Quantum Computing and Its Impact on Investing

What is quantum computing and why is it important you may ask? Quantum computers are different from the computer/laptop you use to read this; solely based on how they solve complex problems. Our current computers use classical physics or in simple terms, they approach the world as we observe it – a world that follows the three laws of physics. Quantum computers on the other hand use the laws of quantum mechanics that govern small things, microscopic level so to speak. For example, the hole of a needle that a doctor uses to inject a vaccine into your body is too small for you (in classical physics) but big in quantum mechanics terms it can hold hundreds of millions of particles like photons and electrons.

Classic computers (our current computers) use bits (1 or 0) – it can only be 1 or zero at a time while quantum computers use Qubits (1 and/or 0), which can be 1 or 0 or both at the same time a concept called superposition (ability of a particle to be in multiple states simultaneously). An example, imagine you toss a coin, it can either be heads or tails. In quantum computing, it can be both heads or tails simultaneously – when it's spinning and when you haven’t looked to confirm its tails.

When trying to solve a problem, they approach the solutions differently. Say you are in the Manhattan financial district and are planning to go to your favorite restaurant in the Upper West Side for dinner, which is the fastest route to take. A classic computer would solve this by taking each possible route to the restaurant, one at a time until it figures the quickest route. That is why you search for directions on your Google Maps or Waze buffers for several seconds. A quantum computer would travel all the possible routes at the same time and then compute the fastest.

Another example, assume you are playing chess with your formidable opponent, and you want to analyze their next move. How do you achieve that quickly and optimally? There has never been a calculation of the exact combinations because they are so many and are estimated to be between 10^111?and 10^123 ??including all the illegal moves. A classical computer would compute all these moves, one at a time, and suggest the next possible move, this would take minutes if not hours. A quantum computer would take milliseconds if not because it would compute all the possible moves at the same time. This is thanks to the concept of ENTANGLEMENT, to be discussed in another article. Superposition and entanglement are referred to as QUANTUM MAGIC.

Now you ask, how does quantum computing help solve the world problems and why now? The simplest answer: investments. In investing, it all depends on speed. How quickly can you get access to market-altering information? How fast can you place and execute a trade to take advantage of the bid and ask spread? How quickly can adjust your portfolio based on this new information? What industries should you invest in and when (because market timing is the most crucial aspect in investing).? Enters the realm of high frequency trading (HFT), hedge funds, portfolio management, supply chain, climate change investing, and weather forecasting just to name a few. Quantum computing will revolutionize investing to a there would be no need for quants and traders.

So how does this affect my bottom line? This depends on who you are and what your objectives are. There are different ways you can take advantage of quantum computing in its infancy stages. You could invest in companies doing research and developing quantum computers – though this may require substantial capital. Even better, you could work for them and get employee shares as part of your compensation. Secondly, you could invest in hedge funds or portfolio management companies that are employing Quantum computing (though in the early stages) to implement their investment decisions. Another way quantum computing will change the world is through cryptography; it will make it so difficult for hackers. Using entanglement, where one particle’s position is affected by the position of another particle in a different universe, if a hacker changes a single code in a system, it will automatically notify the owner. Governments and private enterprises could benefit immensely by investing in cryptography thanks to quantum computing.

Just like in the 1980s when normal computers were the size of a living room, quantum computers are not like regular computers just yet. They are just a bunch of golden, silver, and blue cables/tubes in a casing. It is also unbelievably expensive to obtain one, in the millions of dollars. But just like the evolution of our current computers, quantum computers will be in our homes in the near future; before climate change wipes us off the face of the planet; hopefully.

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