Crypto Security: Protect Your Coins and NFTs From Being Stolen

Crypto Security: Protect Your Coins and NFTs From Being Stolen

With crypto prices in free fall, crypto firms laying off thousands of workers and coins that are considered "stable" losing all their value, it's more important than ever to secure your remaining portfolio. 

The current crypto crash isn't the only way people are losing their money. There have been an increasing number of scams that give thieves access to your accounts and crypto assets. Just recently in May, Seth Green had several NFTs worth over $300,000 stolen, after the actor connected his crypto wallet to a scam website pretending to be a credible NFT project.

Protecting your crypto means taking some of the same steps you'd use to safeguard your other digital accounts, such as creating and using strong passwords. However, crypto accounts have unique characteristics like seed phrases that require additional security. Also, the crypto industry still lacks the regulatory framework necessary for the retrieval of your crypto assets if they're stolen.

In this story, we'll cover several ways you can protect your cryptocurrency and NFTs from being purloined and explain why it's worth taking the time to properly secure your digital assets from being stolen. For more on crypto, learn five questions every investor should ask about cryptocurrency and the latest details on bitcoin's wild price swings.

Always follow these two basic password security rules

One of the easiest ways to protect your digital assets is with strong passwords. Ideally, you want your passwords to be at least eight characters long and include random capital letters, numbers and other special characters. If you can make your password longer, however, you should, because the longer the password, the harder it is to crack, in theory.

If you're worried about remembering all of your long, complicated and unique passwords, consider using a password manager, which makes it simple and secure to store and use your passwords from one place. We recommended choosing a password manager with encrypted storage and two-factor authentication for extra security.

Also, when creating an account, never repeat your passwords. If one of your accounts is compromised, your others will also be at risk.

A strong password is vital to keeping your digital assets secure.

James Martin/CNET

Use a hardware crypto wallet for your most treasured assets

Your crypto wallet serves as the gateway to your crypto assets. "Hot" wallets such as software or mobile apps operate online, while "cold" wallets are hardware devices that work offline. Crypto wallets don't hold the actual coins or tokens -- they store the private keys that prove you own your crypto assets and let you buy, sell or trade on blockchains.

Anytime you purchase cryptocurrency or NFTs, they must be stored somewhere. Most people keep their assets in a digital wallet or marketplace, such as Coinbase or MetaMask, because they're free and easy to use, but for your most valuable holdings, you may want to consider a physical wallet.

A hardware, or cold, wallet allows you to store cryptocurrency and NFTs on a physical drive, which you can connect to a computer to access. Hardware wallets are generally more difficult to hack into, so they're a preferred option when storing digital assets that are especially high in value.

The Trezor One hardware wallet ($48.49) works with bitcoin, ethereum, litecoin and a variety of other cryptocurrencies.

Trezor

Here's more on the different types of crypto wallets.

Keep the seed phrase for your crypto wallet secure and offline

In addition to a password, most crypto wallets use a seed phrase for additional security. This seed phrase acts like a master password and is created whenever you set up a new wallet. A seed phrase is made up of 12 or 24 words that you can use to sign in to your account on other devices, or recover your account if you forget your password.

While this seed phrase provides additional security, it also comes with risk -- anyone who learns your seed phrase could potentially steal all the crypto assets recorded in your wallet. While you might be tempted to store your seed phrase somewhere online, it's crucial to write it down -- offline -- to prevent anyone from accessing it. 

Once you write down your seed phrase, store it in a safe or lockbox, so that it's not easy for anyone else to access. Specialized seed phrase hardware tools, like Cryptosteel and Crypt Keeper, can securely store your 12 or 24 words in a portable system that's protected from fire and flooding.

If your seed phrase is either lost or stolen, but you still know your password, immediately log in to your wallet and generate a brand new seed phrase.

This is an example of a randomly created 24-word seed phrase.

Nelson Aguilar/CNET

Be wary of frauds in direct messages on Discord

Discord is one of the unofficial homes of crypto and NFT communities. It's where many crypto enthusiasts go to discuss upcoming NFT projects, cryptocurrency prices, real-life events and even personal lives. Fans of NFT projects use Discord to form communities -- but it's also where hackers and thieves go to compromise accounts.

