Who Is Liable for a Quantum Adversary in a Cryptocurrency System?

Abstract

Cryptocurrencies are based on digitally signed updates to a ledger maintained in a decentralized manner according to consensus mechanisms in compliance with consented protocols. Cryptography is used to secure all the aspects of a cryptocurrency system. Cryptography considered secure today is likely to be considered insecure in the future with the arrival of quantum computing. An adversary with access to quantum computers—a quantum adversary—may cause severe harm to a cryptocurrency system and its stakeholders. This paper discusses the liability of such harm. It finds that in addition to the liability of the quantum adversary, protocol developers, network participants, and misinforming agents may be held liable for the actions of the quantum adversary. However, in many cases, the harm is likely to be considered a risk accepted by the participants.

Keywords: Blockchain, Cryptocurrencies, Liability, Quantum Computing

JEL Classification: E42, K13, K24, L17