A team of researchers from esteemed laboratories across the United States, including MIT’s Lincoln laboratory, NASA, and the Los Alamos National Laboratory, recently collaborated with a government program to identify and assess key areas of focus for quantum computing researchers. The Defense Advanced Research Projects Agency (DARPA), the military think tank of the U.S. government, spearheaded this research endeavor. The objective was to provide an overview of the current and future capabilities of quantum computing, particularly in fields like chemistry and material science. However, when it came to the realm of finance and fintech applications, the team could not ascertain whether quantum computing could offer a distinct advantage.
Quantum Computing’s Potential in Finance
Scientists anticipate that quantum computing will eventually surpass classical binary computers in various computational tasks, a phenomenon known as “quantum advantage” or “quantum supremacy.” One area that piques the interest of many quantum computing researchers involves developing algorithms and hardware capable of processing “non-linear differential equations.” Many scientists believe that quantum computers could significantly accelerate the processing of such equations. In theory, this could lead to substantial improvements in forecasting and simulation systems related to weather and financial prediction models.
If successfully developed and implemented, quantum computers capable of processing the most complex non-linear differential equations could theoretically predict market movements on a global scale with far greater accuracy and in significantly less time than even the most powerful supercomputers.
DARPA’s Role
The DARPA research mentioned earlier casts some doubt on the idea of a quantum computer accurately predicting stock, commodities, and cryptocurrency markets, which may have been a more optimistic expectation among various research laboratories. While quantum computing is still in its early stages, the looming threat of quantum attack (using quantum computers to break modern encryption methods) has made it a top priority for governments worldwide, including the U.S. government.
According to documents released by DARPA, this new research suggests that “it is plausible that quantum computers will provide an advantage for economically valuable applications in certain chemistry, quantum materials, and materials science applications.” Unfortunately, the documents also acknowledge that, based on the research conducted, it is uncertain whether quantum computing will offer a clear advantage in finance-related applications.
While this may be disheartening for those hoping that quantum computers will revolutionize the financial markets, it is worth noting that DARPA does not have the final say in the world of quantum computing. Companies like Rigetti and Microsoft (the former was involved in this study, and the latter has collaborated with DARPA on multiple occasions) have made significant independent strides in quantum computing. Additionally, other major players such as Google and IBM have also made notable advancements in the pursuit of “quantum advantage.”
In Conclusion
The World Economic Forum (WEF) has also cautioned that central bank digital currencies (CBDCs) could be vulnerable to quantum computer attacks. Despite the setback in finance-related applications, the progress and potential of quantum computing continue to captivate researchers and industry leaders alike. While the full extent of quantum computing’s impact remains to be seen, its development and utilization will undoubtedly shape the future of various fields, including finance and encryption.