Here's how it works: A hacker may directly message you, pretending to be part of a project that you're following and interested in. The DM looks official and usually claims that you can mint an NFT that's difficult to get, at a relatively cheap price, and includes a link to follow. But when you click the link, connect your wallet and attempt to purchase the NFT, your wallet is drained of all your NFTs and crypto. And there's really no way to get it all back.

The most important research you can do to avoid falling for a fake NFT website is to use verified channels to find the correct website when attempting to mint or purchase a newly created NFT. Even if you receive a link from what seems like a credible source, use multiple online sources like Google, Twitter and Opensea to verify that you have the correct URL for the project.

An even simpler method to avoid falling into a scam is to disable DMs on Discord. On your mobile device, launch the Discord app, tap your profile picture on the bottom right, go into Privacy & Safety, and toggle off Allow Direct Messages From Server Members. You'll no longer receive direct messages on Discord.

Discord is where people go to discuss cryptocurrency and NFTs, as well as prey on potential victims.

Discord

Don't fall for support scams on Twitter

Like Discord, Twitter is a hunting ground for hackers looking to swindle unsuspecting victims into giving away their assets.

On Twitter, anytime someone mentions "stolen account," "lost password" or even "MetaMask," an army of hackers may respond, offering to help recover stolen assets or restore access into accounts. Hackers may then ask for your seed phrase via DM and use it to steal your crypto or NFTs. 

If you need support, go straight to the official customer service site on Twitter. Never give anyone your seed phrase, ever, even if an account is verified -- sometimes hackers have access to verified accounts. And never share your screen.

Not even Elon Musk can stop these Twitter scammers.

James Martin/CNET

For more about cryptocurrency security, learn whether it's possible to insure bitcoin and how the Securities and Exchange Commission is taking on crypto fraud.

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Amid War in Ukraine, Should Ordinary Russians Be Banned From Trading Crypto?

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Amid War in Ukraine, Should Ordinary Russians Be Banned From Trading Crypto?

This story is part of War in Ukraine, CNET's coverage of events there and of the wider effects on the world.

As Russia's war on Ukraine intensifies, the US and its allies have continued to increase their economic pressure on the Russian government, to isolate the country further from the global financial system and debilitate its military capacity. Western allies have frozen Russian assets abroad, removed Russian banks from international banking networks and even banned all gas and oil imports, among other unprecedented penalties. But there's still growing concern that Russian President Vladimir Putin and his supporters might turn to cryptocurrencies to avoid economic sanctions.

With their ability to operate as alternatives to the traditional financial system, cryptocurrency exchanges -- digital marketplaces where you can buy and trade digital currencies -- have become an effective option both for Ukraine supporters to raise funds for relief efforts and for ordinary Russians to seek financial shelter from the economic sanctions imposed on their country.

That's why both the Ukrainian government and advocates for even further economic penalties against Russia have become increasingly vocal about the role crypto exchanges can play in the conflict. Hundreds of Western businesses, such as oil companies Shell and BP and tech players Netflix and Microsoft, have scaled back or halted their dealings in Russia since the beginning of the war. And some people argue that similarly stopping crypto operations in the country could significantly weaken Putin's hold on Russia's economy and its citizens.

"I'm asking all major crypto exchanges to block addresses of Russian users," Ukraine's vice prime minister and minister of digital transformation, Mykhailo Fedorov, tweeted Feb. 28. "It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users." 

Fedorov also sent letters to eight cryptocurrency exchanges, including two of the largest by volume, Coinbase and Binance, asking them to stop offering service to Russian users out of concern digital currencies are being used to evade sanctions.

The response was swift. 

"We are not preemptively banning all Russians from using Coinbase," CEO Brian Armstrong tweeted March 3. "We believe everyone deserves access to basic financial services unless the law says otherwise." And hours after getting Fedorov's letter, a Binance spokesperson told CNBC, "We are not going to unilaterally freeze millions of innocent users' accounts. Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people's access to their crypto would fly in the face of the reason why crypto exists."

