Here is a visualization of Electrum's key/address system. Think of the hash functions as glasses, and think of the entropy as wine.

If you pour 124 bits of wine into the system, you only get 124 bits of security, even though some glasses of wine have more capacity, if you only pour 124, you only get 124. The maximum security the glasses can handle is 160 bits, if you don't reveal the public key.

So it's obvious that the hacker will try the 2^124 permutations, which is still unfeasible, however once quantum computers come out, every "drop of wine will count"

https://s18.postimg.org/bifwnkdhl/ELECTRUM.jpg
I hope now it's easier to understand. 


Edit: sorry I confused 4 with 8, now it's fixed