“We wanted to test the power of quantum computing in a research case that is difficult to solve using classical computing techniques,” explains Maryam Haghighi.
Multiverse Computing, a quantum computing company with offices in Canada and Spain, has collaborated with the Bank of Canada to run simulations on how the adoption of cryptocurrency as a payment method might proceed.
In a statement on Thursday, Multiverse Computing said it used its team as part of a proof-of-concept project with the Bank of Canada to generate examples of how non-financial companies could end up adopting cryptocurrencies. Quantum simulations used scenarios with 8-10 financial networks with more than 1.2 octillion possible configurations.
The Bank of Canada has become the first G7 country to use quantum computing to simulate scenarios in which cryptocurrencies and fiat currency can co-exist.
This week, Multiverse Computing, Canada’s leading research firm, has reached a milestone: Its model can evaluate more than an octillion possible scenarios in 30 minutes. An octillion is a 10 followed by 30 zeroes.
Cryptocurrency Payment Simulation
According to Multiverse Computing, it was “important to develop a deep understanding of the interactions that can take place in payment networks” to understand how companies can adopt different forms of payment. Simulations suggest that cryptocurrency payments may end up coexisting with bank transfers and “cash-like instruments” in certain sectors, with the market share of each depending on economic costs, as well as on how financial institutions respond to greater adoption.
Most of the model scenarios showed that the adoption of cryptocurrencies by non-financial institutions should be slow, as there are costs associated with converting fiat currencies into a digital asset. It was also possible to simulate how banks might react: reduce wire transfer fees to compete with the very low costs of crypto transactions.
The research itself has only reached the proof-of-concept stage, so there are no practical consequences of the study on Canadian crypto regulations yet.
However, the ability to use quantum computing models to simulate how fiat and digital currencies might compete for usage and adherence is a big step forward, says a Canadian central bank official.
“We wanted to test the power of quantum computing in a research case that is difficult to solve using classical computing techniques,” said Bank of Canada data science director Maryam Haghighi. “This collaboration helped us learn more about how quantum computing can provide new insights into economic problems by running complex simulations on quantum hardware.”
How the Bank of Canada got involved
The Bank of Canada initially contacted Multiverse Computing in 2019 due to its work in predicting financial crises. The startup’s flagship product, the Singularity software development kit, augments leading financial quantitative tools, such as the Python programming language or Microsoft Excel, with quantum-level cloud computing power.
According to Multiverse Computing CTO Sam Mugel, the bank’s decision to have the team simulate cryptocurrency adoption was a bit of a macroeconomic push.
“The Canadian economy is too stable to have a high probability of financial collapse. So they basically said that any financial collapse that we predicted would probably be wrong,” said the computational physicist Decipher in an interview. Therefore, they asked to see “something more volatile. Let’s take a look at cryptocurrency exchanges and predict cryptocurrency failures.”
With advances in quantum computing, often come many suggesting the use of the technology to “crack” the security of Bitcoin (BTC) or other Blockchain networks by breaking the underlying cryptography.
In February, banking giant JPMorgan Chase published research on a Blockchain network resistant to quantum computing attacks. However, at least one expert at the MIT Technology Review argued in March that the technology was years away from such applications.
By Audy Castaneda