But the CEOs of several exchanges, including some that got Fedorov's letter, said that though they'll continue to offer access to ordinary Russians, they're complying with US law in regard to sanctions. On March 7, Coinbase reportedly said that to facilitate sanctions enforcement, it had blocked more than 25,000 wallet addresses related to Russian individuals or entities thought to have engaged in illicit activity and had reported them to the US government.

"Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed. Many of them likely oppose what their country is doing, and a ban would hurt them, too."

Coinbase CEO Brian Armstrong

Ukraine's request for an all-out ban on Russian users, and the unequivocal rejection from most regulated crypto exchanges, has sparked a debate about the responsibilities digital currency platforms have in an international conflict. As a growing number of Western companies decide to stop conducting business in Russia, should crypto exchanges follow suit and go beyond what they're required to do by law? And even if they did, would banning all Russian users from crypto exchanges make a difference in slowing down Russia's invasion of Ukraine?

Some crypto specialists interviewed by CNET, including executives from crypto companies and public officials working to prevent Russia from using digital assets to sidestep economic sanctions, said a full Russian ban from crypto platforms could do more harm than good in regard to ordinary Russians. And some said the volume of the whole crypto market is still too small to really help Putin's government counter the impact of Western economic penalties, even if it tried.

But other experts on the role the private sector can play in global conflicts said bringing the Russian economy to a standstill is the one nonmilitary way to thwart Putin's advance on Ukraine, and that crypto exchanges can contribute to that only if they stop operating in Russia altogether. 

Cryptocurrencies are digital assets that are recorded on a blockchain, a distributed digital ledger that can't be altered. They usually aren't backed by an underlying asset, such as fiat currency. That's why they could be an ideal safe haven amid a wave of economic sanctions. 

Why crypto exchanges won't budge on Russia

In refusing to kick ordinary Russians off their platforms, cryptocurrency exchanges argue that the move would further hurt Russian citizens who are suffering from the economic impact of the war and who might consider buying cryptocurrencies as a way to protect their financial standing.

"We all saw those photos of runs on ATMs from Russian citizens -- lines around the block in Moscow," said Todd Conklin, counselor to the deputy secretary of the US Treasury Department. "One would suspect ordinary citizens may have been looking for an alternative to the ruble." Conklin made the remarks during a March 4 webinar hosted by blockchain analytics company TRM Labs about the possibility Russia could use cryptocurrencies to avoid economic sanctions. 

The ruble, Russia's national currency, has lost nearly 50% of its value against the US dollar since the start of the year, according to Reuters. Other parts of Russia's financial system have also been impacted by the West's pressure on the country to stop its aggression on Ukraine. Digital payment services such as Apple Pay, Google Pay and Samsung Pay aren't available in Russia any longer. Visa, Mastercard and PayPal also halted operations in the country. Ordinary Russian citizens, worried that economic sanctions will devastate the Russian economy even further, have flocked to ATMs and banks, seeking to withdraw as much cash as possible before it might be too late. 

"Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed," Armstrong, the Coinbase CEO, tweeted. "Many of them likely oppose what their country is doing, and a ban would hurt them, too."

As long as US crypto businesses are complying with US laws in ensuring that sanctioned individuals or entities aren't using their platforms, "crypto could be a vital lifeline for ordinary Russians to preserve their savings [and] receive familial remittances," Michael Parker said in an email. Parker is a former federal prosecutor who's now head of anti-money laundering and sanctions practice at Ferrari & Associates, a Washington, DC-based law firm.

Jesse Powell, co-founder and CEO of Kraken Exchange, another crypto platform, tweeted that though he understood the rationale behind Ukraine's request to remove all Russians from crypto exchanges, Kraken "cannot freeze the accounts of our Russian clients without a legal requirement to do so." 

"I would guess that the vast majority of crypto holders on @krakenfx are anti-war," Powell tweeted. "#Bitcoin is the embodiment of libertarian values, which strongly favor individualism and human rights."

