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quantum computing in payments

A New Revolution Under Way Today

Quantum computing. Sounds like something out of a science fiction film, doesn't it? Well, like many things sci-fi, it has its basis in science - and it has the potential to revolutionize the payments industry. 

While a comprehensive understanding of quantum computing would require you to have a science degree, there is a simple way to present its basics. 

Traditional computing is based on encoding all data as binary code, i.e. a series of bits which can be either a one or a zero. Quantum computing takes this one step further, exploiting something called superposition - the ability of sub-atomic particles to be in two states at the same time. This means that a quantum bit, or a qubit, can be both a one and a zero at the same time. 

In January 2019 IBM presented its first ever quantum computer designed for commercial use. The IBM Q System One has 20 qubits and while this makes it a powerful machine, most researches place the bar for "quantum supremacy" at 50.

Still, IBM's development is significant and while it has no plans to sell the device, it will allow customers to perform quantum calculations by accessing the Q System One over the internet.

The Need for Speed

How is that useful, you ask? Well, the more qubits a computer has at its disposal, the more computations it can perform.

We are talking here about an exponential increase when compared to traditional computing. Quantum computing can literally solve problems that traditional computers were unable to due to the increased speed of its data processing.

Even though its speed-related potential is remarkable, quantum computing has its speed limits. 


Application, Application, Application

Risk management systems could provide significantly improved models of financial exposures and improved calculations of potential losses. Machine learning is already in place, combating online fraud; quantum computing could improve ML algorithms, allowing them to master complex tasks much more quickly. 

And with increased computing power, security algorithms will also improve - there is even talk of developing QC software that can replace security algorithms as soon as vulnerabilities are detected.

Optimization is marked as another area that might benefit from quantum computing, allowing reoptimization of portfolios within seconds instead of weeks and better tracking of the movement of cash between ATMs and banks.

The Road to Tomorrow

Google is already conducting tests, with a reported 80 thousand developers involved with its experimental QC system. True Positive Technologies have been working with quantum computers since 2014 to optimize portfolios and run scenario simulations when creating investment strategies. Hedge funds are showing an increased interest in quantum computing with regards to dynamic portfolios.

And with JPMorgan and Barclays directly working with IBM on quantum computing, it's obvious that at least some of the big players are looking to the future. Furthermore, BCC Research's report from late 2018 projects the QC market's worth at $1.3bn by 2027.

Quantum computing won't come in full use tomorrow or next week but with the current rate of innovation and development, it is expected to gain momentum within the next 5 to 10 years. This might be just enough time for the payments industry to prepare for the next revolution.

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