An Evaluation of the Effects of Broken Cryptographic Primitives on Bitcoin

The Bitcoin cryptocurrency relies heavily on a variety of cryptographic functions and operations, which are currently assumed to be secure, but will inevitably be broken in the future. As Bitcoin tries to compete against traditional currencies, it remains to be seen how the Bitcoin protocol will need to change in response to weakened cryptography. To this end, this study systematically evaluates the effects of broken cryptographic primitives on the operation of the Bitcoin network, and the changes to the Bitcoin protocol that will be necessary in response. We conclude that a broken hash function only requires switching over to a new hash function, without the need to re-write the blockchain, and is well serviced by the “checkpoint” mechanisms already built into Bitcoin. However, a vulnerability of the signature scheme cannot be dealt with in the same manner without side-effects, as it may lead to lost or stolen coins, even if the process is gradual and is conducted before the cryptographic primitive is broken. We conclude that solving this problem either requires some degree of centralization, or the use of Zero-Knowledge Proofs along or on top of Bitcoin.