Given the anti-authority libertarian streak that fuels so much of the cryptocurrency sector, the refusal from crypto exchange executives to stop operations in Russia isn't surprising, said Yale University professor Jeffrey Sonnenfeld, who's the president of the Chief Executive Leadership Institute, a nonprofit focused on CEO leadership and corporate governance.

Crypto executives don't like "being told what to do," Sonnenfeld said. "And yet, there's a striking naivete [in] that they are working in support of [Putin], the greatest autocrat alive today, the most restricted world leader, [who] they are tacitly supporting by enabling a bypass, if it's even for the cognoscenti, for elites and for oligarchs, if it was as limited as some claim."

Sonnenfeld said that the reason more than 300 Western companies have pulled out of Russia so far isn't that the government told them to do so. "It's the maverick streak of these CEOs who pulled out and started this thundering herd," he said, "courageous CEOs who had the moral character to pull out."

What a full ban on Russia would and wouldn't do

Some specialists said that blocking all Russians from crypto would not only potentially inflict damage on millions of innocent citizens, but it would also do little to amplify the West's sanctions on Russia's economy. The reason? Russia doesn't have the digital infrastructure to tap into crypto assets at a level required to outmaneuver the economic penalties already imposed by the US and its allies.

"You can't flip a switch overnight and run a G20 economy on cryptocurrency," Conklin said during the webinar hosted by blockchain intelligence company TRM. He explained that in recent years, Russia has worked to bolster the ruble and build up its reserves, instead of laying the rails needed to support crypto. That's why US economic sanctions have been focused on preventing Russia from accessing the reserves it keeps overseas. "Big banks in an economy need real liquidity," Conklin said. "Conducting large-scale transactions in virtual currency is likely to be slow and expensive."

Anthony Citrano, founder of Los Angeles-based NFT platform Acquicent, pointed to crypto prices as a clue to what's going on. "If the Russian government really were using crypto as a major piece of their international finance strategy, you'd expect to see absolutely explosive growth in prices of major crypto [currencies]," he said, "which we have not seen. Time will tell, but for now there is zero evidence this is happening."

"If you can show [Putin] to be truly impotent over the economy, that he doesn't have control over civil society, then he and the oligarchs fall flat on their face, and that's what cryptocurrency mavericks can do."

Yale University professor Jeffrey Sonnenfeld

Former federal prosecutor Ari Redbord, who's now head of legal and government affairs at TRM, said the economic sanctions levied so far have been so "serious and so draconian in their measures" that Russia would need much more than crypto assets to counterbalance them. "We're talking about [the] potential loss of, or no access to, hundreds of billions of dollars in frozen [Russian] Central Bank assets. We're talking about $1.5 trillion in potential trade losses," he said. "The entire crypto market cap doesn't approach what ultimately Russia would need to prop up a G20 [economy] government and fight what is going to become a more and more costly war."

But that doesn't mean the Russian government or Putin's supporters won't try to use crypto to circumvent economic sanctions. "Russian actors are very adept at money laundering and have been for a long time," Redbord said. In the case of crypto, they'll be looking for "noncompliant exchanges in order to move those funds." 

Such exchanges include platforms like Suex, which was blacklisted by the Biden administration in September for allegedly helping launder ransomware payments. TRM has identified about 340 exchanges that are either in Russia or Russia-related and don't have compliance controls in place, "and that is where illicit actors will look to move on as on-ramps and off-ramps for crypto," Redbord said.

Those digital platforms are already operating outside the law, though. For any US business, including businesses in the crypto industry, "there is still a full compliance obligation to not deal with sanctioned parties or interests in blocked property," said Parker, from Ferrari & Associates. "US crypto businesses must, and largely do, institute robust compliance programs, including advanced analytics software, to ensure legal compliance with US sanctions."

Bringing Russia to a standstill

Yale's Sonnenfeld argues that it's beside the point whether Putin and his supporters can actually get their hands on enough digital assets to offset the impact of Western sanctions. He said that by halting all operations in Russia, crypto exchanges could contribute to putting even more pressure on Putin's government, until it reaches a tipping point.

