## QUANTUM COMPUTING'S POSSIBILITIES AND PERILS ## Source details **Canonical URL:** [QUANTUM COMPUTING'S POSSIBILITIES AND PERILS](https://www.imf.org/en/publications/fandd/issues/2021/09/quantum-computings-possibilitiesand-perils-deodoro) ## Other formats - [Markdown version](/en/publications/fandd/issues/2021/09/quantum-computings-possibilitiesand-perils-deodoro/index.md) - [Structured JSON version](/en/publications/fandd/issues/2021/09/quantum-computings-possibilitiesand-perils-deodoro/index.json) - [Bundle manifest](/en/publications/fandd/issues/2021/09/quantum-computings-possibilitiesand-perils-deodoro/bundle-manifest.json) ## Bibliographic details - Authors: TAHSIN SAADI SEDIK, MAJID MALAIKA, MICHAEL GORBANYOV, JOSE DEODORO - Published: November 25, 2021 --- ### Quantum fundamentals and potential - Quantum computing uses quantum phenomena such as superposition and entanglement to perform computations. - The basic unit is the quantum bit (qubit); qubits represent both zero and one simultaneously (superposition). - Entanglement: changing the state of one entangled element affects others instantly regardless of distance. - Increasing qubit count delivers exponential rises in processing power: - It would take about 18 quadrillion bits of traditional memory to model a quantum computer with just 54 qubits. - A 100 qubit quantum computer would require more bits than there are atoms on our planet. - A 280 qubit computer would require more bits than there are atoms in the known universe. - Quantum advantage evidence: - In 2019, Google used a quantum computer to perform a specific computation task in just 200 seconds; the company said the same task would have taken the most powerful digital supercomputer at that time 10,000 years. ### Possibilities for science, industry, and finance - Quantum computers can explore many solution paths simultaneously, drastically reducing time to solutions for complex tasks. - Potential applications: - Accelerate scientific discovery and innovation across subatomic particle modeling, molecular interactions, and chemical reactions. - Revolutionize chemical engineering and material science (for example, design of new materials such as solid-state batteries). - Improve understanding of climate change through advanced modeling. - Transform financial market modeling and simulations by enabling more accurate Monte Carlo simulations almost in real time without unrealistic simplifications. - Solve optimization tasks—allocating capital, portfolio optimization, ATM cash management—in a fraction of current computation time. - Speed training of machine learning algorithms without the exponential time penalty seen with added dimensions in digital computers. ### Cryptographic risks and implications for financial stability - Quantum computing threatens modern cryptography—symmetric keys, asymmetric keys (public keys), and hash functions—used widely for digital authentication, digital signatures, and data security. - Asymmetric keys are especially vulnerable because most are based on the factorization problem; quantum computers can factor effortlessly. - A fully functioning quantum computer could, in theory, break an asymmetric key in a matter of minutes. - Practical implications of successful attacks: - Compromise of internet communications and systems used by the financial system, including mobile banking, e-commerce, payment transactions, ATM cash withdrawals, and VPN communications. - Vulnerability of digital assets such as Bitcoin and Ethereum and password-protected web applications. - The HTTPS protocol is noted to be used by 97 of the world's top 100 websites. - Retroactive risk: - Information captured and stored today could be deciphered later once sufficiently powerful quantum computers exist; almost any encrypted personal or financial message sent and stored today could be deciphered retroactively. - Many financial institutions and regulators are not yet alert to these novel risks. ### Transition efforts and timeline - Standards development: - The National Institute of Standards and Technology (United States) is running a competition to develop quantum-safe encryption algorithms and hopes to announce a winner by 2024. - The European Telecommunications Standards Institute is also taking a lead; these efforts feed into other standard-setting bodies. - Narrow window for migration due to retroactive risks. - Practical challenges: - Financial institutions must inventory public-key cryptography they use and that used by third-party suppliers. - Transitioning vulnerable algorithms to post-quantum cryptography and building cryptographic agility is required. - Historical experience shows algorithm replacements can be extremely disruptive and often take years or decades. ### Recommendations and policy actions - Immediate steps for financial institutions: - Assess retroactive and future risks from quantum computers, including from information that may already have been captured. - Develop plans to migrate current cryptography to quantum-resistant algorithms. - Build cryptographic agility so algorithms can be upgraded smoothly. - Role of the IMF: - Raise awareness among member countries about risks to financial stability from quantum computers. - Promote quantum-safe standards and practices. - Encourage member countries to collaborate closely in developing quantum-safe encryption standards to ensure interoperability and adopt encryption migration plans for their financial sectors. - Operational caution: - Recognize that today's quantum computers are very sensitive to environmental disturbances (heat, light, vibration), which produce computation errors by pulling qubits out of their quantum state; however, machines capable of cracking codes with fewer errors are not far off. *Based on the article “Quantum Computing's Possibilities and Perils” (F&D Magazine, September 2021) by Tahsin Saadi Sedik, Majid Malaika, Michael Gorbanyov, and José Deodoro; article is based on IMF Working Paper 21/71, “Quantum Computing and the Financial System: Spooky Action at a Distance?”* --- ## Content in this bundle - **الحوسبة الكمية: الفرص والمخاطر** - [الحوسبة الكمية: الفرص والمخاطر (Markdown version)](/-/media/files/publications/fandd/article/2021/december/ar/deodoro.pdf.md){rel="alternate" type="text/markdown"} - [الحوسبة الكمية: الفرص والمخاطر (PDF)](/-/media/files/publications/fandd/article/2021/december/ar/deodoro.pdf){rel="external" type="application/pdf"} - **LAS POSIBILIDADES Y LOS RIESGOS de la informática cuántica** - [LAS POSIBILIDADES Y LOS RIESGOS de la informática cuántica (Markdown version)](/-/media/files/publications/fandd/article/2021/december/es/deodoro.pdf.md){rel="alternate" type="text/markdown"} - [LAS POSIBILIDADES Y LOS RIESGOS de la informática cuántica (PDF)](/-/media/files/publications/fandd/article/2021/december/es/deodoro.pdf){rel="external" type="application/pdf"} - **Perspectives et risques de l’informatique quantique** - [Perspectives et risques de l’informatique quantique (Markdown version)](/-/media/files/publications/fandd/article/2021/december/fr/deodoro.pdf.md){rel="alternate" type="text/markdown"} - [Perspectives et risques de l’informatique quantique (PDF)](/-/media/files/publications/fandd/article/2021/december/fr/deodoro.pdf){rel="external" type="application/pdf"} - **Квантовые вычислительные техника: возможности и опасности** - [Квантовые вычислительные техника: возможности и опасности (Markdown version)](/-/media/files/publications/fandd/article/2021/december/ru/deodoro.pdf.md){rel="alternate" type="text/markdown"} - [Квантовые вычислительные техника: возможности и опасности (PDF)](/-/media/files/publications/fandd/article/2021/december/ru/deodoro.pdf){rel="external" type="application/pdf"} - **量子计算面临的机遇和风险 ● 《金融与发展》● 2021年12月号** - [量子计算面临的机遇和风险 ● 《金融与发展》● 2021年12月号 (Markdown version)](/-/media/files/publications/fandd/article/2021/december/zh/deodoro.pdf.md){rel="alternate" type="text/markdown"} - [量子计算面临的机遇和风险 ● 《金融与发展》● 2021年12月号 (PDF)](/-/media/files/publications/fandd/article/2021/december/zh/deodoro.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2021/09/quantum-computings-possibilitiesand-perils-deodoro_