Tag Archives: Quantum

Blockchain finance in the quantum era

November 19, 2021 Peter Rohde Leave a comment

This post was originally published by BTQ, which builds post-quantum infrastructure to enable the next generation of energy-efficient blockchain networks, here.

Two emerging technologies currently gaining enormous attention are blockchain-based decentralised finance, and the rapidly developing field of quantum computing, both likely to be highly transformative ones that define the future technological landscape and structure of the global economy. While seemingly disparate there is a complex interplay between these technologies via the dependence of blockchain implementations on cryptographic techniques and the future potential for quantum computers to compromise them.

The technological capability for quantum computers to undermine present-day cryptography could reasonably be anticipated to eventuate within the next couple of decades. This timescale may seem distant as it poses no immediate threat for everyday cryptographic applications like securely accessing your email. However, from a financial perspective, where assets may be valued according to their discounted future value, and contracts valued according to whether they can be enforced, such timescales are incredibly meaningful — it is commonplace for economists to refer to the yield curves of assets over multi-decade timescales. Cryptographic assets such as cryptocurrencies or smart contracts must be viewed in a similar light. If I know my cryptographic assets are going to be worthless tomorrow they likely don’t have much value today, and a smart contract isn’t very smart if it’s likely to be invalidated before maturation.

Researchers working at the intersection of these fields have already provided estimates for the timescales and resources required to compromise current blockchain implementations (https://doi.org/10.5195/ledger.2018.127), while others have speculated that the yield curves on cryptographic assets could act as market predictors for when this is likely to take place, which could in principle be securitised into instruments for forecasting or betting upon developments in quantum technology (https://doi.org/10.2139/ssrn.3777706).

While the quantum threat to cryptography may seem rather pessimistic for the future of blockchain-based FinTech it isn’t by any means the end of the road. There is significant nuance and even greater misunderstanding of the threat quantum computers pose to cryptography. It is not uncommon to hear claims to the effect that “quantum computers will one day crack all cryptographic codes”, which is simply not true — not even in theory. Quantum computers could also dominate mining of cryptocurrencies, although there the quantum advantage is far smaller making this a less urgent threat.

There are many different cryptographic primitives that we rely on. Most notably there are ones for securely encrypting data so that it can’t be read by eavesdroppers, and the ones used for authentication and providing digital signatures. In the blockchain context, it is the latter that is of importance. Specifically, blockchains validate transactions via a ‘consensus algorithm’ in which a pool of witnesses attests to the legitimacy of transactions. When a sufficient number of independent witnesses digitally sign-off on the legitimacy of a transaction it becomes irrevocably transcribed to the ledger which forms the blockchain.

The threat here lies in the fact that if someone could falsify digital signatures they could transcribe fraudulent transactions to the blockchain by unilaterally forming consensus. Crypto-assets are at risk because quantum computers can exploit known public keys and addresses to infer the associated private keys and spend the funds freely. Indeed it is estimated that up to a third of existing Bitcoin is vulnerable to such theft. While there are safeguards to avoid this such as always using new addresses, it is almost impossible to apply them to long-term, well-known addresses such as those of major exchanges or popular smart contracts. Also, always using new addresses increases key management overhead, which may have resulted in losing many private keys over time, effectively taking the associated coins out of circulation.

The only reliable way to curb the quantum threat is to substitute the underlying cryptographic protocols with quantum-safe ones using a so-called soft fork.

Currently, the most widely used digital signature techniques are RSA (named after the inventors) and the more efficient elliptic-curve cryptography (ECC). Unfortunately, both of these can in principle be compromised by future quantum computers able to implement an algorithm known as Shor’s algorithm. However, despite recent major advances in quantum computing, including demonstration of so-called ‘quantum supremacy’ (quantum computers able to significantly outperform the best classical computers), implementing Shor’s algorithm at the required scale remains at least a decade away.

In parallel to this, a major field of research in the field of cryptography is ‘post-quantum cryptography’, which as the name suggests is cryptography that even quantum computers cannot break. Currently, NIST (the United States National Institute of Standards & Technology) is in the third round of a major initiative to standardise a suite of post-quantum cryptographic protocols with recommendations expected by 2024 (https://csrc.nist.gov/projects/post-quantum-cryptography/post-quantum-cryptography-standardization).

