By using quantum phenomena to process information in a new way, churning through calculations for certain tasks — such as simulations, data analysis, and optimization — could go from taking many lifetimes to finishing up faster than it would take to make a cup of tea. This dramatic acceleration would open the door to a whole new set of computational tools for businesses.

While quantum computing is still nascent, its implications are far-reaching and will impact a host of industries, including banking, healthcare, and cybersecurity.

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But as more companies vie for backing and early customers, enterprises and investors face the challenge of cutting through the noise to identify the most promising startups.

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The search giant is building advanced quantum computing hardware, has a strong focus on developing quantum AI, and is putting significant energy into achieving scientific breakthroughs around quantum. Alphabet (Google’s parent company) also has a secretive non-Google team called Sandbox working on quantum tech. Expect Google to look to gain an edge by integrating quantum-powered AI capabilities throughout its product ecosystem.

We dig into all of these themes, and more, below.

Read more about big tech’s quantum activity in the full Big Tech In Quantum Report.

Google is building cutting-edge quantum technology

Google targets 1M qubits by the end of the decade

Google builds its own quantum computers, and its machines are currently among the most powerful in the world — though not yet capable enough for useful commercial applications.

Google is planning to up the number of qubits (what quantum computers use to calculate things — the more the better) to 1M by the end of the decade. The company believes this will be enough to run an error-corrected, commercially relevant quantum computer.

Google just opened a quantum computing campus

Google has built a quantum AI campus and data center in Santa Barbara, California to house its main quantum computing efforts.

This indicates that it is doubling down on its quantum computing bets and is expecting the tech to become a more significant part of its business.

Source: Google

Alphabet has a secret, non-Google quantum effort

Alphabet has a software-focused quantum team called Sandbox that is dedicated to applying quantum technology to near-term enterprise use cases. Sandbox operates mostly in stealth mode; however, recent job postings and past comments from its leadership indicate that its work includes:

• Quantum sensors — There are hints that Sandbox is working on a hypersensitive magnetism-based diagnostic imaging platform, possibly a magnetoencephalography (MEG) system for reading brain activity, that combines quantum-based sensitivity gains (tens of thousands of times more sensitive than typical approaches) with quantum machine learning to disentangle a signal from background noise to boost sensitivity. This could allow for more precise scans or for cheaper, more flexible deployments of magnetic-based imaging devices for use beyond hospital settings, as well as improved access in lower-income countries.
• Post-quantum cryptography (PQC) — Quantum computers threaten much of the encryption used on the internet. Post-quantum cryptography will defend against this. Expect Sandbox’s work to be focused on helping enterprises transition to PQC and making Alphabet’s sprawling online services quantum-safe. (Find out more about post-quantum cryptography in our explainer.)
• Distributed computing — This tech allows computers to coordinate processing power and work together on problems. Sandbox’s work here may focus on integrating near-term quantum computers into distributed computing networks to boost overall capabilities. Another approach would be to use quantum optimization algorithms to help manage distributed networks more efficiently.

Google has made scientific breakthroughs

Google establishes itself as a quantum science leader

Google partners liberally on quantum initiatives

Google has partnered with several quantum computing startups — including QSimulate, IonQ, AQT, and Pasqal — on quantum computing projects. This helps Google tap into additional industry expertise while more tightly weaving its quantum computing platforms into the broader ecosystem.

The tech giant is also working with numerous university teams and some corporations, including Nvidia and Boehringer Ingelheim.

Google’s quantum advances keep it in the news

Google could benefit from a quantum AI ripple effect through its businesses

Google thinks that quantum AI is a killer early app

Google’s main quantum efforts are branded under Google Quantum AI and the company sees artificial intelligence as a key application of quantum computers — even in the near term with only moderately powerful machines.

Google has also developed an open-source platform for building quantum machine learning models, TensorFlow Quantum.

Source: Google

AI is key to Alphabet’s long-term business goals

Alphabet is investing heavily in all sorts of AI tools to integrate into its businesses. Though quantum machine learning is only one aspect of this broader strategy, the company is indicating through its big bets in the space that it is bullish on the tech. If it succeeds, then Alphabet could use quantum computing to eventually boost AI initiatives across its entire business.

“As we are thinking about AI, it all starts with foundational R&D we do. I think we are one of the largest R&D investors in AI in the world. And so thinking ahead and doing that and we are doing it across all the foundational areas and we are taking many diverse approaches.” — Sundar Pichai, Alphabet CEO, Q1’21 earnings call

Alphabet’s businesses are set to go quantum

Many of Alphabet’s businesses make use of AI in some capacity. These areas could be given a significant boost by advances in quantum AI, including business lines like:

• Search and ads — Quantum computing will allow for better ways to parse through big datasets quickly. Advances in natural language processing (NLP) that stem from quantum machine learning could help deliver more relevant and targeted search results and ads.
• Waymo — Quantum machine learning could help AI make faster decisions based on less data. Applying this to self-driving car tech could help autonomous vehicles better adapt to dynamic situations on the fly.
• Google Assistant — Just as quantum NLP could help Google better understand websites, it could also help its voice assistant better interpret requests. The company may be hoping to gain a quantum edge over rival voice assistants.
• Google Cloud — As well as offering cloud-based quantum computing services to enterprises, Google could use quantum algorithms to better manage tasks like cloud data storage.
• DeepMind — DeepMind has built a reputation for pushing AI capabilities to the edge, like with its protein folding prediction tool for drug discovery. Quantum machine learning would amplify many of DeepMind’s tools and may eventually help defend against competitors looking to catch up with it.

Looking ahead

To find out how Microsoft, Amazon, IBM, and Intel are competing with Google, check out the full Big Tech In Quantum Report.

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Funding to quantum tech startups soared to record levels in 2021. Media interest in the space has continued to climb. New milestones and scientific breakthroughs are being announced at a quickening pace.

Against this backdrop, big tech companies Google, Microsoft, Amazon, IBM, and Intel are investing heavily in building their own quantum computers and developing applications around enterprise use cases.

With enormous prizes on the horizon, none of these big tech companies want to be left behind.

Download the report to find out:

• How big tech companies are looking to gain from quantum advances and their strategies for commercializing quantum computing
• The different approaches they are using to develop their own quantum computers
• How big tech giants are using partnerships to build out their quantum capabilities and stake out market positions
• Which strengths and capabilities differentiate each big tech company in quantum

REPORT HIGHLIGHTS:

• Big tech’s quantum activity is ramping up quickly. Google, Microsoft, Amazon, IBM, and Intel are all developing their own quantum computing hardware. Big tech companies have already been behind several breakthroughs in the space.
• Cloud is an early area of quantum competition for big tech. Google, Microsoft, Amazon, and IBM have all launched quantum computing services on their cloud platforms. Numerous startups have partnered with big tech companies to offer remote access to a broad range of quantum computers.
• Big tech is poised to forge ahead with quantum advances. Google, Microsoft, Amazon, IBM, and Intel all have ambitious quantum roadmaps. Expect rising qubit counts and more frequent demonstrations of commercial applications.
• Watch for quantum computing to become a hot geopolitical issue, especially for US-China relations. Expect quantum-forward big tech companies, including China-based Baidu and Alibaba, to be drawn deeper into political debates. In the US, government efforts to rein in big tech could be countered by officials nervous about keeping up with countries racing ahead with quantum technology.
  

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Quantum computers process information in a fundamentally different way than today’s conventional computers. This allows them to conduct new types of calculations that otherwise wouldn’t be possible. In theory, quantum-forward banks could build trading strategies that offer better returns, quickly parse through different portfolio combinations to find the best mix of investments, and supercharge risk analysis for tasks like issuing credit.

