The breakthrough made by Google over the last year in quantum computing is nothing short of wondrous. There are a number of points worth making which highlight just how important a development it is. Once you understand the revolutionary nature of the change, we can think about what it means for crypto and the wider world.
The first point made by Google’s team earlier this year is that it was seeing exponential growth. That’s a difficult point to understand because the wider world is only just coming to terms with the potential for exponential growth represented by Moore’s Law.
The powerful nature of exponential growth is something the pace of innovation in the semiconductor sector relied on for decades. Technology was progressing at a predictable pace. The number of transistors which could fit on a chip doubled about every 18 months.
It slowed down a lot about five years ago and we saw that the speed of chips was not doubling any longer. The diameter of a transistor dropped towards the physical limits of a silicon atom.
The big question for the semiconductor industry was what would come next. They tried different materials, they tried stacking chips, they tried twinning different kinds of chips and there is still a growing optical chip industry.
But what Google, IBM and a number of teams in China are really pursuing is quantum computing.
This is something completely new because it does away with switches. In a classical computer the digital one or zero corresponds with the switch being on or off. It’s a simple version of Morse code repeated billions of times as a computer runs equations.
A quantum computer is capable of more stages because it makes use of multiple-world theory to assign probabilities to any of an infinity of different possibilities. That greatly speeds up its ability to answer probabilistic or randomising problems.
The first point is about the speed of innovation. Moore’s Law was about doubling – ie, 2, 4, 8, 16, 32 – but quantum computing’s pace of innovation is more about squaring so 2, 4, 16, 256, 65, 526. You can see the difference.
The second point is the Google team has been repeatedly stating the process is iterative. That means it believes it can just keep adding qubits and the computer will continue to add exponents to its speed of calculation.
The third point is Google has never really designed or marketed chips before. It has the Android phone software, but it has beaten the world’s most significant chip manufacturers and designers to the prize of bringing a functioning quantum computer to reality.
IBM has come out and contested whether Google has in fact succeeded in demonstrating its quantum computer is more capable than the world’s most significant supercomputer. It says it would take a super computer 2.5 days rather than 10,000 years to solve the same puzzle.
But that largely misses the point when you consider the three advantages of quantum I explained above. The pace of innovation in quantum computing is blisteringly quick. The question is no longer about whether they can answer questions faster than a supercomputer. Instead we need to ask what kinds of questions we should even be asking considering the step change in computing power that has just opened up.
The first question the world asked when the quantum supremacy story broke was what this means for cryptocurrencies. Can quantum computers break crypto’s code? But that’s the wrong question.
The better one is, what does this mean for every password used in the world today? If quantum computing’s ability to parse probabilities is applied to cryptography, and let’s be realistic, that’s inevitable for state actors as well as criminals, then we all need to seriously think about how to protect our data.
Cryptocurrencies are like a bright bauble today. Pretty to look at, but with little commercial application. Set aside for the moment that the breakthrough commercial app for the sector does not yet exist and consider this: technological advances deliver social change.
Tech evolution enhances the productive capacity of underserved portions of society, whether that is women or minorities. In other words, technology’s long-term effect is to democratise opportunity for creative outlets. That’s the central promise of blockchain and cryptocurrencies.
The sector has the potential to unleash massive global productivity enhancements. The technology bull market that is now underway is focused on Wall Street and Silicon Valley but for the first time the scope for the opportunity is truly global in nature.
That’s why crypto and blockchain are exciting and why developers now have a more important task than commercialisation in front of them.
The race has been on since 2016 to develop post-quantum cryptography. The US’s National Institute of Standards and Technology has been eliciting papers to help develop post-quantum standards for cryptography that have the potential to function well after the advent of powerful quantum computers.
It is essential for crypto developers to take this kind of research into account and to ensure they are compliant with the best safety standards because no project will be viable without being secure first.
The security issue is not a problem yet, but it is something that is likely to be an issue for the crypto sector in just a couple of years. At that point we will quickly see which teams have taken remedial action early and which have not.
The promise of democratising the global financial sector is that it is too big to allow it to be endangered by questions of security. And I have every confidence this is a challenge it is capable of rising above. The question is how. And how investors can profit.
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All the best,
Investment Director, Southbank Investment Research