This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-35886456
The article has changed 6 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| Quantum computing: Game changer or security threat? | Quantum computing: Game changer or security threat? |
| (about 2 hours later) | |
| Superfast quantum computers could transform the world of finance, advocates say. | Superfast quantum computers could transform the world of finance, advocates say. |
| In a world where how fast you can assimilate and analyse data then act on it, makes the difference between profit and loss, computing speed is key. | In a world where how fast you can assimilate and analyse data then act on it, makes the difference between profit and loss, computing speed is key. |
| This is why banks, insurance firms, and hedge funds invest millions on technology to give them an edge when trading, and to offset human error. | This is why banks, insurance firms, and hedge funds invest millions on technology to give them an edge when trading, and to offset human error. |
| Quantum computers, that owe more to quantum mechanics than electronics, promise to be exponentially more powerful than traditional computers, holding out the tantalising prospect of near-perfect trading strategies and highly accurate forecasting and risk assessments. | Quantum computers, that owe more to quantum mechanics than electronics, promise to be exponentially more powerful than traditional computers, holding out the tantalising prospect of near-perfect trading strategies and highly accurate forecasting and risk assessments. |
| "Financial services is a data-rich environment," says Kevin Hanley, director of design at the Royal Bank of Scotland (RBS). "Time is money and the ability to process data fast could have a huge potential benefit for our customers." | "Financial services is a data-rich environment," says Kevin Hanley, director of design at the Royal Bank of Scotland (RBS). "Time is money and the ability to process data fast could have a huge potential benefit for our customers." |
| Quantum computing in a nutshell | Quantum computing in a nutshell |
| Classical computing relies on binary digits or bits - ones and zeros representing on/off, true/false states. | Classical computing relies on binary digits or bits - ones and zeros representing on/off, true/false states. |
| Quantum computing, on the other hand, features qubits, which can be both 0 or 1 at the same time - a state known as superposition. It all goes back to Schrodinger's cat, but that's another story.... | Quantum computing, on the other hand, features qubits, which can be both 0 or 1 at the same time - a state known as superposition. It all goes back to Schrodinger's cat, but that's another story.... |
| Subatomic particles such as electrons, photons or ions can be made to behave in this mysterious way. | Subatomic particles such as electrons, photons or ions can be made to behave in this mysterious way. |
| And because of this flexibility, qubits can do a lot more - a quantum computer could theoretically carry out trillions of calculations per second. | And because of this flexibility, qubits can do a lot more - a quantum computer could theoretically carry out trillions of calculations per second. |
| But these computers aren't easy to build or operate. Quantum processors from one of the leading manufacturers in this field - D-Wave - need to be cooled to just above absolute zero (-273.15C). They also need to be free from any electromagnetic interference. | But these computers aren't easy to build or operate. Quantum processors from one of the leading manufacturers in this field - D-Wave - need to be cooled to just above absolute zero (-273.15C). They also need to be free from any electromagnetic interference. |
| This makes them bulky and costly; D-Wave's computers cost about $10m-15m. | This makes them bulky and costly; D-Wave's computers cost about $10m-15m. |
| Ironically they're also a bit limited in the kinds of calculations they can currently do, and many observers are still sceptical about how fast they really are. | Ironically they're also a bit limited in the kinds of calculations they can currently do, and many observers are still sceptical about how fast they really are. |
| So it's fair to say we're still at the very early stages of quantum computing. | So it's fair to say we're still at the very early stages of quantum computing. |
| Goldman Sachs, RBS, Guggenheim Partners and Commonwealth Bank of Australia have all invested in quantum computing, with the aim of stealing a march on their competitors. | Goldman Sachs, RBS, Guggenheim Partners and Commonwealth Bank of Australia have all invested in quantum computing, with the aim of stealing a march on their competitors. |
| "This is interesting to the financial world because if you can find an algorithmic advantage to solve a problem, that can give you a great competitive advantage," says Colin Williams, director of business development for D-Wave. | "This is interesting to the financial world because if you can find an algorithmic advantage to solve a problem, that can give you a great competitive advantage," says Colin Williams, director of business development for D-Wave. |
| Google, Nasa, Lockheed Martin, the US Department of Energy and the University of Southern California have all used D-Wave's systems so far. | Google, Nasa, Lockheed Martin, the US Department of Energy and the University of Southern California have all used D-Wave's systems so far. |
| Other tech companies, such as Cambridge Quantum Computing, QxBranch and Rigetti, are also rushing to develop the hardware and software needed to make quantum computing a reality. | Other tech companies, such as Cambridge Quantum Computing, QxBranch and Rigetti, are also rushing to develop the hardware and software needed to make quantum computing a reality. |
| Longer-term visibility | Longer-term visibility |
| Quantum computers could solve problems in a day that would take classical computers thousands of years to solve. | Quantum computers could solve problems in a day that would take classical computers thousands of years to solve. |
| So in the world of investment, they could consider millions of different global investment scenarios and calculate which ones have the best chance of success over the long-term. | So in the world of investment, they could consider millions of different global investment scenarios and calculate which ones have the best chance of success over the long-term. |
| "We can build an optimal portfolio today, but tomorrow it won't be optimal and needs to be rebalanced, which is expensive," says Marcos Lopez de Prado, a senior managing director at Guggenheim Partners. | "We can build an optimal portfolio today, but tomorrow it won't be optimal and needs to be rebalanced, which is expensive," says Marcos Lopez de Prado, a senior managing director at Guggenheim Partners. |