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Quantum computers process information in a fundamentally different way than their classical counterparts. Eventually, they will be able to quickly crack many of today’s public-key encryption methods — a form of encryption that underpins the security of emails, payments, digital certificates for proving the authenticity of websites, and more.

The stakes are high. Any organization relying on current methods for public-key encryption — including banks, shops, and hospitals — would be vulnerable to being hacked, making even the worst data breaches of recent years pale in comparison.

Though this “quantum time bomb” will likely not go off for a while, the risk is quickly becoming a high priority given the accelerating pace of quantum computing advances. Transitioning to new encryption protocols could take years — or even decades — to complete.

However, new public-key encryption techniques that can defend against this quantum threat are already emerging. Known collectively as “post-quantum cryptography (PQC),” these techniques employ encryption algorithms that even a quantum computer couldn’t easily crack, and are sometimes described as being “quantum-resistant” or “quantum-safe.” Interest in the PQC space is rising quickly, with media mentions skyrocketing in 2021.

The stage is set for a race between the adoption of post-quantum cryptography and the development of powerful quantum computers. Post-quantum cryptography has a head start, but quantum computing advances are accelerating.

Funding is pouring into quantum computing companies like PsiQuantum, Rigetti, Cold Quanta, and many others hoping to disrupt major industries. Google, Microsoft, Amazon, IBM, Honeywell, and other big corporations have placed enormous bets in the space.

All it takes is for one quantum computing approach to succeed for much of the internet to no longer be considered secure. In this report, we break down how post-quantum cryptography works, who the key players are, what companies should consider for adopting PQC, and more.

Table of contents

• What is post-quantum cryptography?
• Who are the post-quantum cryptography players?
• What should a company consider for adopting post-quantum cryptography?
• What’s ahead for post-quantum cryptography?

Learn how quantum computers work, the industry landscape, and the tech’s applications beyond cybersecurity in this deep dive report. CB Insights clients can track quantum computing companies using our Quantum Tech Expert Collection.

What is post-quantum cryptography?

Post-quantum cryptography typically refers to public-key cryptography methods that are designed to be resistant to quantum computer-based attacks.

How does public-key cryptography work?

Public-key cryptography, also known as “asymmetric cryptography,” lets multiple parties communicate securely over an open network without having already agreed on an “encryption key” — a code that can be used to scramble information and make it meaningless to observers without the right key.

Public-key encryption allows someone to send out a public key that can encrypt information but cannot decode it. Anyone can see the public key and use it to encode messages, but only the person who has the matching private key can decrypt it. The public key functions like an open padlock — anyone who finds it can close it to secure something, but only the person who has the padlock’s key can open it again.

This means that different parties can pass messages over the internet that only the recipient can read. Today, quantum-vulnerable methods for public-key cryptography — such as RSA encryption — are used widely and underpin the security of lots of online activity, from messages to payments to logging into a website.

Why do quantum computers threaten today’s public-key cryptography?

Public keys and private keys are mathematically linked. Today’s methods for public-key cryptography rely on mathematical problems that conventional computers find extremely difficult, such as finding the prime factors of a very large number.

But quantum computers process information in a way that allows them to do some types of calculations that classical computers can’t.

This includes Shor’s algorithm, which provides a highly efficient way to tackle the very mathematical challenges currently keeping much of our public-key-based online communications private. If Shor’s algorithm was being run by a powerful quantum computer, then most of today’s public-key cryptography approaches wouldn’t hold up.

This is where post-quantum cryptography comes in.

How does post-quantum cryptography defend against quantum computers?

PQC links private keys to public keys without using problems that quantum computers can easily solve. In other words, it aims to deliver the benefits of today’s public-key encryption without the vulnerability to quantum hacking.

Approaches to PQC include building encryption around mathematical “structures” called lattices, using systems purely based upon code, solving complicated problems involving multiple variables, and much more.

Who are the post-quantum cryptography players?

Post-quantum cryptography is attracting attention from organizations including governments and affiliated agencies, corporations, and startups.

The National Institute of Standards and Technology (NIST), a US-based standard-setting body, is a central player in the space. It’s currently evaluating leading post-quantum cryptography candidates and is due to announce new standards for public-key encryption within the next year or so.

But activity in the sector is picking up even as companies wait for NIST to complete its process:

• Major tech players including Microsoft and IBM are developing their own candidates for post-quantum cryptography algorithms.
• Amazon’s AWS cloud platform has begun to offer support for some PQC protocols.
• Intel is working on ways to bring PQC to low-powered IoT devices.

With a lot of money riding on the security of their transactions, big financial companies are also making early moves. For example, Mastercard recently launched a new wireless payments protocol that it claims is quantum-safe. Meanwhile, its rival VISA has published multiple papers exploring how PQC could affect payments. JPMorgan is reportedly already combing through its systems to identify which data to prioritize for a quantum-safe revamp.

Meanwhile, a growing number of startups are looking to gain an early-mover advantage and position themselves for a coming surge in demand. ISARA, PQShield, and Post-Quantum are among the most well-funded companies in the space, with all 3 aiming to help enterprises and governments transition to post-quantum cryptography systems.

Other startups are working on niche quantum-resistant applications, such as more secure blockchains (Cellframe), protecting IoT systems (AgilePQ), and encrypted telehealth platforms (Cyph).

CB Insights clients can check out the full quantum tech market map here and can see many more post-quantum cryptography companies in our Quantum Tech Expert Collection. 

What should a company consider for adopting post-quantum cryptography?

Pretty much every company will eventually move to some form of post-quantum cryptography, but when and how will be key considerations.

What cybersecurity threat do quantum computers pose to companies?

Most of what a company does online could be impacted by the onset of powerful quantum computers. This is because public-key cryptography plays a role in all sorts of things, including:

• Sending messages online
• Facilitating online payments
• Logging into websites
• Blockchain applications
• Accessing data stored online
• Securing IoT devices

This means that a company that was not protected against a quantum computer-backed hack would not be able to meaningfully assure customers that its systems were secure once a powerful quantum computer emerged.

When will companies need to adopt post-quantum cryptography?

A number of cybersecurity players, including researchers working for NIST and the UK’s National Cyber Security Centre (NCSC), are recommending that enterprises already begin laying the groundwork for migrating to post-quantum cryptography and then move quickly to implement new encryption approaches when PQC standards are announced.

But some in the space also caution against actually committing to a particular PQC approach until standards have been set within the coming year or so.

The quantum threat won’t materialize overnight, but transitioning to post-quantum cryptography will take a long time

Though it is widely accepted that quantum computers will eventually render a lot of today’s public-key encryption obsolete, the actual timeline is impossible to predict. Most estimates fall within the range of 10-20 years, but the threshold could be passed much earlier if quantum computer producers make an unforeseen breakthrough.

For instance, PsiQuantum, the most well-funded quantum computing startup in the world, claims that it will have a 1M qubit quantum computer within just a few years. (Qubits are what quantum computers use to conduct calculations. Read about how they work in this explainer.) If achieved, this would signal that the tech is evolving much faster than many thought possible.

Quantum computer maker PsiQuantum raised a $450M mega-round at a $3B+ valuation in July. 

In any event, transitioning to post-quantum cryptography is expected to take a decade or more, driving a sense of urgency to upgrade systems as soon as possible so that companies aren’t caught off guard when capable quantum computers emerge.

Data harvested now can be decrypted later

Data encrypted with quantum-vulnerable algorithms can be intercepted now and stored for a time when powerful quantum computers exist. This is a key concern for governments wanting to guard secrets, but companies dealing with sensitive information — such as key IP or some types of personal information — may also need to develop a strategy to counter this drawn-out hack.

Implementing PQC for high-priority data will solve this issue going forward, but nothing can be done for information that has already been squirreled away.

