Will Quantum Computing finally take off?

13

October

2022

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But first, what is quantum computing?

Quantum computing is a new operating technology which can harness the quantum mechanic laws to solve complex problems substantially faster than the classical computer. The main difference between a quantum computer and a classic computer is that a quantum computer uses qubits to run multidimensional quantum algorithms instead of bits to run its operations. As a bit can only hold either the value 0 or 1, a qubit can be in a superposition which allows them to be in any proportion of both states at once. With 4 bits for example, there are 24 combinations out of which you can only use one. With 4 qubits in superposition however, can be in all the combinations at once. 20 qubits in superposition can already store over a million values at once. At the moment though, it is still under debate whether quantum computing is just a very specialized tool or a revolution for mankind.

Quantum computing has many application and in recent years many companies are attempting to implement it in their digital strategy. ExxonMobil for example partners up with IBM and makes use of quantum computing to find optimal fleet routes for their ships accounting for many uncertainties like weather and demand (ExxonMobil Strives to Solve Complex Energy Challenges, n.d.). While Mercedes-Benz is partnering with IBM and Google to explore quantum computing and its ability to accurately simulate batteries at a molecular level of detail which involves huge complexity in running algorithms. With these simulations, Mercedes-Benz can explore new materials to create more efficient batteries (Mercedes-Benz Group, n.d.).

Many companies in this branch aim to have the best quantum computer with the most superconducting qubits to reach quantum supremacy. Quantum supremacy is reached when a quantum device is able to solve a problem that no classical computer is able to solve in a feasible time. Google have claimed to reach quantum supremacy back in 2019 by performing a series of operations in 200 seconds which would take a supercomputer about 10,000 years (Waters & Murgia, 2019). In 2020 a group based in the University of Science and Technology of China claimed to reach quantum supremacy by generating samples which took their quantum computer about 20 seconds while taking an ordinary supercomputer 600 million years of computing (Zhong et al., 2020).

References

ExxonMobil strives to solve complex energy challenges. (n.d.). IBM. Retrieved October 13, 2022, from https://www.ibm.com/case-studies/exxonmobil/

Mercedes-Benz Group. (n.d.). The Art of Quantum Simulation. Retrieved October 13, 2022, from https://group.mercedes-benz.com/innovation/partnerships/collaboration/quantum-computing-google.html

Waters, R., & Murgia, M. (2019, September 20). Google claims to have reached quantum supremacy. Financial Times. Retrieved October 13, 2022, from https://www.ft.com/content/b9bb4e54-dbc1-11e9-8f9b-77216ebe1f17

Zhong, H., Wang, H., Deng, Y., Peng, L., Luo, Y., Qin, J., & Wu, D. (2020, December). Quantum computational advantage using photons. Science, 370(6523), 1460–1463. https://doi.org/10.1126/science.abe8770

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New money: central bank digital currencies

5

October

2022

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Central banks are public institutions who manage the currency and control the money supply of a country. Their main activities include: setting interest rates to achieve price stability, act as a lender of last resort, and usually issuing banknotes and coins. However, after pressure of different factors, a new type of money has been introduced by the central banks. This new type of money in the form of Central Bank Digital Currencies (CBDC’s) or digital cash have been under accelerated development in most countries already. This accelerated development is the effect of numerous causes:

  1. Firstly, the development of cryptocurrencies like Bitcoin and stable coins such as Facebooks Diem can heavily disrupt the grip of central banks on the supply and control of money. Bitcoin remains as the most dominant digital currency with a market capitalization of $386,333,762,020 as of today (CoinMarketCap, 2022).
  2. Secondly, the COVID-19 pandemic closed physical stores and limited contacts which made digital payment services essential for conducting business.
  3. Finally and most importantly, central banks engage in digital currencies to ensure a safe and robust payment mechanism in a world of declining usage of cash and consistent universal lack of access to banking systems.

According to Samudrala and Yerchuru (2021), CBDC’s can be summarized as following:

  • “Digital version of national fiat currency”
  • “Fully fungible with fiat”
  • “Legal tender”
  • “Sovereign liability”
  • “Distributed directly or through approved financial institutions”
  • “Typically co-exist and fully fungible with cash”

But why would people adopt CBDC’s when they can already pay with cash, credit, or even private digital currencies? There are a few reasons why CBDC’s are more convenient and functional than other payment methods:

  • Accessibility: consumer access to CDBD’s only depend on a country’s internet infrastructure and smartphone penetration where as cash is dependent on a country’s banking branch network, number of ATM’s, and universal retail-store acceptance.
  • Anonymity: a pure form of anonymous transaction can be found in the use of cash. Debit or credit cards cannot allow for full anonymity because of record keeping rules and regulations. CBDC’s will most likely have to conform to some regulations as well but having less impact than with debit/ credit cards.
  • Operational efficiency: the current mechanism of the Federal Reserve is very cost inefficient compared to CBDC mechanisms and are up to 6x more expensive.
  • Programmability: the characteristic of programmability is what makes the CBDC so unique and multi-functional. CBDC’s can be programmed in certain ways based on predetermined criteria.

Of course, CBDC’s hold many more characteristics which can influence its adoption. But these function drive the decisions of CBDC implementation and adoption.

CoinMarketCap. (z.d.). Cryptocurrency Prices, Charts And Market Capitalizations. Geraadpleegd op 5 oktober 2022, van https://coinmarketcap.com/

Samudrala, R. S., & Yerchuru, S. K. (2021). Central bank digital currency: risks, challenges
and design considerations for India. CSI Transactions on ICT, 9(4), 245–249.
https://doi.org/10.1007/s40012-021-00344-5

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