"Government-ordered sanctions have limits," Sonnenfeld said, even if they're a coordinated effort between multiple international actors, including the US, the EU, the UK, Australia, Japan and the UN. "They work best when voluntary efforts of the private sector rally."

That's what happened in South Africa in the late 1980s, Sonnenfeld said, when international pressure contributed to putting an end to apartheid, a system of institutionalized racial segregation that had ruled the country for more than 40 years. Economic sanctions imposed by the US government had an effect only when dozens of major private companies joined in. "It brought civil society to a stop/standstill," he said.

Sonnenfeld and his research team at Yale compiled a list of companies that continued operating in Russia following its invasion of Ukraine. After the publication of a Washington Post story that mentioned that McDonald's and Starbucks were on the list, both chains announced plans to stop operating in Russia. Since the list was created and made public, it now shows "over 330 companies [that] have announced their withdrawal from Russia in protest" of the Ukraine war.

For Sonnenfeld, paralyzing Russia's economy is the only nonmilitary option the West has against Putin's advances on Ukraine.

"The humanitarian thing to do is to not go with bombs and bullets, and to strangle civil society" and dissolve Putin's image of being a totalitarian with full control over all sectors, he said. "If you can show him to be truly impotent over the economy, that he doesn't have control over civil society, then he and the oligarchs fall flat on their face, and that's what cryptocurrency mavericks can do" should they decide to halt operations in Russia. "They can be really helpful here." 

Allowing ordinary Russians to have access to digital assets through crypto exchanges is "not doing anything humanitarian," Sonnenfeld said. "People should be thrown out of work, they should be out on the street" due to an economic collapse brought on by government-ordered sanctions and to private companies denying Russian citizens access to services, goods and money. "Is that cruel?" Sonnenfeld said. "No, it is better than shooting them, than bombing them -- and that's the stage we're at right now."

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Crypto security can be a pain, but a few safeguards will go a long way

Crypto security can be a pain, but a few safeguards will go a long way

Securing your cryptocurrency might seem like a daunting task. For the uninitiated, the learning curve includes hot and cold wallets, online exchanges and private keys.

Digital security experts warn that you shouldn't skimp on your studies, particularly of the hardware and software wallets used to store data that proves ownership of cryptocurrencies. Unlike a stolen credit card number, which can be an inconvenient but surmountable problem, pilfered cryptocurrency is often simply lost because of the decentralized nature of many digital coins.

If you run into problems, you may have no one to turn to.  

Hackers are attracted to cryptocurrency because it can be stolen over the internet, which means victims are often far away in different countries. Even if identified, hackers can be in countries -- think Russia -- that make extradition difficult, so the threat of punishment is low. And cryptocurrency is hard, though not impossible, to trace.

Cryptocurrency comes with security risks that other kinds of investments don't have, says Don Pezet, co-founder of the online IT training company ITProTV.

"If a hacker steals your funds, they're just gone," said Pezet, a longtime IT professional who also serves as chief technology officer of ITProTV's parent company, ACI Learning.

The best thing you can do, he says, is make sure your cryptocurrency is secured from the get-go, so you don't run into problems down the road. 

Crypto exchanges, where investors can buy and swap one currency for another, are constantly under threat from cybercriminals looking to score big paydays by emptying the vaults.

One of the biggest thefts of all time occurred in August, when cybercriminals exploited a vulnerability in Poly Network, a platform that connects different blockchains, the online software ledgers that record cryptocurrency transactions. Once in, the hackers ransacked Poly for $600 million, though the funds were later recovered.

Read more: What to do if your bitcoin, ether or other cryptocurrency gets stolen

Not all hacks are headline catching. Cybercriminals are also looking to rob individual investor wallets, and they employ many of the same methods used to break in to any other online account. You risk being looted if you give up your credentials in a phishing scam or let your devices get infected with malware.

Though people may worry about being targeted by attackers, in reality they themselves may be the biggest threat to their cryptocurrency's security, says Andrew Gunn, senior threat-intelligence analyst at ZeroFox.

"We can't afford to forget about the human element," Gunn says.

Here's some advice from the experts on how to protect your digital assets.

