Diving For Digital Dollars: Exploring For Lost Bitcoin

There is a treasure buried in cyberspace.

But first, a short history flashback:

In the 18th century, the San Jose was a three-masted, 62-gun galleon that was sunk by the British. It had 600 people on board during the War of the Spanish Succession (1701-1714). The British, at the time, were trying to prevent Spanish galleons from returning to Europe. The reason was that they had a lot of bullion and jewels to finance the war. The San Jose sailed from Portobelo, Panama. It was the flagship of a treasure fleet of 14 merchant ships and three warships. It was spotted near Cartagena by the English commodore Charles Wager and attacked on June 8, 1708. Wager intended to capture the ship and the loot, but the galleon’s gunpowder supply exploded and it sank into deep water.

A few years ago, the Colombian Navy discovered the wreck. This was done thanks in part to the Woods Hole Oceanographic Institution (WHOI). which used its REMUS 6000 autonomous underwater vehicle to locate the wreck at a depth of about 2,000 feet. They didn’t do this out of sheer curiosity, as the San Jose was carrying a few hundred tons of gold, silver, emeralds and the like. The total was worth an estimated $17 billion in today’s money. Yes, this is not a misprint. This is the richest wreck in the world. Right now, billions of dollars worth of 18th-century Latin American fungible tokens lie at the bottom of the sea. Who is going to pick it up?

Colombia estimates that it will cost about $70 million to save what it calls a “national treasure”. It wants it displayed in a museum to be built in Cartagena. But an interesting dispute is surfacing over the wreckage, which lies in Colombian waters. Spain insists that the treasures belong to them because they were aboard a Spanish ship. The indigenous Bolivian nation Qhara Qhara claims that the Spaniards forced the community members to extract the precious metals. They say the treasures should belong to them).

The fate of this seabed fortune is similar to a crypto-chaos mix-up that occurred recently. Someone typed in the wrong destination address for a token transfer and sent $36 million in frictionless digital money from the future… into oblivion.

There must be a lot of crypto-currencies that have sunk beneath the waves of the web. The key that was on the key was destroyed (remember the poor guy scouring Welsh landfills for your hard drive). Or the value was transferred to a wallet for which there is no private key. Or because the only person who knew the passphrase died in a swimming accident or suffers from Alzheimer’s.

These gold coins scattered in the seabed of South America remind me of all those bitcoins that have gone to cryptographic heaven. Or perhaps cryptographic purgatory, because the corresponding private keys have been lost. In time, new technology will emerge that will recover them, except in this case it will be a quantum computer instead of a submarine. When quantum computers break the encryption behind the digital signature systems used for (say) Bitcoin and Ethereum, then people will be able to spend other people’s money with impunity.

Archaeologists will not be the only ones looking for these quantum computers. Of course, as many other people (e.g., organized crime, unscrupulous “whales” and tax authorities in many countries) are also looking for them. Quantum computers capable of deciphering the codes that will be needed to find them are being developed, but it’s not going to happen soon. Professor John Martinis, who was previously the chief scientist at Google.

Professor John Martinis, who used to be the top scientist in the Google GOOG quantum computing team, says Google’s plan in this area is to build a million-qubit system with a low enough error rate that error correction is efficient enough to run within a decade. Such a system will have enough logic qubits for the system to run powerful algorithms to tackle problems that are beyond the capabilities of conventional supercomputers.

One such problem is breaking the asymmetric cryptography at the heart of crypto-currencies. Then, transfer money from lost or abandoned wallets. For technical reasons related to the operation of public keys and the like, Deloitte accountants estimate that about four million bitcoins will be vulnerable to such a quantum attack. With bitcoin hovering around $30,000, that means a pool of over a hundred billion dollars is at the end of the quantum rainbow.

Keep in mind that this is only for lost or abandoned vulnerable wallets. An additional and far greater risk to bitcoins is the attack on unprocessed transactions. When you spend bitcoins, you transmit your public key. An attacker with a quantum computer can find the corresponding private key. Then, recreate the transaction to send money (for example) to himself. He would have to process your fake transactions before the original transaction (paying higher fees). All this should be done quickly and in a relatively short time. This sounds difficult but is worth doing because it puts every Bitcoin transaction at risk.

Mark Webber and his team at the University of Sussex in the UK recently calculated that breaking the crypto-currency in a 10-minute window. This would require a quantum computer with 1.9 billion qubits while breaking it in an hour would require a machine with 317 million qubits. Even taking a full day into account, this number only drops to 13 million qubits. In other words, the working quantum computer you can look for in Davy Jones’ cyberlocker is far from a reality, and it will cost well over $70 million. However, it is coming.

This undated image released by the Colombian Institute of Anthropology and History shows the remains of the Spanish galleon San Jose (Colombian Institute of Anthropology and History via AP).

The quantum version of the AUV that found the San Jose is inevitable and the treasure will be discovered. And there are many. The legendary Satoshi Nakamoto owned about a million bitcoins. He mined them during the development phase of the crypto-currency. These coins should now be considered a treasure, as Satoshi disappeared a few years after the launch of bitcoin. Estimates vary, but somewhere between a fifth and a quarter of bitcoins are already lost like this. Or, at least they are lost until a quantum computer arrives to retrieve them, and they are never in circulation again.

And that’s just bitcoin. Other crypto-currencies are also at risk. As Stephen Holmes and Liqun Chen noted in a paper published last year at the University of Surrey in the United Kingdom. The risks to different crypto-currencies are not all the same. They share a common quantum vulnerability through the use of unsecured digital signatures by the Elliptic Curve Digital Signature Algorithm (ECDSA). But the specific risks of a successful quantum attack depend on many factors, such as the time interval between blocks, the vulnerability to an attack that delays the time of completion of an unprocessed transaction, and the behavior of a crypto-currency user to increase the cost of a quantum computing attack.

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

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