Crypto Quantum Fears
From theory to risk
I wasn’t sure about what I was going to write about for this week’s article, as I was going through writer’s block. Then I came across some quantum news related to Ethereum and realized that it always tends to be a hot topic during a bear market, and even hotter this time because we're closer to it becoming a reality. I guess this is the human element that can’t be replaced with AI.
Nonetheless, chains such as Ethereum are taking active measures to counter quantum threats, and it is also among the most investable verticals from a public market standpoint, which hasn’t been fully appreciated yet as it enters a bull market.
Quantum computing has been like the boogeyman that continues to be used as fear for the market that is consistently being mentioned as being 2 years away for the past 10 years. However, this time it does seem like it is closer than ever, and the threat might actually be real, so let’s take a look at what it is, what mitigations are being taken, and how to allocate towards it from a financial standpoint.
What is Quantum Computing
Quantum computing stems from quantum mechanics, which is the study of physics at very small scales, going smaller than atoms, and delves into tiny particles and waves that make up atoms. By applying quantum physics to large-scale computers, they are able to tackle complex problems not possible with modern computers we use every day.
This implies they can process data by using mathematical techniques not accessible to classical computers and discover patterns and discern algorithms that classic computers might miss.
Quantum computers solve problems that would take computers thousands of years to crack. The main difference between a quantum computer and a standard computer is that a standard computer processes information in a binary manner through 0’s and 1’s. Whereas a quantum computer processes information through quantum bits that can exist in multiple states during a calculation. Qubit is explained as a “magic coin” through what is called superposition. So instead of simply being in one state at the time (0’s or 1’s as mentioned before) it can hold multiple states at the same time (it can be both heads and tails simultaneously). Except that these qubits can combine and exponentially scale in the matter of states it can hold simultaneously as it processes information, which is why it is so powerful in comparison to a “single-state” computer.
I hope that made sense. I did my best to simplify it. But to make it even simpler, it’s 1-state computing vs exponential computing, while quantum computing is like a GPU on steroids.
Based on research being spearheaded by IBM, it is claimed that we are getting close to what is called “quantum advantage,” which means that a quantum computer can run computations more efficiently and accurately than a regular computer. This is scheduled to be ready by the end of 2026.