Already several highly capitalised blockchain-based cryptocurrencies claim to be quantum-secure. Yet in the absence of standards like those being pursued by NIST, it’s unclear how much trust to place in these protocols. Once standards are settled we will see rapid advancement in next-generation blockchain protocols designed to survive the onset of the quantum era. But based on the forward-valuation mantra these considerations need to be taken into account today as they affect different blockchain implementations differently and consequently will impact investment strategies.

Furthermore, the conservative nature of standards bodies like NIST directs them to focus on basic crypto such as digital signatures, while the fast-growing crypto markets demand more advanced crypto; for example, zero-knowledge rollup techniques have been rapidly gaining momentum and popularity. Most of these advanced crypto such as the popular zero-knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs) would be compromised by quantum computers, just like RSA and ECC. Therefore, it is crucial that we examine as soon as possible all relevant crypto, both in use and under research and development, making sure that they can survive quantum attacks in the next decades to come. This will involve substantial research and engineering efforts, without which DeFi will be, unfortunately, just like castles built on sand.

Those with the deepest understanding of this technological interplay and the ability to navigate quantum threats will be the ones who dominate future financial markets. This highlights the importance of quantum education and awareness not just within companies’ cyber teams, but at the executive level where strategic decision-making takes place.

Dr Peter Rohde is senior lecturer and ARC Future Fellow in the Centre for Quantum Software & Information at the University of Technology Sydney, Australia.

Prof Gavin Brennen is professor of physics at Macquarie University, director of the Macquarie Centre for Quantum Engineering, a chief investigator in the ARC Centre of Excellence in Engineered Quantum Systems, Australia, and a quantum information advisor to BTQ AG.

Quantum technology policy

Australia should invest in a home-grown quantum industry

November 2, 2021 Peter Rohde Leave a comment

This article was originally published in The Strategist, run by the Australian Strategic Policy Institute (ASPI), written by Gavin Brennen (Macquarie University) & Peter Rohde (University of Technology Sydney), following the recent ASPI Policy Brief “An Australian strategy for the quantum revolution”.

The recently announced AUKUS technology-sharing pact is about much more than the United Kingdom and United States helping Australia get nuclear-powered submarines; it is an agreement to share platforms and innovation costs for advanced technologies like artificial intelligence and quantum computing. Much of America’s rapidly expanding quantum sector has been fuelled by Australian discoveries and research. But the agreement highlights that, rather than be an intellectual supplier to the US, Australia needs to initiate a strategic investment in quantum technology as a national priority.

In 2001, a discovery made by three physicists, one an Australian, provided a radical new way to build quantum computers using light. Two decades later, two world-leading quantum computing companies—built on principles of this theory and led by Australians—have a valuation of well over US$3 billion.

But neither is based in Australia. PsiQuantum is based in Silicon Valley and Xanadu is based in Toronto. Other Australians have gone on to lead quantum computer development teams in public companies like IBM and Google—but again, overseas. Despite Australia’s continued prominence in quantum research, when it comes to capitalising on the ideas domestically, we come up short.

The impact of quantum computing, quantum communications and other quantum-enabled technologies is world-changing. Quantum computers can solve a panoply of problems for tasks like synthesising new drugs, managing supply chains and cracking public key cryptography. Meanwhile, quantum cryptography promises uncrackable encryption and quantum sensors can be used for mineral exploration, medical diagnostics and navigation.

Throughout the Covid-19-induced economic downturn, major world economies have escalated their investment in quantum in a global arms race, of sorts. In 2020, the US Congress passed the National Quantum Initiative Act, which injects another US$1 billion into the country’s already multibillion-dollar investment in the advancement of quantum technologies. Several EU nations are making similar scale investments.

However, by far the biggest state actor is China, which has flagged an investment of more than $13 billion to establish a four-hectare quantum technology centre in Hefei, and has made major advancements in the field in recent years, including secure communications mediated using satellite-based quantum cryptography.

Aside from major financial investments, 17 countries have now adopted coordinated national quantum strategies and another three have quantum strategies in development.

While Australia played a highly influential role in the early development of quantum technologies, today we are witnessing a significant flight of intellectual capital to more fertile jurisdictions overseas. Exacerbating this situation is the slow rollout of Covid vaccines accompanied with strict border controls, which has accelerated Australia’s technology talent leak.

Before 2015, we ranked sixth in sovereign investment among the nine largest economies actively investing in quantum technology. Today, we’re ranked last. And, Australia has no coordinated national quantum strategy to speak of. Of course, Australia can’t directly compete with the US or China in terms of capital investment and infrastructure for quantum. But we can nurture the advancement of our place in the global quantum ecosystem in a manner that matches our national strategic interests—the same approach that we, and other medium-sized economies, use in existing areas of defence and strategic policy.

