How Financial Services Can Benefit from Quantum Computing Solutions

Enter Quantum recently reported that the Bank of Canada completed a proof-of-concept project to determine possible outcomes of adopting cryptocurrency as a legitimate means of payment. The bank worked with quantum solutions specialist Multiverse Computing using D-Wave’s quantum computer to simulate how it might play out.

The following is a Q&A with Multiverse chief technology officer Sam Mugel about the project and how quantum computing could tackle problems that were previously impossible.

Enter Quantum: How did the project with Bank of Canada come about?

Sam Mugel: Before incorporating as a company, we were working for a not-for-profit called the Quantum World Association and published a bunch of articles about how quantum computing will affect the financial sector and predict financial crashes.

At an event a couple of years later, someone from the Bank of Canada approached us and said oh, I saw your paper and I thought it was really interesting. We could really use something like that; let's do a project together.

The Bank of Canada economists told us the Canadian economy is too resilient and that if we started predicting financial crashes, then it was unlikely to be true. So, we moved away from that and said, well, crypto code is a place where we see quite a lot of financial crashes and maybe it makes more sense to look at this trade to see if we can either predict when they're likely to happen.

Why did you choose D-Wave to carry out the quantum processing aside?

D-Wave has a lot of resources. There is no other quantum processor that has thousands of qubits of information to play around with. The number of qubits in our project is huge.

Every link between any two institutions is encoded. Take CIBC and Scotia Bank, for instance. If they exchange money via wire transfer the qubit is set zero, or one if it’s via crypto codes. As you increase the number of players, the number of possible connections is going to grow rapidly, so we needed a lot of qubits available.

We have a partnership agreement with D-Wave to access their quantum computer, but aside from that, we did everything from building the model in collaboration with the Bank of Canada and working out how to solve the model to programming the quantum computer ourselves.

Is this the sort of problem where you can demonstrate quantum advantage in a real-world situation?

It could be, though this isn't what we set out to do. This is the type of problem where you could expect to find advantage because it's extremely difficult to do on a regular computer. From that point of view, it's the type of problem where we would expect to see advantage if the classical hardware could do it.

What did you learn over the course of the project?

We learned how to apply this machine in a completely new way. These types of graph problems are very useful for solving social and economic networks and D-Wave hasn't been used to tackle these things before so it’s very exciting that we found a new way to apply these machines.

The application itself is very interesting because we know that at the moment, we're not capable of predicting the effects of cryptocurrency regulations because it's a very difficult computational problem to tackle. We're opening a new field of applications that we can use quantum computing to tackle, so, we're creating value that didn't exist.

Now you've got a tool like this, a central bank would want to see how they can regulate cryptocurrencies without killing the whole market. But also, you could imagine it could help take away some of the crazy volatility of cryptocurrencies to make it safer for people to use as a way of transferring money.

What's next for Multiverse?

We've got a 50-page scientific paper coming out soon on this topic. We'd love to continue working on this and there are some really interesting directions they can go into. We've studied financial institutions exchanging money, but what happens if you start adding new types of players like cryptocurrency marketplaces for instance?

This is a new piece of work that's not just accelerating something we knew how to do before, but actually doing something new. The fact it is a model that can quite genuinely be applied not just to cryptocurrencies but also to economic or even social networks makes it quite exciting.