POST-QUANTUM CRYPTOGRAPHY FOR SECURING BLOCKCHAIN-BASED FINANCIAL TRANSACTIONS

Description

Security and Privacy in AI Systems,

Edited By: Dr. Sunita Chaudhary, Dr. Joydeb Patra

ISBN (978-81-685212-9-2)  

The rapid advancement of quantum computing poses a significant threat to classical cryptographic mechanisms that underpin blockchain-based financial systems. Current blockchain infrastructures rely heavily on public-key cryptography schemes such as Elliptic Curve Digital Signature Algorithm (ECDSA) and hashing techniques like SHA-256, which are vulnerable to quantum attacks using Shor’s and Grover’s algorithms (ResearchGate). This vulnerability raises critical concerns regarding the long-term security of financial transactions, including cryptocurrencies, smart contracts, and decentralized finance (DeFi) platforms.

Post-Quantum Cryptography (PQC) emerges as a promising solution by introducing cryptographic algorithms resistant to quantum attacks. This paper explores the integration of PQC into blockchain systems to enhance transaction security, data integrity, and user authentication. It evaluates key PQC algorithms such as lattice-based (CRYSTALS-Kyber, Dilithium), hash-based (SPHINCS+), and code-based cryptography. Furthermore, the study analyzes the performance implications, scalability challenges, and architectural redesign requirements associated with adopting PQC in blockchain ecosystems.

The findings indicate that while PQC significantly improves resistance against quantum threats, it introduces trade-offs in terms of computational overhead, larger key sizes, and network latency. Hybrid cryptographic models and crypto-agility frameworks are identified as practical transitional solutions for financial institutions. The study concludes that proactive adoption of PQC is essential for ensuring the resilience and future security of blockchain-based financial transactions in the emerging quantum era.