Ever since I was a kid taking apart transistor radios to see the magic inside, I’ve been fascinated by the way things work. Or as my family and friends have sometimes put it more bluntly, I’ve always been a tech geek. Now, as chairman of a Reserve Bank and chairman of a technology-focused Federal Reserve Board, I have put my interest in the subject to work every day.
Fortunately for me and my technical colleagues, ours is a time of remarkable innovation. From the development of personal computers, smartphones and the Internet to the rise of gene therapies, stem cell treatments and zero-carbon electricity, technological development has played a role in making the world healthier, greener, affordable and – as we all know, sometimes a source of distraction.
We are now on the verge of another great technological leap: the development and diffusion of quantum computing, a potentially revolutionary technology. This is an exciting time, full of opportunities but also fraught with no small amount of risk. The Federal Reserve, as the nation’s central bank and regulator, has a strong interest in fostering an environment that is conducive to innovation and safeguards our country’s financial infrastructure.
So what is quantum computing? To start answering this question, it helps to think a little about quantum mechanics.
Quantum mechanics is a branch of theoretical physics which is, basically, the study of very, very small things, in particular the behavior of matter and light on a subatomic scale. These smaller discrete units are called quantum particles.
Once you get to such a small scale, things behave strangely. They don’t act at all like the objects we see in our daily life.
Quantum particles can, for example, be in a state of overlap, which is not easy to turn heads. During the superposition, quantum particles are simultaneously in a combination of all their possible states. Imagine a quarter showing heads, tails, and every in-between state at the same time, which would definitely complicate an NFL coin toss.
And then, there is quantum entanglement. What is that? I like this description from Cal Tech: “When two particles, such as a pair of photons or electrons, become entangled, they remain connected even when separated by great distances. In the same way that a ballet or a tango emerges from individual dancers, entanglement arises from the connection between the particles.
No wonder Albert Einstein once described quantum entanglement as “a spectral action at a distance”. Or, if you prefer a more scientific term than “spooky”, you might as well say “weird”.
What is so exciting is that quantum computing is making real what was previously theoretical.
Here’s how: Quantum computing relies on insights found in quantum mechanics to greatly expand computing power. Instead of zeros and ones, quantum computers use quantum principles such as superposition and entanglement. Instead of “bits” – zeros and ones – quantum computers use what they are called qubit. That is, they calculate using zeros, ones, and everything else at the same time. This makes them extraordinarily powerful when it comes to performing tasks like machine learning, searching, and encryption. These are the true supercomputers of a rapidly approaching future.
Here, I think, the opportunities and risks for governments, businesses, institutions and even individuals are clear. Whether you call it spooky, weird or just plain exciting, there’s no doubt that quantum computing has the potential to revolutionize our world.
Imagine, for example, quantum computers that simulate the structure, properties and behavior of molecular structures, the building blocks of pharmaceutical products. The benefits for drug development could be profound.
Or imagine financial institutions using quantum computing to calculate risk more accurately, allowing them to promote inclusion while strengthening their balance sheets and reducing threats to the financial system.
Closer to home, the implementation of quantum technologies to run economic models could greatly strengthen our understanding of the economy and how it reacts to changes in the Fed’s monetary policy.
All in all, it’s no surprise that some of the biggest names in technology, banking and pharmaceuticals are making heavy investments in quantum technology.
A cause for greater concern is the prospect of quantum technologies falling into the wrong hands. One thing is certain: current encryption methods will not stand up to quantum cryptography. Governments, companies and institutions are already working hard to develop secure quantum cryptography and that’s a good thing. The cyber environment is already rife with threats from malevolent state actors to online bandits, and quantum technologies will only intensify them. For our part, ensuring the safety of the financial system and the Federal Reserve is at the top of our list of priorities.
You can learn more about quantum computing in this video and take a deeper look at some of the challenges posed by quantum computing. this article of the Global Risk Institute.