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The next big thing in financial technologies: quantum computing – Part 2

Friday 15 February 2019 | 08:42 AM CET

In 2018, George Gesek, the CEO of NOVARION Systems made an insightful introduction on quantum computing to The Paypers’ readers, worthy of a follow up

Mr. Gesek shared some interesting thoughts about how quantum computing will affect the financial services industry, and since technology evolves at a fast pace and we have just reached the forth industrial revolution, we thought it was high time to dig deeper into quantum computing’s latest developments.

In 2018 NOVARION Systems started trialling quantum computing for optimized workflows and prediction models for market behaviour with some of their client banks. Can you share with our readers some of your findings while testing this emergent tech?

At this early stage, software engineers begin to become acquainted with the programming paradigms of quantum computation. At the moment, we see a major problem not only with the new technology itself, but also with the lack of educated quantum computation experts within all areas of industry, including the financial sector. For instance, one of our largest financial clients has around 1000 IT specialists, out of which 800 are software engineers, with 60 of them already working in the field of artificial intelligence. However, none of the 800 software engineers is familiar with programming a quantum computer.

One could argue that this situation is because we are still missing hardware for universal purposes, but facts tell us another story: there are already more than 100 different Quantum Computer Simulators available with Quantum Programming Languages that can be easily added-on to the most popular classical programming languages. A comprehensive list can be found here: https://quantiki.org/wiki/list-qc-simulators

Even more, the following figure from Quantum World Association shows that in order to understand the programming paradigms of quantum computation, a software engineer does not need to deep dive into Quantum Gates or even the underlying hardware capabilities, but can start on the very top of the pyramid, with the Quantum Universal Languages.

In the 1930s, Alan Turing showed with precise logic in a Formal System that a conventional computer is capable to calculate any algorithm – thus, Quantum Algorithms as well! The only difference is that the number of calculation steps (speed) varies dramatically. Therefore, today we can use affordable high-performance computer systems to simulate a Quantum Computer with around 30 Qubits. This is good enough for the industry to test their first Quantum Computing programs. Therefore, I encourage any software development department with more than 10 members to first experiment with Quantum Computation using the free tools on hand!

Regarding the financial industry, the most promising and at the same time achievable areas of successful quantum computing are any applications where Monte Carlo Simulations play a role. This is because of the nature of these algorithms is based on probability functions, which lie in the realm of native quantum computing. Such applications are namely Risk Analysis, Market Prediction or Portfolio Optimization.

In a second run, we can think of applying Quantum Algorithms to machine learning systems, e.g. used for Credit Scoring.

While quantum computing promises to accelerate technological advances in many fields, it also poses some challenging problems. The main threat arises from the extreme computational power, which endangers even the most state of the art encryption methods and security measures for classical data. Have technological companies started to analyse/find solutions to this problem?

Currently, some cyber security companies see quantum computation as a threat to their implementations of encryption methods, suggesting that they understand how powerful a quantum computer must be to break their security. However, since the posed threat doesn’t seem imminent, (not taking place, let us assume, within the next 3 years) most of the development departments do not take any measures to develop new, Post Quantum Secure methods.

Overall, even if the industry is more or less aware of this threat expected from the new class of calculation power of quantum computers, the security industry remains in an observation mode. This is because big companies - like IBM and Google - tell the world they would need millions of Qubits to break the already implemented security, as the following graph by Google shows:

Nevertheless, the above picture is valid if we assume that both the qubits are encumbered with many errors and the respective algorithm is in need of error free qubits. As soon as there is a technology available, where these suppositions are not necessary anymore, the risk of a global meltdown of our encryption and other algorithmic cyber security systems would be imminent. By the way, this is indicated by the blue area in the above picture as “? Near-term applications”, which are still unknown.

Protectbox’s CEO Kiran Bhagotra mentioned in a Wired magazine article that “in 2019, quantum computing could break the blockchain”. How do you comment on this?

This article shows one of the reasons why companies should now invest in Post Quantum Security. Because we really do not know when the breakthrough with severe security impacts will arise. The only thing we know about this breakthrough is its certainty to arrive!

How will the talks/developments around quantum computing evolve in 2019? How will the technology dominate this space, both industry-wise and geography-wise - Europe and US (or maybe Asia)?

This is another question nobody can answer in the field of Quantum Technology, because there are already so many players on the set, that we would need a fully-fledged Quantum Computer to analyse it.

However, what we have seen over the past 24 months - in the field of Quantum Technology in general and Quantum Computation in particular – is a 10 times (or more) growth in terms of people, financial and technological resources involved. Additionally, governments and political influencers promise huge efforts to lead the key-technology of the 21st century. However, nobody can predict the outcome, since no one knows where or when the breakthrough will be made - it can already happen in a lab somewhere, and maybe we have not heard about it yet.

About George Gesek

After his studies of physics at the Technical University of Vienna, George Gesek entered the ICT industry to foster the beginning merge of computer and quantum science. This milestone of humanity seems reached now with the state of the art production techniques in the nanometer realm, finally to create the first universal quantum computer.

 

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