Standards haven’t arrived yet, but preparations can already begin

Many companies are waiting until NIST announces its post-quantum cryptography standards before making the leap. This approach reduces the likelihood of running into interoperability issues and will help ensure that the PQC approach being deployed actually works as intended.

However, enterprises can still make moves to start preparing for PQC. This includes:

• figuring out how they are currently using public-key cryptography
• understanding the requirements and constraints of their systems (issues like data latency needs, hardware specs, and legal compliance could all influence a transition to PQC)
• identifying what data is especially sensitive

What are the barriers to the adoption of post-quantum cryptography?

Public-key cryptography is used everywhere; updating it will be challenging

Transitioning to post-quantum cryptography will be difficult. Public-key cryptography is used in lots of different ways for a broad range of purposes, from passwords to digital signatures for websites to facilitating other types of encryption.

Successfully updating all of these instances is unlikely to be as simple as a software update. Depending on the circumstance, it may require new hardware, installing infrastructure, redrafting security protocols, or even renegotiating contracts with external partners.

Given this complexity, a major cybersecurity risk going forward is that some companies may be tempted to not bother upgrading their systems.

Post-quantum cryptography approaches vary widely in their advantages and constraints; expect different standards for different applications

In general, post-quantum cryptography will be more taxing on computers than what is currently used, but some will need more power than others and different approaches will offer varying risk profiles.

Given the broad set of tasks that public-key encryption is used for, it’s possible that NIST will recommend different PQC standards depending on the use case. For example, one approach may be recommended for low-powered IoT devices not carrying highly sensitive data, while another may be recommended for tasks like facilitating online data storage.

How does quantum key distribution relate to post-quantum cryptography?

Another encryption technology to keep an eye on is “quantum key distribution” (QKD), sometimes referred to as “quantum cryptography.” This approach taps into quantum phenomena to transmit an encryption key in such a way that its quantum state measurably changes when the message is read. This means that even a quantum computer-equipped hacker would not be able to intercept the encryption key without giving themselves away.

In theory, this provides an extremely secure way to transmit encryption keys, but it can be challenging to implement properly in practice and it can’t do everything that public-key cryptography approaches can (such as authenticating who you’re actually speaking with).

National security-minded agencies like the NSA have also warned that QKD introduces other forms of risk. For example, since QKD systems are designed to fail if someone intercepts the transmission, it actually provides a way for an adversary to cause problems by intentionally interrupting communications.

The technology also currently requires specialized equipment and is limited to relatively short distances (though new QKD distance records are regularly being set).

Despite these challenges, QKD is gaining traction and will become more common in the future. Toshiba, for example, is expecting to generate $3B in revenue from QKD services by the end of the decade. A growing number of quantum communication startups — including SpeQtral, Quantum Xchange, and KETS — are also working on QKD systems.

However, the tech will likely have to be deployed alongside other cybersecurity measures, including post-quantum cryptography, to be effective.

Given the above, companies should not think of QKD as an alternative to PQC but as a complementary cybersecurity tool that could be useful for specific applications related to some high-value data.

CB Insights clients can check out our quantum tech market map here and can see many more quantum key distribution companies in our Quantum Tech Expert Collection. 

What’s ahead for post-quantum cryptography?

Post-quantum cryptography is already gaining momentum with businesses, but interest will surge when NIST announces its PQC standards.

More vendors are also entering the space. Early-stage startups like QuSecure, Code-X, and QANplatform have raised funding this year to build out quantum-resistant tech. Expect more players to spring up as demand for post-quantum cryptography products grows over the coming months and years.

Quantum computers are advancing rapidly and companies should continue to monitor the space. Funding is pouring into startups, quantum computing-related patents are on the rise, and new developments are regularly being announced. Tech giants like Google, Microsoft, and Amazon are betting big on the tech. Though the trajectory of the emerging quantum technology space is uncertain, the likelihood of a powerful quantum computer emerging in the not-too-distant future feels higher than ever.

Companies that balance the urgency of migrating to PQC alongside steady, deliberate decision-making stand to be most well-positioned. Moving too quickly presents pitfalls, especially around interoperability or being hamstrung by hard-to-fix constraints, but waiting until a powerful quantum computer is about to be launched would be far too late.

Cybersecurity risks aside, powerful quantum computers have disruptive applications across a wide range of industries, including finance, healthcare, logistics, and more — find out more in this report. 

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Big tech companies are leveraging their expertise in software, data, and AI to capitalize on rising opportunities in the space, from research and discovery to clinical development to patient monitoring.

Amazon, for example, is working to build out a digital pharmacy following its 2018 acquisition of PillPack. Meanwhile, Microsoft is using its AI capabilities to make the drug discovery process more efficient.

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The emerging technology has the potential to reshape countless sectors, but some will have to adapt more quickly than others.

Below, we look at 9 spaces where quantum computing is already making waves.

1. Healthcare

Quantum computers could impact healthcare in a number of ways.

For example, Google recently announced that it had used a quantum computer to simulate a chemical reaction, a milestone for the nascent technology. Though the specific interaction was relatively simple — current classical computers can model it too — future quantum computers should be able to simulate complex molecular interactions much more accurately than classical computers. Within healthcare, this could help speed up drug discovery efforts by making it easier to predict the effects of drug candidates.

Another area where drug discovery could see a boost from quantum computing is protein folding. Startup ProteinQure — which was featured by CB Insights in the 2020 cohorts for the AI 100 and Digital Health 150 — is already tapping into current quantum computers to help predict how proteins will fold in the body. This is a notoriously difficult task for conventional computers. But using quantum computing to address the issue could ultimately make designing powerful protein-based medicines easier.

Source: ProteinQure

Eventually, quantum computing could also lead to better approaches to personalized medicine by allowing faster genomic analysis to inform tailored treatment plans specific to every patient.

Genome sequencing creates lots of data, meaning that analyzing a person’s DNA requires a lot of computational power. Companies are already rapidly reducing the cost and resources needed to sequence the human genome; but a powerful quantum computer could sift through this data much more quickly, making genome sequencing more efficient and easier to scale.

A number of pharma giants have shown interest in quantum computing. Merck’s venture arm, for instance, participated in Zapata’s $38M Series B round in September 2020. Meanwhile, Biogen partnered with quantum computing software startup 1QBit and Accenture to build a platform for comparing molecules to help speed up the early stages of drug discovery.

CB Insights clients can check out this report for more on how quantum technologies are reshaping healthcare.

2. Finance

Financial analysts often rely on computational models that build in probabilities and assumptions about the way markets and portfolios will perform. Quantum computers could help improve these by parsing through data more quickly, running better forecasting models, and more accurately weighing conflicting possibilities. They could also help solve complex optimization problems related to tasks like portfolio risk optimization and fraud detection.

Another area of finance quantum computers could change are Monte Carlo simulations — a probability simulation used to understand the impact of risk and uncertainty in financial forecasting models. IBM published research last year on a method that used quantum algorithms to outcompete conventional Monte Carlo simulations for assessing financial risk.

Source: IBM

A number of financial institutions including RBS, the Commonwealth Bank of Australia, Goldman Sachs, Citigroup, and more have invested in quantum computing startups.

Some are already starting to see promising results. John Stewart, RBS’s head of global innovation scouting and research told The Times newspaper that the bank was able to reduce the time taken to assess how much money needed to be offset for bad loans from weeks to “seconds” by using quantum algorithms developed by 1QBit.

3. Cybersecurity

Cybersecurity could be upended by quantum computing.

Powerful quantum computers threaten to break cryptography techniques like RSA encryption that are commonly used today to keep sensitive data and electronic communications secure.