| Quantum computers could, in theory, give investment firms much better visibility over the longer-term to make more accurate predictions and reduce this need to tinker with their portfolios, saving costs and possibly boosting profits. | |
| "If you can predict the US dollar/Swiss franc exchange rate a tenth of a cent more reliably, then the value isn't in the computer, it's in the cost saving," says Mr Williams. | "If you can predict the US dollar/Swiss franc exchange rate a tenth of a cent more reliably, then the value isn't in the computer, it's in the cost saving," says Mr Williams. |
| Better forecasting could also reduce the prevalence of high-frequency trading, which has been accused of creating market volatility. | Better forecasting could also reduce the prevalence of high-frequency trading, which has been accused of creating market volatility. |
| High-frequency traders have also been blamed for raising the costs of trading for ordinary investors by swooping into purchases nanoseconds before an interested party and reselling the stocks at a higher price. | High-frequency traders have also been blamed for raising the costs of trading for ordinary investors by swooping into purchases nanoseconds before an interested party and reselling the stocks at a higher price. |
| Not so fast | Not so fast |
| So how soon will quantum computers be readily available? | So how soon will quantum computers be readily available? |
| D-Wave's Mr Williams reckons businesses will have access to quantum computing functionality by 2018, whereas RBS's Mr Hanley thinks it will be "five to 10 years before quantum computing comes of age". | D-Wave's Mr Williams reckons businesses will have access to quantum computing functionality by 2018, whereas RBS's Mr Hanley thinks it will be "five to 10 years before quantum computing comes of age". |
| But this isn't stopping financial institutions getting excited. | But this isn't stopping financial institutions getting excited. |
| Blu Putnam, chief economist for the CME group - a US-based derivatives market - says quantum computing has led to a "mind-set change" where financial services "now seek out the nearly impossible to solve problems" in asset and risk management. | Blu Putnam, chief economist for the CME group - a US-based derivatives market - says quantum computing has led to a "mind-set change" where financial services "now seek out the nearly impossible to solve problems" in asset and risk management. |
| Before then, there is a lot of preparation to do. | Before then, there is a lot of preparation to do. |
| Quantum computers can't be interrogated in the same way as traditional computers. The algorithms - sets of complex mathematical rules - used for classical computing need to be reworked to fit into the quantum system. | Quantum computers can't be interrogated in the same way as traditional computers. The algorithms - sets of complex mathematical rules - used for classical computing need to be reworked to fit into the quantum system. |
| And finding and training computer scientists to understand and use these systems effectively is another big challenge for the financial services industry. | And finding and training computer scientists to understand and use these systems effectively is another big challenge for the financial services industry. |
| But Mr Hanley says: "Rather than observe these changes from a distance or be last in the queue, I'd rather be at the front and have a seat at the board." | But Mr Hanley says: "Rather than observe these changes from a distance or be last in the queue, I'd rather be at the front and have a seat at the board." |
| Cracking the code | Cracking the code |
| Quantum computing may offer potential benefits to the financial services industry, but it also poses risks. | Quantum computing may offer potential benefits to the financial services industry, but it also poses risks. |
| Banks rely on encryption to keep their transactions and customer data secure. This involves scrambling and unscrambling data using keys made of very large numbers - tens, if not hundreds, of digits long. | Banks rely on encryption to keep their transactions and customer data secure. This involves scrambling and unscrambling data using keys made of very large numbers - tens, if not hundreds, of digits long. |
| A hacker would have to find the right key by trial and error and test it in order to unlock the data - a process that could take hundreds of years even with the most powerful of today's supercomputers. | A hacker would have to find the right key by trial and error and test it in order to unlock the data - a process that could take hundreds of years even with the most powerful of today's supercomputers. |
| But quantum computers - with their ability to carry out trillions and trillions of operations a second - could crack the code with relative ease, potentially undermining the security of the entire global financial services industry. | But quantum computers - with their ability to carry out trillions and trillions of operations a second - could crack the code with relative ease, potentially undermining the security of the entire global financial services industry. |
| Such a possibility leads Mr Lopez de Prado to fear that governments might outlaw quantum computers entirely. | Such a possibility leads Mr Lopez de Prado to fear that governments might outlaw quantum computers entirely. |
| "Governments could say they should be banned because otherwise there would be no secrets, but they can't be un-invented. | "Governments could say they should be banned because otherwise there would be no secrets, but they can't be un-invented. |
| "We need a new mathematical breakthrough that creates an unbreakable encryption," he says. | "We need a new mathematical breakthrough that creates an unbreakable encryption," he says. |
| Cryptographers are busy working on new algorithms to block attacks from future quantum computers, and many believe this will be possible. | Cryptographers are busy working on new algorithms to block attacks from future quantum computers, and many believe this will be possible. |
| But the industry needs this breakthrough fast. The processing power of quantum computing is growing with each generation. | But the industry needs this breakthrough fast. The processing power of quantum computing is growing with each generation. |
| Follow Technology of Business editor @matthew_wall on Twitter. | Follow Technology of Business editor @matthew_wall on Twitter. |