How to Keep Tokenized Assets Safe in the Quantum Era

Quantum computing is advancing fast. It could soon break the encryption that keeps tokenized assets secure. According to The Guardian, cybersecurity experts warn that encryption attacks are already happening. Hackers are stealing encrypted data today. They also plan to decrypt it once quantum computers become powerful enough.

The UK's National Cyber Security Centre has urged businesses to prepare for quantum threats. Experts say, by 2035, quantum computers will be able to crack the encryption that protects blockchain transactions. This puts digital assets at serious risk.

At the same time, by 2030, the market of asset tokenization is expected to reach $10 trillion. The adoption in asset tokenization is increasing especially in real estate, commodities, and financial securities. But as the industry expands, the security risks also grow. The risk of theft of assets that have been tokenized on the blockchain is very possible. Business owners must act now to prevent quantum threats before they become real problems.

This article explores how quantum computing affects tokenized assets, how the industry is adapting to quantum-resistant security, and what businesses can do to protect their digital assets in the quantum era.

DLT as The Foundation of Asset Tokenization

Tokenized assets rely on Distributed Ledger Technology or usually called DLT to record and manage ownership. DLT is a decentralized system that removes the need for a central authority which makes blockchain transactions more transparent and efficient.

How DLT Works in Asset Tokenization

DLT stores any asset tokenization transaction records across multiple nodes. This process ensures that no single entity controls the network. Each transaction is verified through cryptographic methods to prevent tampering and fraud. This makes DLT the backbone of tokenized assets across industries.

Why Tokenized Assets Are at Risk from Quantum Computing

DLT Security Relies on Encryption

Distributed Ledger Technology (DLT) secures tokenized assets using encryption. asset tokenization transactions, smart contracts, and ownership records rely on RSA, ECC, and SHA-256 to protect data from fraud and tampering. These cryptographic methods are effective today. However, quantum computing could soon make them obsolete.

Why Tokenized Assets Are at Risk from Quantum Computing

Quantum Computing Can Break Encryption

Instead of using binary, quantum computers use qubits. This allows them to perform multiple calculations simultaneously. This also gives them the power to break encryption that protects tokenized assets.

A major threat comes from Shor’s Algorithm, which allows quantum computers to factor large numbers quickly. Once quantum computers become powerful enough, they will break these encryption methods. The breakage can expose any blockchain transactions and asset records from any project.

Hackers Are Already Preparing

Cybersecurity experts warn that attackers are using a strategy called "store now, decrypt later." Hackers steal encrypted data today and keep it stored. When quantum computers become strong enough, they will decrypt this data and access financial transactions, smart contracts, and asset records.

Governments and security agencies are taking this seriously. The NSA and NIST have warned about the urgent need for post-quantum cryptography (PQC). This security upgrade is necessary to protect blockchain-based assets before quantum computers become mainstream.

How to Protect Tokenized Assets from Quantum Threats

Post-Quantum Cryptography is the Solution

Quantum computers will break RSA and ECC encryption, but new cryptographic methods can resist these attacks. Post-Quantum Cryptography is designed to remain secure even against the power of quantum computing.

Post-Quantum Cryptography or what we call PQC is a new type of encryption designed to resist quantum attacks. Unlike RSA and ECC, which quantum computers can break, PQC uses complex mathematical problems that even quantum systems cannot solve easily.

Scientists are developing different PQC methods, including:

Lattice-based cryptography
Uses multidimensional mathematical structures that are hard to break.
Hash-based signatures
Secures transactions with cryptographic hashing instead of number factoring.
Multivariate cryptography
Relies on solving equations that are too complex for quantum computers.

The National Institute of Standards and Technology (NIST) is leading the effort to standardize these encryption methods. Many businesses and blockchain projects are already testing these solutions to prepare for the quantum era.

Upgrading Digital Assets with Quantum-Secure Encryption

Businesses must start using quantum-resistant encryption before quantum computers become widely available. This means:

Replacing RSA and ECC encryption with PQC-approved algorithms
Using hybrid encryption models to allow a smooth transition
Ensuring blockchain security upgrades to protect smart contracts and transactions

Companies that start preparing now will have an advantage. Those that wait too long may face serious security risks in the future.

Steps to Secure Tokenized Assets for the Quantum Era

Upgrade Cryptography for Stronger Security

Current encryption methods (RSA and ECC), will not be secure in the quantum era. Businesses need to upgrade their security by switching to post-quantum cryptographic (PQC) algorithms. Business might take some time to take a full transition to PQC. But to avoid the security gaps, businesses should use hybrid encryption, which combines traditional cryptography with quantum-resistant methods. This approach allows companies to maintain security while gradually adopting PQC solutions.

Secure DLT Transactions with Quantum-Resistant Solutions

Distributed Ledger Technology (DLT) is the foundation of tokenized asset transactions. If encryption breaks, attackers could intercept transactions, alter smart contracts, or steal digital assets. Businesses need to strengthen blockchain security by using:

PQC-enabled VPNs to encrypt all transaction data.
Quantum Random Number Generators (QRNGs) to create strong cryptographic keys.
Upgraded key exchange protocols to prevent vulnerabilities from quantum-powered attacks.

Align with Industry Standards and Regulations

The National Institute of Standards and Technology is the leading institute to standardize the PQC algorithms. Businesses should follow their guidelines to ensure their blockchain security meets global standards.

Regulatory agencies are also developing quantum-safe policies to protect financial transactions. Companies working with tokenized assets must stay updated on these regulations and collaborate with cybersecurity experts and blockchain networks to remain compliant.

Real-World Responses: HSBC’s Quantum-Secure Tokenized Gold

Big financial institutions are already working to protect tokenized assets from quantum threats. One example is HSBC’s quantum-secure tokenized gold. HSBC teamed up with Quantinuum and created a gold-backed digital token. This gold-backed token uses quantum-resistant encryption. This encryption can make sure transactions stay secure as quantum computing improves. By adding post-quantum cryptographic security to its blockchain, HSBC is setting an example. It shows how banks and businesses can protect digital assets before quantum threats become a real problem.

Secure Your Tokenized Assets Before Quantum Risks Become Reality

Quantum computing is advancing fast. When it reaches full potential, traditional encryption will no longer protect tokenized assets. Businesses that fail to prepare may face data breaches, financial losses, and security risks that could have been prevented.