This prospect emerges from Shor’s Algorithm, a quantum algorithm that was theorized in the 1990s. This technique describes how a suitably powerful quantum computer — which some expect could emerge around 2030 — could very quickly find the prime factors of large numbers, a task that classical computers find extremely difficult. RSA encryption relies on this very challenge to protect data being shuttled around online.

But companies are emerging to counter this threat by developing new encryption methods, collectively known as “post-quantum cryptography.” These methods are designed to be more resilient to quantum computers — often by creating a problem that even a powerful quantum computer wouldn’t be expected to have many advantages in trying to solve. Companies in the space include Isara and Post Quantum, among many more. The US National Institute of Standards and Technology (NIST) is also backing the approach and is planning to recommend a post-quantum cryptography standard by 2022.

Source: Post Quantum

Another nascent quantum information technology called quantum key distribution (QKD) could also offer some respite from quantum computers’ code-breaking abilities. QKD works by transferring encryption keys using entangled qubits. Since quantum systems are altered when measured, it’s possible to check if an eavesdropper has intercepted a QKD transmission. Done right, this means that even quantum computer-equipped hackers would have a hard time stealing information.

Though QKD currently faces practical challenges like the distance over which it is effective (most of today’s QKD networks are pretty small), many are expecting it to soon become a big industry. Toshiba, for instance, said in October 2020 that it expects to generate $3B in revenue from QKD applications by the end of the decade.

CB Insights clients can see private companies working on post-quantum cryptography and QKD in this market map.

4. Blockchain and cryptocurrencies

Quantum computing’s threat to encryption extends to blockchain tech and cryptocurrencies — including Bitcoin and Ethereum — which rely upon quantum-susceptible encryption protocols to complete transactions.

Though specific quantum threats to blockchain-based projects vary, the potential fallout in worst-case scenarios could be severe.

For example, about 25% of bitcoins (currently worth hundreds of billions of dollars) are stored in such a way that they could be easily stolen by a quantum computer-equipped thief, according to an analysis from Deloitte. Another fear is that quantum computers could eventually become powerful enough to decrypt and interfere with transactions before they’re verified by other participants on the network, undermining the integrity of the decentralized system.

And that’s just Bitcoin. Blockchain tech is being used more and more for applications within asset trading, supply chains, identity management, and much more.

Rattled by the profound risks posed by quantum computers, a number of players are moving to make blockchain tech safer. Established networks like Bitcoin and Etherum are experimenting with quantum-resistant approaches for future iterations, a new blockchain protocol called the Quantum Resistant Ledger has been set up that’s specifically designed to counter quantum computers, and startups including QuSecure and Qaisec say that they’re working on quantum-resistant blockchain tech for enterprises.

Quantum-resistant blockchains may not fully emerge until post-quantum cryptography standards are more firmly established in the coming years. In the meantime, those running blockchain projects will likely be keeping a nervous eye on quantum computing advancements.

Check out our explainer for more on how blockchain tech works.

5. Artificial intelligence

Quantum computers’ abilities to parse through massive data sets, simulate complex models, and quickly solve optimization problems have drawn attention for applications within artificial intelligence.

Google, for instance, says that it’s developing machine learning tools that combine classical computing with quantum computing, stating that it expects these tools to even work with near-term quantum computers.

Similarly, quantum software startup Zapata recently stated that it sees quantum machine learning as one of the most promising commercial applications for quantum computers in the short term.

Though quantum machine learning may soon offer some commercial advantages across a broad range of areas — including autonomous vehicles and predicting the weather — future quantum computers could take AI even further.

AI that taps into quantum computing could advance tools like computer vision, pattern recognition, voice recognition, machine translation, and more.

Eventually, quantum computing may even help create AI systems that act in a more human-like way. For example, enabling robots to make optimized decisions in real time and more quickly adapt to changing circumstances or new situations.

Take a look at this report for other emerging AI trends.

6. Logistics

Quantum computers are good at optimization. In theory, a complex optimization problem that would take a supercomputer thousands of years to solve could be handled by a quantum computer in just a matter of minutes.

Given the extreme complexities and variables involved in international shipping routes and orchestrating supply chains, quantum computing could be well-placed to help tackle daunting logistics challenges.

DHL is already eyeing quantum computers to help it more efficiently pack parcels and optimize global delivery routes. The company is hoping to increase the speed of its service while also making it easier to adapt to changes — such as canceled orders or rescheduled deliveries.

Others want to improve traffic flows using quantum computers, a capability that could help delivery vehicles make more stops in less time.

Source: Volkswagen

For example, Volkswagen, in partnership with D-Wave Systems, ran a pilot last year to optimize bus routes in Lisbon, Portugal. The company said that each of the participating buses was assigned an individual route that was updated in real time based on changing traffic conditions. Volkswagen states that it intends to commercialize the tech in the future.

7. Manufacturing and industrial design

Quantum computing is also drawing interest from big players thinking about manufacturing and industrial design.

For example, Airbus — a global aerospace corporation — established a quantum computing unit in 2015 and has also invested in quantum software startup QC Ware and quantum computer maker IonQ.

One area the company is looking at is quantum annealing for digital modeling and materials sciences. For instance, a decent quantum computer could quickly filter through countless variables to help determine the most efficient wing design for an airplane.

Other companies, including Daimler and Samsung, are already using quantum computers to help research new materials for building better batteries.

IBM has also identified manufacturing as a target market for its quantum computers, with the company highlighting areas like materials science, advanced analytics for control processes, and risk modeling as key applications for the space.

A selection of IBM’s envisioned manufacturing applications for quantum computing. Source: IBM

Though quantum computing will likely be implemented in manufacturing only gradually as more powerful machines emerge over the coming years, some companies — including machine learning startup Solid State AI — are already offering quantum-supported services for the industry.

8. Agriculture

Quantum computers could boost agriculture by helping to produce fertilizers more efficiently.

Nearly all of the fertilizers used in agriculture around the world rely on ammonia. The ability to produce ammonia (or a substitute) more efficiently would mean cheaper and less energy-intensive fertilizers. In turn, easier access to better fertilizers could help feed the planet’s growing population.

Ammonia is in high demand and is estimated to be a $77B global market by 2025, according to CB Insights’ Industry Analyst Consensus.

Little recent progress has been made on improving the process to create or replace ammonia because the number of possible catalyst combinations that could help us do so is extremely large — meaning that we essentially still rely on an energy-intensive technique from the 1900s known as the Haber-Bosch Process.

Using today’s supercomputers to identify the best catalytic combinations to make ammonia would take centuries to solve.

However, a powerful quantum computer could be used to much more efficiently analyze different catalyst combinations — another application of simulating chemical reactions — and help find a better way to create ammonia.

Moreover, we know that bacteria in the roots of plants make ammonia every day with a very low energy cost using a molecule called nitrogenase. This molecule is beyond the abilities of our best supercomputers to simulate, and hence better understand, but it could be within the reach of a future quantum computer.

9. National security

Governments around the world are investing heavily in quantum computing research initiatives, partly in an attempt to bolster national security.

Defense applications for quantum computers could include, among many others, code breaking for spying, running battlefield simulations, and designing better materials for military vehicles.

Last year, the US government announced an almost $625M investment in quantum technology research institutes run by the Department of Energy — companies including Microsoft, IBM, and Lockheed Martin also contributed a combined $340M to the initiative.

The US is investing more in quantum information science (QIS) research, including quantum computing. Source: The US National Quantum Coordination Office

Similarly, China’s government has poured billions of dollars into numerous quantum technology projects and a team based in the country recently claimed to have achieved a quantum computing breakthrough.

Though it is uncertain when quantum computing may play an active role in national security, it is beyond doubt that no country will want to fall behind the capabilities of its rivals. A new “arms race” has already begun.

For more on what quantum computers are, the investment landscape, and how the tech is being applied across industries, check out this report.

