Breaking Finance: How Quantum Technology Will End Secrets

In 2018, Innotribe dedicated a full day to Quantum Technologies (QT). Now, four years later, they’re back on the topic at Sibos 2022 in “Quantum, Revisited,” with Jaya Baloo, Chief Information Security Officer (CISO) at Avast, and Stacey Jeffrey, Senior Quantum Researcher at CWI, a Dutch technology research institute. math. and computer science.

Stacey Jeffrey and Jaya Baloo at Sibos 2022

With a technology like QT that promises to revolutionize or upend industries and also feels permanently on the horizon, simply out of reach, it makes sense to measure its development in years rather than the usual weeks and months.

But the technology is on the verge of some fundamental breakthroughs that, once they materialize, will change the way we view technology forever, including fintech, with significant repercussions for everything from banking to state secrets.

Baloo and Jeffrey began by describing what quantum technologies really are. The moniker encompasses quantum computing, quantum communications, quantum mechanics, quantum simulation, and quantum physics.

What the quantum?

“The big problem that people may have heard about is that if we build computers based on the laws of quantum physics, they can do certain things that would not be possible or would be much slower on a normal computer,” says Jeffrey.

For example, there are certain problems that can be solved much faster, which can have a great impact on financial services, industry, science and the development of new technologies. But there are also new security applications that could potentially be built using this kind of technology that would be really impossible without using quantum mechanics.

Jeffrey says it’s important to emphasize that “these quantum computers are something that is still being built” and many of these applications also come with potential threats. One of the most famous applications of quantum computers, “when in fact we have built large, fully-functioning, scalable quantum computers,” would be to use them to attack encryption systems that are widely used today, including RSA encryption, a cryptosystem of public key that is used for secure data transmission in banking, for example.

As such, the implications for banking, or just browsing the web, could be huge. Asymmetric algorithms used for multiple applications in financial services could pose a significant cybersecurity risk when quantum computers can run encryption-breaking algorithms.

That is why organizations such as the World Economic Forum are looking at the problem from a “threats and opportunities” perspective, issuing two reports on the subject, one on the opportunities of a quantum economy and another on security.

“If we know that the quantum economy is coming, that this post-quantum future is coming, how do we actually transition to a quantum safe place to manage and mitigate that threat?” says Baloo.

hype machine

Because QT is still in its early stages but shows a lot of promise, there is a risk of disappointment and disinterest. The cycle of hype, propagated by the media and welcomed by capital-hungry research institutions, could create quantum fatigue.

Quantum computing promises a lot, but can it deliver?

But, says Baloo, “if you look at most of the groundbreaking matches we’ve had over the years, part of the reason we had fuel for that groundbreaking to happen is partly because of that hype.”

In truth, the hype is what drives companies like IBM, Microsoft, and Google to endorse QT in the first place, promising huge returns from an investment perspective, including solving fundamental scientific and economic problems. “And all those promises are where that hype stems from.”

“I think we should spend this money on QT, because I think it’s a very promising technology,” says Jeffrey. She believes there are many potential applications, but as a scientist, Jeffrey sees a problem when “we’re making really misleading claims.”

“It’s great to make statements that people can understand, but a lot of the things that we know how to do with quantum computing are not that understandable.”

quantum winter

“One thing that we’re really afraid of is that we’re making all these big promises, which are amplified in the headlines, and people can get the impression that every year we’ve finally invented a quantum computer that, again, hasn’t developed significantly. Jeffrey says.

The truth is that progress is slow and there is a risk of a ‘quantum winter’, named after a similar phenomenon in artificial intelligence (AI). AI winter occurred when “there was a lot of hope and promise behind AI several decades ago,” before a negative theoretical outcome caused interest and research in the field to “implode.” As a result, there was a long period without research in AI and the researchers found it “impossible” to get funding for their research. That’s why AI has now made a comeback with the rebranding “machine learning” (ML), says Jeffrey.

“One of the things that worries us is that something similar could happen in the quantum field, that people just decide it doesn’t work.” But if you ask people in science and academia, “they say it’s actually progressing as expected. The timeline has even moved on a bit since I started working in the field.”

Capture now, decrypt later

All technology has a double use: it can be used for good, or it can be used for bad. To take advantage of quantum computing, we need to be able to mitigate some of the negative consequences, “specifically in cybersecurity,” says Baloo. “The best way to do it is to start now.”

Governments around the world are capturing large volumes of encrypted Internet traffic with the intent, once a quantum computer is up and running, to decrypt that information.

“Now we have a quantum computer, and look, we have a lot of old secrets.” And sometimes those old secrets are “super helpful” in predicting the behavior of new things.

“Old secrets can still have a long-term impact,” adds Baloo. Divesting from quantum would also mean divestment from the security technologies needed to mitigate any quantum threats.

“If you have a budget, what threads will you work on? The ones in the next five-year horizon or the ones that no one is talking about? As a result, financial institutions may not have the budget to look at their cryptographic algorithms and how they should trade them for post-quantum algorithms, or the money to investigate quantum communications opportunities.

“And that means we are giving an advantage to any country or company that would be secretly developing such an advantage,” says Baloo.

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