top of page

Quantum Banking

In recent news, Google has allegedly achieved ‘quantum supremacy’. Specifically, the tech giant claims to have built the first quantum computer, a state-of-the-art device capable of outperforming even the most powerful supercomputers. Named after an American species of tree, the Sycamore quantum processor was able to perform a set of calculations in 200 seconds. At first glance, it doesn’t sound that impressive. However, when Google claimed that the very same calculation would have taken the world’s most powerful supercomputer, IBM’s Summit, 10,000 years to compute, things get rather intriguing. How did Google achieve this performance? And what does that mean for the rest of the world? 


Quantum computing involves two key phenomena. The first one is ‘superposition’. Whilst in terms of classic computing bits can be assigned values of one or zero, quantum bits, aptly named qubits, can be assigned both values at the same time. In this state, they are able to carry more information, and, inherently, their encoding power is significantly superior to that of classic bits. But, that’s not all. The second phenomenon, called ‘entanglement’, acts as a time-machine of sorts for the qubit. In classic computing, bit calculations are sequential. They must follow an unbreakable linear order. By contrast, quantum rules ditch the order in favour of flexibility. Calculations can be performed on entangled qubits all at once, instead of one at a time, thus decreasing the overall computing time. These are the principles which yield so much power to quantum computers. However, whilst they govern the quantum world on paper, the reality of the laboratory is quite different. In this case, matters are far more complicated. Even the slightest disturbance in the environment can make a qubit go haywire, hindering the calculations and corrupting the result. For this reason, quantum computer designs are to be contained in isolated systems, at deep-freeze temperatures. These special conditions are what kept quantum technology out of reach for so long.


Nevertheless, Google was successful in creating such a system and with it, achieve staggering computing speed. Yet, what are the implications? How can one translate that to the banking world, where money has apparently little to do with quantum technology? 


An Investment Heaven


No, this is not Panama Papers 2.0. Rest assured, the heaven created by quantum computing is not physical, but rather virtual. It is of special importance to investors since it makes their job easier.


Contrary to public opinion, investing is not gambling. Decisions made by investment banks, hedge funds and other investing entities are not arbitrary. Their actions are deeply rooted in science. The reasoning they employ is usually based on models, similar to those used to predict weather phenomena. Instead of a downpour, they are trying to predict major events in order to determine their assets’ future worth and mitigate potential losses. In order to visualise this, let’s take a look at a method employed by many banks today.


The Monte Carlo method lays out events as a road with multiple alternatives. A certain enterprise might declare bankruptcy, or it might reveal great profits. Another financial crisis might hit, or the global economy will remain stable a while longer. These scenarios are branching into countless possibilities. The resulting labyrinth of events makes it harder for the investor to predict the most likely outcome. Traditionally, these probability problems were solved by supercomputer calculations – a service which comes with a hefty price tag attached.


This is where quantum technology comes in. The ‘superposed’ and ‘entangled’ qubit has the potential to vastly outperform the classic bit when it comes to discerning probabilities. Many investors have been looking forward to quantum implementation in order to cut down on costs and processing time associated with laborious calculations. It’s the perfect way to make things more efficient and increase profits. Yet in this paradise, danger lurks close by.


A Security Nightmare


The investment heaven is bountiful, yet its gates are brittle. When it comes to securing data of our assets, transactions, and pretty much anything else in today’s digitalised age, we have come to rely on encryption. Quantum computing might change everything in terms of encoding our most precious information. It has the potential to take things we consider state-of-the-art now, like blockchain encryption, and throw them out of the equation.


This specific problem might also be its solution. Quantum computing is not only a tool for cyber thieves but also an opportunity for digital security companies to further develop their technologies. Quantum hacking could very well find its rival in quantum encryption. The same methods which allow for faster decoding could also imply a better encoding process. Until the playing field is levelled, it will be a matter of who gets there first. It all boils down to a problem of adaptability and a race to implementation. 


A Distant Dream


Regardless of its theorised power, there are many gaps when it comes to quantum technology. For certain tasks, there is no certainty that a quantum computer would be better than a fleet of classic computers. Moreover, Google’s current tech is far from perfect. Its quantum computer has severe limitation and is riddled with errors. It requires a room full of engineers just to keep it stable. The processor, which initially contained 54 qubits, went down to 53 qubits after one started malfunctioning. The calculation which it performed was specifically designed to showcase the strengths of the quantum properties. Little is known in terms of performance in other areas.  There is also the response from IBM, which argues that, with some clever algorithms, it’s Summit supercomputer would need 2 days and a half and not 10,000 years to measure up to Google’s 200 seconds performance.


Quantum computing remains very much in the realm of possibilities. It has tremendous applications, both in positive and negative ways. Yet there are many questions left unanswered and, at length, the limitations and controversies surrounding quantum technology transform this digital apex into a dream. At least for now. 


bottom of page