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Below, we look at what makes quantum computing different from today’s commonplace “classical” computing.

Some key differences between quantum computers and classical computers include:

• Quantum computers process information in a fundamentally different way to classical computers. Instead of relying on transistors — which can only represent either the “1” or the “0” of binary information at a single time — quantum computers use qubits, which can represent both 0 and 1 simultaneously. Read our quantum computing explainer for more on how this works.
• A quantum computer’s power grows exponentially in relation to the number of qubits linked together. This differs from a conventional computer, which sees its power increase in direct proportion to the number of transistors. This is one reason why quantum computers could eventually handle some types of calculations much better than classical computers.
• Though quantum computers could drastically outperform classical computers at some tasks — such as optimizing delivery routes or simulating a chemical reaction — they are difficult to build and there are lots of types of calculation where they aren’t expected to offer many advantages. As such, most everyday processing will likely be better handled by conventional computers even when powerful quantum computers begin to emerge.

For more on what quantum computers are, the investment landscape, and how they’re being applied across industries, check out this report.

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Healthcare, for example, is a primary focus for quantum tech companies developing extremely powerful computers, ultra-secure communications, and highly precise sensors. These applications could speed up the drug discovery process, improve accuracy in diagnostics, and enhance data security.

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Tech giants like Google and IBM are investing heavily in pushing the boundaries of quantum computing, and Microsoft and Amazon have begun offering quantum programming tools on their cloud platforms. Meanwhile, the US government is drawing up plans to build a new internet using quantum-friendly infrastructure.

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The trends in our 2020 Tech Trends Report — while buttressed by data and evidence — are meant to shake our faith in steady trend lines. They point to areas where conditions are ripe for discontinuity and disruption.

Using our emerging tech insights platform, we analyzed signals like patent and investment activity, executive chatter in earnings transcripts, media mentions, and more to identify the top 14 tech trends to watch in 2020. 

Our 68-page report digs into trends like: 

• Broader and deeper quantum tech commercialization
• Apple doubles down on healthcare products and services
• AI bias becomes a top regulatory concern
• Radical biohacking: Biohackers push medical devices and regulators to the brink
• Empathy becomes a must-have in tech product design and development

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A quantum computer uses quantum mechanical states to define “qubits” — which can represent both a 1 and 0 simultaneously — to quickly solve complex computations involving lots of possible variables, like cracking encryption keys, predicting stock-market fluctuations, or optimizing an aircraft route to minimize fuel consumption.

Advances are coming quickly. Microsoft, for instance, designed a special programming language for quantum computers, called Q#, and released a “Quantum Development Kit” to help programmers create new applications. One of Google’s quantum computing projects involves working with NASA to apply the tech’s optimization abilities to space travel.

This rate of advancement has also led to some fears. For instance, quantum computers’ potential to crack traditional encryption methods has added impetus to the race to develop another quantum-based technology — quantum cryptography — which could form the basis of quantum communication networks which can’t be hacked without the sender knowing. A number of corporations, with a few highlighted below, are working to create these networks as they prepare for a quantum computing world.

We identified a selection of 20 corporations involved in the development of commercialized quantum computing hardware and software, as well as a number of corporations working on quantum cryptography and communication.

Learn more about how quantum computers work by checking out our explainer.

This list is organized alphabetically.

• • Airbus
  • Alibaba
  • AT&T
  • Baidu
  • Booz | Allen | Hamilton
  • British Telecommunications
  • Google
  • Honeywell
  • IBM
  • Intel
  • KPN
  • Lockheed Martin
  • Microsoft
  • Mitsubishi
  • NEC
  • Nokia
  • NTT
  • Raytheon
  • SK Telecom
  • Toshiba

1. Airbus is looking to quantum computers to change aerospace

Airbus Group established a team to tackle quantum computing at the end of 2015 at its site in Newport, Wales. Airbus’ Defence and Space unit’s main objective is to study a range of technologies related to quantum mechanics, from cryptography to computation.

Airbus is not planning to develop its own quantum computing hardware, but instead wants to adapt existing quantum machines to specific problems within the aerospace industry, namely those requiring the handling and storage of large amounts of data, including sorting and analyzing images streamed by satellites, or creating novel, ultra-durable materials for aircraft.

In 2016, Airbus’ VC arm Airbus Ventures invested in a seed round for quantum computing startup QC Ware, which is building a quantum computing cloud platform — in 2018, it invested again in the company’s Series A.

In January 2019, Airbus launched a contest for quantum computing-driven solutions to various aircraft design and operation problems — issues of interest include wingbox design optimization, computational fluid dynamics, and making aircraft climb routes more fuel efficient.

2. Alibaba has a lab dedicated to quantum computing

In July 2015, Alibaba’s Aliyun cloud unit and the Chinese Academy of Sciences established a research facility based in Shanghai called the Alibaba Quantum Computing Laboratory. The lab looks into quantum computing applications across various fields, including artificial intelligence and security for e-commerce and data centers.

In February 2018, Alibaba Cloud launched a cloud quantum computing service that had 11 qubits.

3. AT&T wants to build a quantum communications network

In May 2017, AT&T announced that it was working with the California Institute of Technology to build out its quantum networking technology — which could help it offer more secure communications.

In late 2017, the two partners — alongside NASA’s Jet Propulsion Laboratory and the US Department of Energy — started constructing a quantum network hosted at Fermilab in Batavia, Illinois.

4. Baidu wants to catch up to its biggest rival

Baidu announced the formation of its Institute of Quantum Computing in March 2018, an initiative which focuses on quantum information theory and quantum computation. Baidu’s search engine, the most popular in China, could benefit from quantum computings’ potential to help search through vast databases.

Baidu has lagged behind its domestic competitor Alibaba, which already unveiled a 11 qubit quantum cloud computing service.

5. Booz Allen Hamilton is seeking to offer quantum computing to clients

Booz Allen Hamilton is looking to use quantum computing to find an edge in the race for better data-science products and services.

The management consulting firm says it has partnered with government and business clients to develop pilot progams and quantum computer prototypes for solving optimization problems

Areas of interest for Booz Allen Hamilton include, among others, logistics, drug discovery, and validation of complex code in software.

In September 2018, Booz Allen Hamilton received a contract from the US Air Force Research Laboratory. As part of this project, together with quantum computing company D-Wave Systems, Booz Allen is researching ways to use quantum computing to address the problem of optimizing the grouping of satellites in order to maximize their coverage area.

6. British Telecommunications (BT) is using quantum properties to protect sensitive information

BT, alongside Toshiba Research, ADVA Optical Networking, and the UK National Physical Laboratory, are collaborating to research and implement quantum encryption. This technology uses quantum entangled photons — particles of light — to protect sensitive data as it is being transmitted, the idea being that someone could not intercept the transmission without altering its quantum state and hence revealing that it was compromised.

In 2018, BT began making public progress towards using quantum mechanics to improve the security of communications — partly driven by the potential of quantum computers to upend traditional encryption methods. In June 2018, BT announced that it had built a “quantum-secured“ internet network that spanned between Cambridge, UK and BT’s laboratory in Ipswich, a distance of around 50 miles.

7. Google wants to use quantum computers to develop artificial intelligence

Google operates a D-Wave quantum computer in the Quantum Artificial Intelligence lab (QuAIL). The lab is hosted by NASA and the Universities Space Research Association at the NASA Ames Research Center in Mountain View, California.

In 2015, Hartmut Neven, who leads Google’s QuAIL operations, and his team recently published a paper with initial test results that indicated the D-Wave machine could perform certain computations 100M times faster than a classical computer chip.

Since as early as 2013, this consortium has been utilizing D-Wave’s machines to explore quantum computing applications in areas as diverse as web search, speech/image pattern recognition, planning and scheduling, air-traffic management, robotics missions to other planets, and support operations in mission control centers.