Quantum technology will be one of the most strategically valuable sectors in the coming decades, but it needs entrepreneurs and resources to thrive. Australia enjoys a well-educated workforce, a uniquely attractive natural environment and a welcoming culture with a high standard of living. These are prime conditions to build a knowledge-based economy. But what’s lacking is an investment culture and federal policy committed to support this technology.

In a recent policy report published by ASPI’s International Cyber Policy Centre, we provide a roadmap for establishing a national quantum technologies initiative to develop a home-grown quantum industry.

This should be a whole-of-government initiative with a dedicated minister for critical and emerging technologies working across the relevant economic, national security, industry, research, defence and science agencies in the public sector.

The Australian government should also immediately lay the groundwork for a post-Covid multibillion-dollar technology stimulus that should include a significant fraction targeted to quantum technologies. The stimulus would be a game-changer for Australia and help the country diversify and deepen its technological and research and development base.

We also argued that an Australian ‘distributed quantum zone’ should be established to create a competitive commercial environment for developing quantum hardware and software through tax and regulatory incentives, infrastructure and training, and to attract foreign direct investment.

Australia sits at a point in its history where our economic strength is heavily reliant on industries that are in decline. The fourth industrial revolution will require shifting to a more knowledge-based economy, employing intellectual capital. This is an area in which Australia already has a competitive advantage. The government says it wants advanced development and manufacturing industries to emerge in Australia and the AUKUS agreement is an important step in that direction. But first we need to build up the right ecosystem, and that involves giving technologists, inventors and entrepreneurs a reason to base themselves here.

Quantum Physics

The vision for the global quantum internet

September 3, 2021 Peter Rohde Leave a comment

Originally posted on the Cambridge University Press blog Fifteeneightyfour. The book “The Quantum Internet: The Second Quantum Revolution” is available for purchase here along with a free online preview.

The true power of classical computing was never fully realised until the emergence of the internet, enabling the global integration of computing infrastructure. Indeed, many of our present-day devices would have very little utility without it. In the absence of the internet, consumers would not be able to rely on cloud infrastructure, information sharing and communication would not be possible, supercomputing would be largely inaccessible, and smartphones would be little more than bricks. The internet enables information to be a commodity whose market value drives technological advancement.

With emerging quantum technologies the quantum internet will be very different and far more powerful. Quantum computers operate according to entirely different principles in the way they process information, which in the future will enable many advanced and extremely economically valuable forms of computation to be implemented which cannot be realised on conventional computers. This raises the immediate question “what if we start networking them together?”

The classical internet is not capable of integrating remote quantum devices. This requires entirely new infrastructure that distributes quantum entanglement, a uniquely quantum information resource. The long-term vision for this infrastructure is the quantum internet, something that will likely develop in the coming decades. As with the emergence of the classical internet, it is to be expected that quantum computers will not realise their full potential until this infrastructure exists. But the motivation is even stronger than for classical devices. When classical computers are unified via distributed cloud-based architectures, the net computational power is effectively the sum of the parts. However, quantum computers exhibit fundamentally different scaling characteristics: a classical computer’s power is roughly proportionate to the number of CPUs it contains, whereas a quantum computer’s power grows exponentially with the number of quantum bits —or qubits— it processes. Therefore, upon unifying quantum devices via a quantum internet, we are left with something far greater than the sum of the parts, acting as an immediate incentive for global cooperation.

This quantum enhancement in computing power translates to enhanced economic incentives and returns, making quantum entanglement a highly valuable future commodity. As with any fungible commodity, entanglement will have a market value that drives economic investment into the infrastructure required to distribute it. In an ideal world, a unified global marketplace would emerge, similar to what we see in other global markets. The strategic implications of quantum computing are immense — breaking important cryptographic codes, making new unbreakable ones, with major implications for research & development, important optimisation problems, drug design and simulation. However, these strategic implications may also fracture quantum networks along geo-strategic boundaries, leading to quantum alliances, diplomacy and politics.

Although it is too early to predict exactly how the quantum internet will evolve over the coming decades, it’s clear this technology will underpin the future quantum era in the same way that the classical internet underpins the present digital era. One thing is certain — the global impact of the quantum internet will be enormous.

Quantum computer scientist & alpinist