Recent breakthroughs in quantum computing have upended the conversation. Many technologists are deeply concerned about the security of the cryptographic algorithms, which are the backbone of blockchain technology. Last December, Google announced its next-generation quantum chip, Willow. Like many other revolutionary breakthroughs, this discovery has caused alarm by giving rise to significant risk as treated by BlackRock and the broader crypto community as of late. These current worries are based on the potential for quantum computers to break the encryption currently securing Bitcoin wallets and exchanges.

Google claimed Willow could solve computational tasks in minutes that would take the world's most powerful supercomputers 10 septillion years. Worries over the potential of Quantum Computing to upend our cryptographic algorithms reached a high point last year when Google announced Willow.

Researchers at JPMorgan, Quantinuum and other teams have achieved important breakthroughs. The project increased their ability to generate certifiably random numbers — which strengthens encryption, bolsters digital signatures, and makes future blockchain systems more secure with quantum randomness. Moreover, Microsoft revealed its quantum chip, Majorana 1, that solves some of the biggest challenges to scale.

BlackRock, in a recent amendment to its iShares Ethereum Trust filing, has formally recognized the existential risk. The amendment added new rules governing in-kind creation and redemption. It further warned that advancements in quantum computing would pose a serious risk to the cryptography used throughout the Bitcoin network.

If quantum computing is able to advance in that way, there is a risk that quantum computing could result in the cryptography underlying the Bitcoin network becoming ineffective, which, if realized, could compromise the security of the Bitcoin network, or allow a malicious actor to compromise the wallets holding bitcoin owned by the Trust or others on the Bitcoin network, which would result in losses to Shareholders. - BlackRock's filing

Other experts have pointed out that these disclosures are part and parcel of most financial products. It’s the very specific mention of quantum computing that highlights a growing awareness of this new, accelerating threat.

These are just basic risk disclosures. They are going to highlight any potential thing that can go wrong with any product they list or underlying asset that’s being invested in. It’s completely standard. - James Seyffart

In his discussion of quantum-proof architecture, BlackRock was adamant that new architectures should not be created. They further cautioned that smooth, timely, and appropriate transitions across the network at scale are not a given.

there is no guarantee that new quantum-proof architectures will be built and appropriate transitions will be implemented across the network at scale in a timely manner - BlackRock's filing

Quantum computing is an incredibly promising technology, but without quantum-resistant cryptographic solutions, blockchain networks will be vulnerable.