Quantum technology is approaching the mainstream. Goldman Sachs recently announced that they could introduce quantum algorithms to price financial instruments in as soon as five years. Honeywell anticipates that quantum will form a $1 trillion industry in the decades ahead. But why are firms like Goldman taking this leap — especially with commercial quantum computers being possibly years away?
To understand what’s going on, it’s useful to take a step back and examine what exactly it is that computers do.
Let’s start with today’s digital technology. At its core, the digital computer is an arithmetic machine. It made performing mathematical calculations cheap and its impact on society has been immense. Advances in both hardware and software have made possible the application of all sorts of computing to products and services. Today’s cars, dishwashers, and boilers all have some kind of computer embedded in them — and that’s before we even get to smartphones and the internet. Without computers we would never have reached the moon or put satellites in orbit.
These computers use binary signals (the famous 1s and 0s of code) that are measured in “bits” or bytes. The more complicated the code, the more processing power required and the longer the processing takes. What this means is that for all their advances — from self-driving cars to beating grandmasters at Chess and Go — there remain tasks that traditional computing devices struggle with, even when the task is dispersed across millions of machines.
A particular problem they struggle with is a category of calculation called combinatorics. These calculations involve finding an arrangement of items that optimizes some goal. As the number of items grows, the number of possible arrangements grows exponentially. To find the best arrangement, today’s digital computers basically have to iterate through each permutation to find an outcome and then identify which does best at achieving the goal. In many cases this can require an enormous number of calculations (think about breaking passwords, for example). The challenge of combinatorics calculations, as we’ll see in a minute, applies in many important fields, from finance to pharmaceuticals. It is also a critical bottleneck in the evolution of AI.
And this is where quantum computers come in. Just as classical computers reduced the cost of arithmetic, quantum presents a similar cost reduction to calculating daunting combinatoric problems.