Use a "cold" wallet for long-term storage. Cold wallets store the data proving ownership of cryptocurrency offline, making them much harder for cybercriminals to get to. Both Pezet and Gunn say cold wallets are the safest option available.

The private keys to your cold wallet can be stored on a device, like a USB drive. You can also print them out on paper and file them away. Either way, an attacker can't get at your cryptocurrency without them.

The downside of this storage method is that the responsibility for securing it falls solely on you. If you lose the USB drive or misplace your file, you can't get your cryptocurrency.

"There is a ridiculous amount of unclaimed crypto out there from these types of situations," Gunn said, adding that some people have sought password crackers to break into their accounts after they've forgotten their credentials. 

Cold wallets also aren't as convenient as hot wallets, which are hosted online, often by a cryptocurrency exchange. It's fine to keep some of your funds in a hot wallet if you use cryptocurrency for day-to-day spending, Gunn says. But he urges everyone to properly secure those accounts to make them more difficult to crack.

It's also smart to keep as little cryptocurrency as possible in hot wallets. If your funds get stolen, there isn't much you can do to get them back.

Gunn advises using multiple cold and hot wallets, each protected by its own unique password. That way, if the worst does occur, you're limiting the fallout.

Use strong passwords and multifactor authentication. Securing your cryptocurrency with good passwords is absolutely mandatory, just like it is for all digital accounts. We're talking at least 12 random characters.

Two-factor authentication, which requires a second form of identification such as a fingerprint or a notification pushed to your smartphone, also helps secure accounts. It'll go a long way toward keeping you safe if your password is compromised.

Use only your own device to access your wallets. It may seem convenient, but don't access your cryptocurrency from a public computer, such as one at a library or in a hotel business center. There's no way to tell if they're infected with malware.

Similarly, make sure to take care of your devices. Keep your antivirus software and operating systems up to date. Always use a secure internet connection, preferably bolstered by a VPN, Gunn says.

Do your homework. Larger, more regulated exchanges are generally safer. Make sure the one you use is reputable, especially if you're going to use it for a hot wallet.

Be wary of emails that look like they're coming from the company that holds your cryptocurrency wallet. It could be a phishing email looking to steal your credentials and, ultimately, your funds.

As with emails that look like they're coming from your bank, it's always best to skip any included hyperlinks and to go straight to the company's website.

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Cryptocurrency faces a quantum computing problem

Cryptocurrency faces a quantum computing problem

Cryptocurrencies hold the potential to change finance, eliminating middlemen and bringing accounts to millions of unbanked people around the world. Quantum computers could upend the way pharmaceuticals and materials are designed by bringing their extraordinary power to the process.

Here's the problem: The blockchain accounting technology that powers cryptocurrencies could be vulnerable to sophisticated attacks and forged transactions if quantum computing matures faster than efforts to future-proof digital money.

Cryptocurrencies are secured by a technology called public key cryptography. The system is ubiquitous, protecting your online purchases and scrambling your communications for anyone other than the intended recipient. The technology works by combining a public key, one that anyone can see, with a private key that's for your eyes only. 

If current progress continues, quantum computers will be able to crack public key cryptography, potentially creating a serious threat to the crypto world, where some currencies are valued at hundreds of billions of dollars. If encryption is broken, attackers can impersonate the legitimate owners of cryptocurrency, NFTs or other such digital assets.

"Once quantum computing becomes powerful enough, then essentially all the security guarantees will go out of the window," Dawn Song, a computer security entrepreneur and professor at the University of California, Berkeley, told the Collective[i] Forecast forum in October. "When public key cryptography is broken, users could be losing their funds and the whole system will break."

Quantum computers get their power by manipulating data stored on qubits, elements like charged atoms that are subject to the peculiar physics governing the ultrasmall. To crack encryption, quantum computers will need to harness thousands of qubits, vastly more than the dozens corralled by today's machines. The machines will also need persistent qubits that can perform calculations much longer than the fleeting moments possible right now.

But makers of quantum computers are working hard to address those shortcomings. They're stuffing ever more qubits into machines and working on quantum error correction methods to help qubits perform more-sophisticated and longer calculations.