In 2014, in an effort to reduce the chasm between machine learning and human intelligence — and to take a lead in the nascent field of artificial intelligence — Google began leveraging its experience with D-Wave’s machines and focusing on developing its own quantum hardware.

In 2018, Google announced it had built a new quantum processor, codenamed Bristlecone. The 72 qubit device was a significant improvement on Google’s previous best of 9 qubits, with the closest contender at the time being IBM’s experimental 50 qubit machine. Later in 2018, Google announced a partnership with NASA to explore problems that could be solved using the new quantum processor.

In early 2019, Google presented a circuit custom-made for quantum computing at the IEEE International Solid-State Circuits Conference in San Francisco. The circuit is designed to operate within a cryogenic enclosure cooled down to a temperature of less than 1 degree kelvin — a crucial infrastructure step for scaling up quantum computer systems in the future.

8. Honeywell is pushing for quick commercialization of its trapped ion quantum technology

Honeywell’s work on quantum computing began in 2014 when the company participated in an Intelligence Advanced Research Projects Activity (IARPA) project investigating the technology.

Honeywell’s main focus is a kind of quantum technology known as a trapped ion quantum computer — an approach to quantum computing that relies on suspending ions in space using electromagnetic fields, and transmitting information through the movement of those ions in a “shared trap.”

In May 2019, Honeywell’s CEO Darius Adamczyk — a former computer engineer who has taken personal responsibility over the company’s quantum computing project — announced that the firm’s technology had demonstrated “record-breaking high fidelity quantum operations,” and expected the project to begin generating revenue by the end of the year.

Honeywell is one of the few corporations working on trapped ion technology, with the vast majority — including IBM, Google, and Intel — all using semiconductor technology to build their own quantum computing hardware.

9. IBM eyes commercial quantum computers

IBM has a quantum computing group at its Yorktown Heights, New York, research center. In April 2015, it announced a new kind of circuit that can detect both bit-flip and phase-flip errors together — a potentially important step for overcoming the challenges of correcting quantum errors that can plague quantum computing systems. Later that year, IBM was awarded an iARPA grant to use this technology under the Logical Qubits program. The aim of the program is to overcome certain limitations of quantum systems by building a quantum circuit design that can scale to larger dimensions.

IBM unveiled a 20 qubit quantum computing system, called “IBM Q System One,” in early 2019 which would be accessible to users through the cloud — announcing both ExxonMobil and CERN as customers for its quantum computing service. Their stated areas of focus at the time were using “IBM Q” to study financial data, logistics, and risk.

In June 2019, IBM announced a partnership with a number of African universities. As part of the collaboration, IBM expects that researchers will use IBM Q’s processing power to study topics such as drug research and development, mining, and the management of natural resources.

IBM Global Vice President Norishige Morimoto recently said that IBM would have quantum computers commercialized within five years.

10. Intel looks for better ways to mass produce quantum computers

In September 2015, Intel committed $50M to QuTech, the quantum research institute of the Delft University of Technology, and the Dutch Organisation of Applied Research, to provide engineering support over a ten-year collaboration.

At CES in 2018, Intel announced that it had constructed a 49 qubit superconducting chip called Tangle Lake. A big step up from Intel’s previous chips, which came in at 7 and 17 qubits respectively.

In March 2019, Intel announced a testing tool for quantum computers which allows researchers to validate quantum wafers and check that qubits are working correctly before they’re constructed into a full quantum processor. This could be an important cost- and time-saving technique for researchers on quantum computing, as well as a step towards the high-volume production of quantum processors.

11. KPN wants to create more secure telecommunications

KPN is a Dutch landline and mobile telecommunications company that has implemented end-to-end quantum key distribution (QKD), a technology which could lead to more secure transmissions, in its network between KPN data centers in The Hague and Rotterdam. KPN is collaborating with ID Quantique, a Swiss company specialized in quantum encryption.

12. Lockheed Martin doubles down after early quantum computing moves

In partnership with the University of Southern California, Lockheed Martin co-founded the USC-Lockheed Martin Quantum Computation Center (QCC). The center is focused on harnessing the power of adiabatic quantum computing, in which problems are encoded into the lowest energy (“coldest”) state of a physical quantum system to find the optimum answer to a specific problem with many variables.

This optimization approach could help Lockheed Martin with a range of challenges, such as improving aircraft design or manufacturing logistics.

Additionally, D-Wave Systems Inc. announced in 2015 a multi-year agreement with Lockheed Martin to upgrade the company’s 512-qubit D-Wave Two quantum computer to the new D-Wave 2X system with 1,000+ qubits. This represents the second system upgrade since Lockheed Martin became D-Wave’s first customer in 2011.

13. Microsoft wants to equip quantum programmers

Microsoft’s QuArC group, which was established in December 2011, is focused on designing software architectures and algorithms for use on a scalable, fault-tolerant quantum computer. Notable achievements for the group include LIQUi|>, a software architecture and tool-suite for quantum computing. Microsoft’s QuArC group collaborates closely with universities around the world, including quantum computing groups at University of Sydney, Purdue University, ETH Zurich, and the University of California Santa Barbara (UCSB), among others.

In 2014, Microsoft revealed it was researching topological quantum computing — which aims to improve upon controlled engineering of quantum states — within a group called Station Q, located on the UCSB campus. Underscoring the software and algorithmic work of the QuArC group, Station Q aims to help create a scalable, fault-tolerant, universal quantum computer.

Microsoft has also made strides towards building out the development layer of quantum computing. At the end of 2017, Microsoft announced the Quantum Development Kit — a programming framework and language called Q# for developers looking to write applications for quantum computers. In February 2019, Microsoft launched the Microsoft Quantum Network — a network of institutions and individuals working on quantum applications and hardware.

In May, Microsoft said that its Quantum Development Kit had been downloaded 100,000 times and that it would open-source its Q# language, compiler, and quantum simulator.

14. Mitsubishi Electric makes moves to secure mobile communications

Mitsubishi Electric claims it has developed the world’s first “one-time pad software,” an advanced encryption technique for mobile phones that aims to ensure that telephone conversations remain confidential.

Additionally, the company is involved in implementing its technology in a project being conducted by the National Institute of Information and Communications Technology to test the viability of mobile communications over a quantum secure network.

15. NEC and Fujitsu look to offer long-distance quantum communications

In September 2015, the Institute for Nano Quantum Information Electronics at the University of Tokyo, in collaboration with Fujitsu Laboratories Ltd., and NEC Corporation, announced that they achieved quantum key distribution for securing communications at a distance of 120 kilometers using a system with a single-photon emitter.

In January 2018, NEC announced a plan to invest develop its own quantum computing technology for answering optimization questions. Fujitsu, another Japanese giant, announced partnerships with the University of Toronto to invest $451 million in quantum computing by 2020, and with Vancouver’s 1QB Information Technologies — a company Fujitsu has invested in.

16. Nokia owns a quantum computing pioneer

Nokia is the parent company of Bell Laboratories — a pioneer in the development of quantum computing algorithms. Several researchers at Bell Labs have served as pioneers in quantum computing, including Peter Shor (of Shor’s Algorithm) and Luv Grover (Grover’s Algorithm). The nascent field of quantum computing was given a boost by Shor’s discovery, in 1994, that quantum computers would be able to find the prime factors of large numbers far faster than conventional computers — a property which could soon undermine traditional encryption methods, which rely on hard to calculate prime factors.

Today, Nokia is involved in a project at Oxford University alongside Lockheed Martin to explore the potential for quantum technology to enhance optimization and machine learning.

In 2017, a Morgan Stanley report counted Bell Labs’ quantum computing program alongside those of IBM, Google, and Microsoft as the “most credible.”

