Chinese researchers have reportedly breached encryption algorithms using quantum computing. These algorithms even include the ones related to banking and cryptocurrency systems.

Led by Wang Chao at Shanghai University, the research team claimed they used a quantum computer developed by Canada’s D-Wave Systems to penetrate encryption algorithms through a method known as quantum annealing, according to a report by the South China Morning Post.

Vulnerable Encryption Methods

The algorithms targeted in the study—Present, Gift-64, and Rectangle—are vital components of the Substitution-Permutation Network (SPN) structure, which powers advanced encryption standards (AES) widely used in securing cryptocurrency wallets.

AES-256, one of the most secure encryption methods today, might now face new vulnerabilities due to this breakthrough, which experts say could soon pose a real threat to password-protected systems.

Quantum Annealing vs. Traditional Encryption

Quantum annealing, the technique applied by Wang’s team, searches for solutions by finding the lowest energy state. Unlike traditional algorithms that explore every potential path, quantum computers can bypass obstacles by using a phenomenon known as quantum tunneling. This allows them to reach the most optimized solution far faster than classical methods.

“This is the first time that a real quantum computer has posed a real and substantial threat to multiple full-scale SPN structured algorithms in use today,” said the research team in their paper.

Notably, Wang has acknowledged that real-world applications of quantum-based hacks are still limited due to environmental and hardware constraints. Although the researchers managed to break encryption algorithms, they did not manage to reveal the actual passcodes, but they indicated further advancements could pose a more profound threat to cryptographic security.

Crypto Industry Weighs the Risk

Quantum computing has long been viewed as a looming danger to the crypto industry. A machine capable of breaking through current encryption standards could open the floodgates to large-scale hacks, potentially exposing billions of dollars in user funds.

In response to the potential risk, Ethereum co-founder Vitalik Buterin suggested earlier this year that a hard fork of the blockchain could mitigate such a threat. In a March post, Buterin explained that users could install new wallet software to maintain security, and the process could start as early as tomorrow if necessary.

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