Image Source: Unsplash

Quantum computing represents one of the most significant long-term threats to modern cryptography. While classical computers operate on "bits" (a 1 or a 0), quantum computers use "qubits," which can exist in a superposition of both states simultaneously. This allows them to perform complex calculations exponentially faster than any classical machine. This paradigm shift holds immense promise for science but also poses an existential risk to the security infrastructure underpinning global finance, communication, and the entire blockchain ecosystem. The race is on to develop quantum-resistant technologies before a sufficiently powerful "cryptographically relevant quantum computer" (CRQC), capable of breaking today's encryption, becomes a reality.

The timeline for such a machine remains a subject of intense debate, but most experts place its arrival anywhere from five to fifteen years away. These computers do not use traditional silicon chips; instead, their processors are built from highly specialized qubits. The leading designs include superconducting qubits, favored by Google and IBM, and trapped-ion qubits. Both of these designs are incredibly delicate and must operate in heavily shielded, near-absolute-zero environments to maintain their quantum state. The primary threat to cryptocurrency comes from Shor's algorithm, a quantum algorithm that can efficiently find the prime factors of large numbers. Current blockchain encryption, such as the Elliptic Curve Digital Signature Algorithm (ECDSA) used by Bitcoin and Ethereum, relies on the fact that this factoring problem is practically impossible for classical computers to solve. A CRQC running Shor's algorithm could take a public key (which becomes visible on the network after a transaction) and use it to derive the user's private key in minutes, giving the attacker full control of the wallet.

If a quantum computer were to "solve" a blockchain, the scenario would be catastrophic. An attacker could monitor the network and, the moment a public key is revealed, calculate the corresponding private key and sign a new transaction to drain the wallet before the user's legitimate transaction even confirms. This vulnerability would shatter the public's trust, causing a total and likely irreversible collapse of the market. The majority of cryptocurrencies currently lie on the vulnerable end of the spectrum, as their core cryptographic signatures are not quantum-resistant. This threat is not just theoretical; major nation-states and the world's largest tech corporations are the primary leaders in the race to build a CRQC, whether for scientific discovery or national security.

In the face of this future threat and today's pressing privacy-shortfalls, new cryptographic methods are emerging as the future of on-chain security. Zero-Knowledge (ZK) proofs are at the forefront of this shift. As noted by industry leaders like Coinbase CEO Brian Armstrong, ZK-proofs are a fundamental breakthrough in computer science that allows for verification without revelation. This technology enables a party to prove that a statement is true (e.g., "I have sufficient funds for this transaction") without revealing any of the underlying data (e.g., "my total balance is X"). This provides a powerful solution for on-chain privacy. While Armstrong and others primarily champion ZK-proofs today for their scaling benefits (in the form of ZK-rollups), their ability to ensure privacy is their other killer feature, paving the way for a more secure, private, and scalable blockchain future.

This privacy model also offers a powerful defense against quantum attacks. The primary quantum vulnerability for blockchains like Bitcoin is that a user's public key is exposed on-chain when they make a transaction, giving Shor's algorithm the target it needs to derive the private key. ZK-proofs can be used to create "shielded wallets" or "shielded transactions," a system where transactions are validated on the network without ever revealing the sender's address, the receiver's address, or the amount. By hiding this key identifying information, the public key is never broadcast, effectively starving a quantum attacker of the one piece of data it needs to initiate the attack. This is a move toward a "never trust, never reveal" architecture. This strategy appears to be central to Brian Armstrong's vision; recent reports confirm Coinbase acquired the ZK-privacy team from Iron Fish to build private transactions directly into its Layer-2 network, Base. This move strongly suggests a strategic direction that leverages ZK-privacy not only for user confidentiality but as a foundational layer for a more resilient and quantum-resistant blockchain ecosystem.

A second, more immediate threat is mass surveillance by AI, which is why "auditable privacy" has become a crucial missing piece for crypto's adoption. This is a system that keeps transactions private from the public by default, but gives users the choice to share their financial history with trusted parties (like an auditor) using a special "view key." This concept explains why the ZK-proof solution is the only viable path forward and clarifies the precise strategy Brian Armstrong and Coinbase are pursuing. The Problem is that transparent blockchains are a goldmine for AI. As Iron Fish states, "Every on-chain action, who you pay, when, and how often, creates patterns AI can analyze." This allows centralized entities with massive compute power to "reconstruct your financial identity and behavior," reducing users to "exploitable data points." Both the quantum threat and the AI threat are enabled by the same core weakness: a public, transparent ledger.

For a quantum attack it needs the public key (revealed during a transaction) to derive the private key. For an AI Attack it Needs the public transaction graph (the full history of "who, what, when") to build surveillance models. Pure, absolute anonymity (like Monero or the original vision for ZCash) is a non-starter for the mainstream financial world due to strict regulations (Know Your Customer, Anti-Money Laundering). This is the central conflict in crypto: how to get the benefits of privacy without enabling illicit activity?

Sandy Peng, Co-Founder of Scroll, directly tackles this in her report, 'The Privacy Layer,' arguing that auditable privacy is especially crucial for stablecoins. She reasons that stablecoins are rapidly becoming the foundation for onchain finance and digital money, but their current public nature prevents widespread adoption by institutions and mainstream users who require confidentiality and regulatory compliance. Peng posits that integrating auditable privacy into stablecoins is the key to unlocking their potential as the next generation of trusted digital money. This concept then unifies all the topics: the quantum threat, the AI threat, her core thesis, and Brian Armstrong's strategy.

In short, you are witnessing the convergence of a single strategy: The ZK-proofs that protect from future quantum computers are the same ZK-proofs that protect from today's AI surveillance, and the 'auditable privacy' layer built on top is what makes it possible for regulated companies like Coinbase to deploy solutions like private, compliant stablecoins at scale.

Sources

• https://x.com/brian_armstrong/status/1952427668135178664
• https://usethebitcoin.com/news/base-network-to-get-private-stablecoin-tr...
• https://www.forbes.com/sites/digital-assets/2025/10/23/the-future-of-cry...

More By This Author:

Time To Get Tactically Defensive
America At A Crossroads: Build Like China Or Fall Behind
This Week In Markets: Earnings, Inflation, And Geopolitical Shifts