World Economic Forum warns that CBDCs, including Drex, are vulnerable to hackers

The World Economic Forum (WEF) recently issued a scathing warning about the vulnerability of central bank digital currencies (CBDCs) to decryption attacks by quantum computing systems. These eventual attacks could also affect Drex.

According to the WEF, although quantum computers are still in the experimental phase, their emerging capabilities pose a significant threat to the security of digital financial systems.

Quantum computing, although still in development, has proofs of concept that demonstrate its ability to solve specific problems that traditional computers cannot solve in a reasonable time.

However, the possibility of “Q-Day” – the hypothetical point at which malicious actors could break standard encryption with quantum computers – still seems distant, with predictions ranging from a few years to decades.

Among the industries potentially affected by the quantum threat, the digital asset sector is among the most vulnerable. According to the WEF, this threat could “break” CBDCs, including Drex, the digital currency of the Central Bank of Brazil.

In a May 21 blog post, the WEF stated that “central banks must build cryptographic agility into CBDC systems to defend against quantum cyberattacks targeting payment infrastructure.”

The WEF identified three specific threats that quantum computing could pose to CBDCs:

1. Breaking Cryptography in Motion. Quantum computers could be used to intercept transactions as they occur, breaking the encryption that protects this data in real time.

2. Impersonation of Identity. Quantum computing could compromise identity verification systems, allowing malicious actors to insert fake identities into the system.

3. Theft of Encrypted Data for Future Decryption. Known as “harvest now, decrypt later”, this attack vector involves the theft of encrypted data, which is stored to be decrypted by a quantum system in the future. Under this paradigm, victims may not realize their data has been stolen for years or even decades before the threat materializes.

To mitigate or eliminate these threats, the WEF recommends that CBDCs be built with quantum-proof protections from the start, using a methodology called “cryptographic agility.”

This capability enables the orchestration and rotation of cryptographic algorithms based on real-time threats. In practice, this becomes a defense against evolutionary attack techniques.

Cryptographic agility provides the flexibility needed to quickly update and change cryptographic algorithms as new threats emerge. This ensures that CBDCs remain secure as technology advances.