The World Economic Forum (WEF) recently issued a strong warning regarding the vulnerability of central bank digital currencies (CBDCs) to decryption attacks from quantum computer systems.
Quantum computers are still mostly in the experimental stage, with a few proofs-of-concept and some laboratories claiming to have solved problems that traditional computers couldn’t handle. However, there is still some time before “Q-Day,” the hypothetical point at which malicious actors can break standard encryption with quantum computers.
While encryption threats would impact every industry, the digital asset sector faces a significant challenge. The WEF suggests that this heightened risk could potentially “break” CBDCs.
To address this concern, the WEF advised central banks to incorporate cryptographic agility into CBDC systems as a defense against quantum cyberattacks on payment infrastructure. It is worth noting that physicists do not agree on when quantum computers will become powerful and available enough to pose a threat to current encryption methods, with predictions ranging from a few years to decades.
The WEF identified three specific threats that quantum computing could pose to CBDCs. Firstly, quantum computers could break “in motion encryption,” allowing bad actors to intercept transactions in real-time. Secondly, they could exploit identity impersonation by breaking encryption protecting identity verification systems, leading to the insertion of spoofed identity assets. Finally, the most commonly cited threat is “Harvest now, decrypt later,” where bad actors steal encrypted data and store it for future decryption by a quantum system.
To mitigate or eliminate these threats, the WEF recommends building CBDCs with quantum-proof protections at their core through cryptographic agility.