"We expect that within a few years, sufficiently powerful computers will be available" for cracking blockchains open, said Nir Minerbi, CEO of quantum software maker Classiq Technologies.

Fixing cryptocurrencies' quantum computing problem

The good news for cryptocurrency fans is the quantum computing problem can be fixed by adopting the same post-quantum cryptography technology that the computing industry already has begun developing. The US government's National Institute of Standards and Technology (NIST), trying to get ahead of the problem, is several years into a careful process to find quantum-proof cryptography algorithms with involvement from researchers around the globe.

Indeed, several cryptocurrency and blockchain efforts are actively working on quantum resistant software:

• The Ethereum project, which created the biggest cryptocurrency after Bitcoin in terms of total value, has begun charting a post-quantum course. Justin Drake, a researcher at the Ethereum Foundation, detailed quantum resistance ideas in Ethereum 3.0 at the StarkWare conference in 2019. That's likely a long ways off, though: Ethereum's current transition to Ethereum 2.0 is taking years.
• Some people are building new cryptocurrency and blockchain technology designed for the quantum computing era. That includes Quantum Resistant Ledger and Bitcoin Post Quantum, which despite the name is unrelated to the original Bitcoin cryptocurrency. These efforts employ post-quantum algorithms to protect against future quantum cracking.
• Cambridge Quantum Computing, a startup merging with quantum computer maker Honeywell, is working on quantum security technology that "can be applied to any blockchain network." It aims to secure both the communications among computers storing blockchain data and the signatures used to encrypt and sign blockchain data. 
• The Hyperledger Foundation, an open-source software project geared for business uses of blockchain, has begun working on post-quantum cryptography through its Ursa effort, says Daniela Barbosa, Hyperledger's executive director. Ursa is a library of cryptography software Hyperledger projects can use.

A problem with the post-quantum cryptography algorithms under consideration so far, though, is that they generally need longer numeric encryption keys and longer processing times, says Peter Chapman, CEO of quantum computer maker IonQ. That could substantially increase the amount of computing horsepower needed to house blockchains.

The problem with decentralized governance

Many cryptocurrencies, like Bitcoin, are decentralized by design, overseen in effect by anyone who participates in each cryptocurrency network. To update a cryptocurrency's inner workings, people trying to upgrade a cryptocurrency must convince more than half of participants to "fork" the cryptocurrency into a new version.

The real quantum test for cryptocurrencies will be governance structures, not technologies, says Hunter Jensen, chief technology officer of Permission.io, a company using cryptocurrency for a targeted advertising system.

Such governance could reward cryptocurrencies that have stronger central powers, such as Dash with its masternodes or even "govcoins" issued by central banks, that can in principle move more swiftly to adopt post-quantum protection. But it presents a conundrum in the crypto community, which often rejects the idea of authority.

"It will be the truly decentralized currencies which will get hit if their communities are too slow and disorganized to act," said Andersen Cheng, chief executive at Post Quantum, a London based company that sells post-quantum encryption technology.

Other quantum problems with cryptocurrencies

Another risk is that blockchains rely on a digital fingerprinting technology called hashing that quantum computers could disrupt. That's likely to be fixable with more-modest technology updates, though.

The cryptocurrency wallets people use to keep track of their digital assets could also be vulnerable to quantum computing. These wallets store private keys people need to access their assets recorded on the blockchain. A successful attack could empty a wallet.

"How do you force users to upgrade keys? That answer is not so straightforward and likely the most dangerous part," said Joe Genereux, senior cryptography and security engineer at browser maker Brave, which uses its own Basic Attention Token (BAT) cryptocurrency for an ad system that pays users. "I think cryptocurrencies that have better governance or post-quantum designs baked in early can get around this issue better."

Ultimately, though, cryptocurrency's organic, self-directed development suggests people will update the digital asset technology to surmount quantum computing's challenges, says David Sacco, who teaches at the University of New Haven.

"The beauty of the ecosystem," he said, "is that anyone can do it if they understand the technology."

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