills to find his hard drive) or because the value was transferred to a wallet for which there is no private key, or because the only person who knew the password phrase has died in a swimming accident or been overcome by Alzheimer’s.

Sinking agents

These gold coins scattered across the South American ocean floor remind me of all the bitcoins that have gone to the crypto heaven, or perhaps the crypto purgatory, because the relevant private keys have been lost. Over time, new technology will emerge which means they can be recovered, except that in this case it will be a quantum computer instead of a submarine. When quantum computers break the encryption behind the digital signature schemes used for (for example) BitcoinBTC
and EtherETH
eum, then people will be able to spend each other’s money with impunity.

Of course, there will be no archaeologists looking for these quantum computers, because very many other people (eg organized crime, unscrupulous “whales” and the tax authorities of many nations) are also searching for them. The code-broken quantum computers that will be needed to find them are under development, but they will not happen tomorrow. Professor John Martinis, who used to be the best scientist in GoogleGOOG
quantum computing team, says that Google’s plan in this field is to build a million-qubit system with a sufficiently low error rate that error correction will be effective enough to make execution reliable about a decade from now. Such a system will have enough logical qubits that the system will be able to execute powerful algorithms to attack problems that are beyond the capabilities of classic supercomputers.

One of these problems, of course, is breaking the asymmetric cryptography at the heart of cryptocurrency to transfer money from lost or abandoned wallets. For technical reasons related to the way public keys and things work, Deloitte’s accountants estimate that around four million Bitcoins will be vulnerable to such a quantum attack. With Bitcoin hovering around $ 30,000 or so, that means a pot of more than a hundred billion dollars is at the end of the quantum rainbow.

Remember that it is only for lost or abandoned vulnerable wallets. An additional and much greater risk for Bitcoin is attacks on unprocessed transactions. When you use Bitcoin, you are broadcasting your public key. An attacker with a quantum computer can find the corresponding private key and recreate the transaction to send the money (for example) to himself. They must then have the counterfeit transactions processed before the original transaction (by paying a larger fee). All of this needs to be well timed and completed in a relatively short amount of time, which sounds difficult, but it is worth doing because it jeopardizes every Bitcoin transaction.

Fishing for Bitcoin

Mark Webber and his team at the University of Sussex in the UK recently calculated that breaking the cryptography in a 10-minute window would require a quantum computer with 1.9 billion qubits, while cracking it in one hour would require a machine with 317 million qubits. Even if one takes into account an entire day, this number drops to only 13 million qubits. In other words, the working quantum computer that can search Davy Jones cyberlocker is a long way off, and it will cost much more than $ 70 million. Still it comes.

The quantum version of the AUV that found San José is an inevitable one, and the treasure will be discovered. And there is plenty of that lying around. The legendary Satoshi Nakamoto had in the order of one million bitcoins which he extracted during the development phase of the cryptocurrency. These coins should now be considered a treasure chest when Satoshi disappeared a few years after Bitcoin’s launch. Estimates vary, but somewhere in between one fifth Bitcoin is already lost this way – or at least lost until a quantum computer comes to collect it – and never comes back into circulation.

And it’s just Bitcoin. Other cryptocurrencies are also at risk, though, as mentioned in one paper from Stephen Holmes and Liqun Chen at the University of Surrey in the UK last year, the risk of different cryptocurrencies is not the same. They share a common quantum vulnerability through the use of non-quantum secure digital signatures for elliptical curve digital signature algorithm (ECDSA), but the specific risk of a successful quantum attack depends on many factors, such as the blocking interval, the vulnerability of an attack delaying an unprocessed transaction to complete and the behavior of a cryptocurrency user to increase the cost of a quantum data attack.

Over time, the value will migrate to currencies built on quantum-resistant algorithms, or to quantum computers themselves. But right now, it may well be worth spending a few billion to build a quantum submarine to dive and dredge up around a hundred billion in lost cryptocurrency. Who can imagine a crowdfunding?