17. NTT focuses on optimization applications

NTT Basic Research Laboratories and NTT Secure Platform Laboratories have collaborated to explore ultra-cold atoms and quantum information processing. In 2014, the company and researchers from the University of Bristol in the UK developed an optical chip that uses photons to test new theories in quantum computing, with a goal of reducing the resources previously required to test quantum theory.

In 2017, the company opened up its prototype quantum computer for public testing. The NTT’s quantum computer differs from those of most other corporations working on quantum computing in that it’s a “quantum Ising” machine — which is designed specifically to tackle optimization problems.

In late 2018, NTT announced a plan to open a quantum computing research center in Silicon Valley, with the aim being to promote research on quantum computing theory and collaborate with other local researchers.

18. Raytheon applies quantum computing to imaging

Raytheon established a quantum information processing group within its Raytheon BBN Technologies R&D center that focuses on exploiting quantum phenomena for sensing, computing, and imaging.

In 2012, Raytheon BBN Technologies was awarded $2.2M in funding under the quantum computer science program, sponsored by Intelligence Advanced Research Projects Activity (IARPA), with the goal of integrating aspects of a quantum computer into a single framework for better managing resources and assessing performance.

In 2017, a team at Raytheon BBN, in collaboration with IBM Research, published a study in Nature Quantum Information in 2017 that demonstrated quantum computing’s ability to discover the answers to a certain class of problems faster and more efficiently than a conventional computing device.

19. SK Telecom is building a quantum communications network in South Korea

In March 2016, SK Telecom announced that it completed the rollout of five different national test networks for quantum communications that covered a total distance of 256 kilometers.

In early 2018, SK Telecom invested $65M to take a reportedly greater than 50% ownership stake in ID Quantique, a developer of quantum key distribution systems and other quantum-influenced technologies. In September, SK Telecom announced that a partnership between them, ID Quantique, and Nokia had successfully developed interoperation between IDQ’s QKD and Nokia’s optical transport system.

20. Toshiba goes after secure communications networks

Toshiba’s quantum key distribution (QKD) system delivers digital keys for cryptographic applications on fiber-optic-based computer networks.

Notably, the company announced in 2015 that genome data from Toshiba’s Life Science Analysis Centre was slated to be encrypted by a quantum communication system and transmitted to Tohoku University’s Tohoku Medical Megabank Organisation. Toshiba maintains one of the largest quantum IP portfolios in the world.

In February 2018, Toshiba unveiled a 13.7 Mbps quantum key distribution device — several times faster than the previous fastest QKD device, also developed by Toshiba, which had a speed of 1.9 Mbps.

In 2019, Toshiba announced a partnership with Quantum Xchange, an American developer, to double the capacity of Phio, its quantum key distribution optical network. Currently, the Phio project is active for a selection of banks and asset management firms in New York City, helping customers move data and maintain security.

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While “product-market fit” may have become the mantra for many tech companies and investors, we believe there are still plenty of companies out there with their eyes set on building true game-changing technologies. In our Game Changers report, we identified 8 categories of innovation that could have the greatest impact on how we live. Among these is next-gen computing — specifically, quantum computers and DNA data-writing technologies, which have the potential to fast-track innovation across industries.

Quantum computers can solve real-world problems much faster than traditional computers — and their capacity is only increasing. Meanwhile, using synthetic DNA to store vastly more data than a typical chip has the potential to revolutionize computers’ memory capacity.

In our report, we identified 5 startups taking computing to the next level through quantum computing and DNA-based data writing. The top five next-gen computing game changers are Twist Bioscience, Rigetti Computing, Cambridge Quantum Computing, KnuEdge, and Optalysys. On the vanguard of computing research, many companies in the category are at the grant, seed, or Series A stage, with the notable exception of the later-stage DNA computer tech company Twist Bioscience.

Twist Bioscience

Twist Bioscience’s synthesized DNA could help pioneer DNA computing, which writes data into synthetic nucleotides. DNA can last 2000+ years without deterioration, and a single gram can store almost 1T gigabytes of data. Twist is partnered with Microsoft to develop this innovative DNA computer technology.

Total Funding: $135.8M

Select Investors: DARPA, ARCH Venture Partners, Yuri Milner, Illumina, Paladin Capital Group

Rigetti Computing

Rigetti Computing is aiming to build a solid state quantum processor for the world’s first quantum supercomputer. Competing with the well-funded startup D-Wave, currently the only company to offer large-scale superconducting qubit chips, Rigetti plans to eventually set up a quantum-powered cloud computing service to tackle difficult computing problems such as chemistry simulations.

Total Funding: $5M

Select Investors: Data Collective, Felicis Ventures, Susa Ventures, Y Combinator

Cambridge Quantum Computing

Cambridge Quantum Computing is building a quantum operating system and developing quantum algorithms, with a specific focus on quantum cryptography for its secure currency platform. Quantum encryption techniques will be necessary as current encryption will be rendered useless (quantum computers will be powerful enough to brute-force break classical encryption methods).

Total Funding: $50M

Select Investors: Grupo Arcano

KnuEdge

Founder (and former NASA Chief) Dan Goldin surprised the world by announcing $100M in angel funding for his 10-year-old stealth chip company. KnuEdge plans to make chips inspired by human neural networks to power artificial intelligence.

Total Funding: $100M

Select Investors: Various angels

Optalysys

A University of Cambridge spinout, Optalysys develops optical computing hardware for Big Data supercomputers, using light rather than electricity for processor intensive math functions.

Total Funding: $1M

Select Investors: DARPA

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Steve Jurveston, managing director of the investment firm Draper Fisher Jurvetson, and an early investor in leading quantum computing company D-Wave Systems, dubbed the phenomenon of the increasing capacity of quantum computers as “Rose’s Law.”

Rose’s Law for quantum computing parallels Moore’s Law for semiconductor processor development. Basically, quantum computers are already getting really, really fast.

And now that these super-fast computers are no longer confined solely to the laboratory, governments, companies big and small, and investors from Silicon Valley to Wall Street are all beginning to position themselves to capitalize on the use of commercialized quantum computers across a multitude of industries and applications from finance to AI.

Below are 13 perspectives on quantum computing from a variety of investors, startups, corporations, and industry leaders. If we have missed any perspectives that you think are worth highlighting, please let us know in the comments.

The Commentary

1. Vern Brownell, CEO D-Wave Systems and former CTO of Goldman Sachs

D-Wave Systems sells what it claims is “the world’s first commercially available quantum computer.” Vern Brownell recently spoke about his company and the promise of quantum computing, in addition to the potential for this technology to make a practical impact in specific industries such as finance.

“We’re at the dawn of this quantum computing age. We believe we’re right on the cusp of providing capabilities you can’t get with classical computing. In almost every discipline you’ll see these types of computers make this kind of impact. It opens up a completely new tool chest for scientists and developers. We’re at the bleeding edge today. It’s a very exciting time to be in the middle of all this.

“Quantum computers have the potential to provide a different approach to solving very difficult finance problems, but it will take the collective intelligence of many experts to do so.”

2.  Mike Lazaridis, Co-Founder and Managing Partner at Quantum Valley Investments 

Mike Lazaridis (pictured above) and Doug Fregin are the founders of Quantum Valley Investments, which focuses on the commercialization of breakthrough technologies in quantum information science, especially those being developed in Canada. He advocates for the development of quantum technologies and hopes they will help grow Canada’s technology ecosystem.

“The technologies that are being developed in Waterloo [Canada] will shape the 21st Century even more than the digital revolution changed the world in the 20th Century. And just as the discoveries and innovations at Bell Labs led to the companies that created Silicon Valley, so will the discoveries and innovations at research centers in Waterloo transform the region into an area known as The Quantum Valley.”

