Cryptographic Flexibility: The Key to Protecting CBDCs from Quantum Attacks

The World Economic Forum (WEF) recently issued a warning about the potential vulnerability of central bank digital currencies (CBDCs) to attacks from quantum computers. As of now, quantum computers remain mostly experimental. While there are various proofs of concept and several labs have previously claimed to solve specific problems with them that traditional computers cannot handle in a reasonable timeframe, there is still time before the hypothetical “Q-Day”—the moment when attackers will be able to break standard encryption using quantum computers—arrives.

Nevertheless, the potential threats to traditional encryption methods could impact all industries and be especially damaging to the digital asset sector. According to the WEF, this threat could literally destroy CBDCs.

In a blog post published on May 21, WEF representatives wrote that “central banks must build cryptographic flexibility into CBDC systems to protect against quantum cyberattacks targeting payment infrastructure.”

The post also notes that “over 98% of central banks in the global economy are exploring CBDC opportunities. At the same time, the private sector is developing scalable quantum computers that could create $1.3 trillion in value by 2025.”

There is no consensus among scientists about when quantum computers will reach a level where their power and accessibility become a threat to current encryption methods. Estimates range from a few years to several decades.

Three Main Quantum Threats to CBDCs

The WEF highlighted three specific threats that quantum computers could pose to CBDCs:

• Breaking encryption in transit: Quantum computers could be used to break “in-motion” encryption, allowing attackers to intercept transactions in real time.
• Identity spoofing: The blog also mentions the threat of identity spoofing, where quantum systems could break the encryption protecting identity verification systems, enabling hackers to use fake credentials.
• “Harvest now, decrypt later” attacks: The most common threat noted by the WEF is that attackers may steal encrypted data now and store it for future decryption by quantum systems.

How to Protect CBDCs: Cryptographic Flexibility

To mitigate or eliminate these threats, the WEF recommends that central banks start building CBDCs with built-in quantum-resistant protection now, using “cryptographic flexibility” methodologies.

According to the WEF, “cryptographic flexibility” is the ability to easily coordinate and change cryptographic algorithms in response to current threats in real time, effectively countering evolving attacks.

Therefore, central banks should begin adapting their systems to new threats and actively develop protective measures to ensure the security of digital currencies in the future.