3. Daniel Lidar, Ph.D., USC-Lockheed Martin Center for Quantum Computing

Dr. Lidar is the Director of the USC Center for Quantum Information Science and Technology, and is the scientific director of the USC-Lockheed Martin Center for Quantum Computing. His insights reveal that he believes quantum computing is at a take-off stage.

“This is a very exciting time. This is not incremental; we’re really starting to see various groups working with superconducting qubits taking big strides forward.”

4. Arvind Krishna, Senior Vice President, Director of Research at IBM

IBM’s quantum computing work is a core initiative within the newly formed IBM Research Frontiers Institute. IBM has built a user interface on its cloud platform that allows users to easily connect to the company’s quantum hardware. Quantum computing hardware is still very capital-intensive to develop so IBM’s quantum cloud computing network is the first move to democratize the use of the technology. Arvind Krishna commented on the significance of enabling access to the technology via the cloud.

“This moment represents the birth of quantum cloud computing. By giving hands-on access to IBM’s experimental quantum systems, the IBM Quantum Experience will make it easier for researchers and the scientific community to accelerate innovations in the quantum field, and help discover new applications for this technology.”

5. Serguei Beloussov, CEO and founder of data security firm Acronis

Advancements in the science behind the development of quantum computers are prompting some of the world’s most valuable companies to invest in practical applications of the technology. Serguei Beloussov provided his take on the motivations behind corporate moves in quantum computing.

“Quantum computing at the moment [particularly] quantum metrology and quantum security are things that are dependent on science so [development] can be very slow or rapid. If this technology actually appears, it will be such a huge change that companies like Amazon, Alibaba, Google want to be in front of that change and that is why they are investing.”

6. John Martinis, Professor at UC Santa Barbara since 2004, Research Scientist at Google since 2014

John Martinis has been researching quantum computers for the last 30 years. Google hired him in 2014 to build quantum hardware chips that could advance their agenda of accelerating the training of AI systems through machine learning. Martinis believes his research will be key to making Google’s ambitions a reality.

“Machine learning will be transformed into quantum learning. People talk about whether we can make creative machines – the most creative systems we can build will be quantum AI systems.”

7. Dr. Vikram Sharma, founder and CEO of QuintessenceLabs 

QuintessenceLabs is an information security company that uses quantum encryption keys to protect digital communications. The company was named one of the top emerging innovation companies by the global Security Innovation Network (SINET), which includes the US Department of Homeland Security and the Home Office in the United Kingdom. The company’s CEO delivered a message of warning with regard to the current vulnerabilities in securing sensitive data, and the idea that effective security will rely on quantum encryption to help mitigate those vulnerabilities.

“Organizations are increasingly recognizing that data breaches will occur and that even if systems are compromised, they need to continue to operate. Strong encryption will be necessary to robustly safeguard data, however, ubiquitous encryption is difficult and challenges still lie ahead. As we expand globally, we look forward to educating new markets on the commercial benefits of quantum-based encryption.”

8. Dr. Serguei Kouzmine, Managing Partner at QWave Capital and President of the Russian Quantum Center

QWave is a venture capital firm focused on seeking out early-stage private companies with breakthrough physics and materials science-based technology. The firm made a $5.6M investment for a minority stake in Switzerland-based quantum encryption company ID Quantique. Dr. Kouzmine detailed his firm’s rationale behind the investment.

“ID Quantique and Quantum Key Distribution are the future of communication in industries where security and confidentiality are mission-critical. This technology and this company exist because of the tremendous opportunity presented by advancements in quantum mechanics. The academic and scientific advances of the past are becoming the real commercialized technology solutions that will change tomorrow.”

9. Steve Adachi, Senior Researcher Lockheed Martin 

Lockheed Martin is currently collaborating with D-Wave Systems and academia to advance the company’s understanding of quantum computing. Steve Adachi noted some of the details that make quantum computers both unique in their potential and challenging to program for real-world uses.

“Traditional computers have bits that are limited to ‘thinking’ serially in zeroes and ones, while quantum computers have quantum bits or qubits that can ‘think’ in both zeroes and ones, and all of the points in between, all at once. Combine qubits with the fact that quantum computing taps into the physics of entanglement and tunneling, and we’re talking about an entirely new computing language. Problems must be written in a completely different way, making it a true problem of problems.”

10. Hartmut Neven, ‎Technical Lead Manager of Image Recognition at Google

Hartmut Neven, leads the Quantum Artificial Intelligence lab Google established to experiment with the D-Wave Systems machine. He spoke about delivering a proof-of-concept for commercially applicable quantum technology.

“We need to make it easier to take a problem that comes up at an engineer’s desk and put it into the computer. There’s a list of shortcomings that need to be overcome in order to arrive at a real technology [including the need to make it ready for Google’s engineers to use].”

11. Professor Michelle Simmons, University of New South Wales (UNSW)

Professor Michelle Simmons is director of the UNSW Centre of Excellence for Quantum Computation and Communication Technology and a well-known quantum researcher. Scientists at the center have recently shown that quantum particles can remain connected after they have been separated so that actions performed on one still affect the other—a phenomenon known as entanglement. Prof. Simmons offered a timeline on the progress and potential for her work.

“Now, we’re aiming to build the first quantum integrated circuit, which we’re aiming for by 2020. Beyond that, we must do error correction, so that if errors come into the chip, you can run multiple processes in parallel to eliminate those errors—and that error correction will take another five years or so. Whether we can control the quantum states and all of that at the fundamental level has now been proven. The big killer is, at what point do we build a processor big enough that it’s faster than a classical computer? That means moving away from small-scale models to integrated processing devices and prototypes. That’s the challenge, and that can be done, we anticipate, within the next decade.”

12. Peter Carr, chair of the NYU Tandon School of Engineering Department of Finance and Risk Engineering

Researchers including Peter Carr, the former managing director and head of market modeling at Morgan Stanley, wrote in a paper that quantum computing can help asset managers solve a difficult problem — wagering on a set of assets over a time horizon that’s divided into multiple periods.

 “… we have demonstrated the potential of D-Wave’s quantum annealer [a specific type of quantum computer] to achieve high success rates when solving an important and difficult multi-period portfolio optimization problem.”

13. Dr. Thomas Conte, professor of Computer Science at Georgia Institute of Technology’s College of Computing

Dr. Conte is also the 2015 President of the IEEE Computer Society, a leading publisher of technical material in computing. His research is focused on how to continuously improve computers. He is a firm believer that traditional methods of increasing computer power are slowly dwindling, creating a need for newer and more efficient ways to compute.

“Moore’s law is really, really, really, really going to end. We know it’s going to be over, because at some point in the near future, we’ll be building transistors out of just a handful of atoms. When we’re down to that level, you can’t go too much further. The gig is up, if you will. So we have to figure out something else to do.”

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But some of our newsletter readers pointed out that it would be helpful to have a primer with a high-level view on quantum computing. If this is you, here we go.

1) What are quantum computers? 

Quantum computers rely on naturally occurring quantum-mechanical phenomena — basically two important states of matter known as superposition and entanglement. These states of matter, when harnessed for computing purposes, can speed up our ability to perform computations on complex sets of data.

The important distinction here is that quantum computers are different from traditional computers, which are binary digital electronic computers that rely on transistors.

Transistors?

Transistors — there’s like billions in your smartphone — get switched from being 0 or 1, on or off, to compute information. Quantum computers do not use transistors (or classical bits), instead they use Qubits.

Qubits are the basic unit of information in a quantum computer.

Qubits can be either a -1 or a 1, or have properties of both of these values, which is called superposition. So, right away there’s a whole lot more possibilities for performing computations.

The most advanced quantum computing technology available today can make use of up to 1,000 Qubits.

Additionally, the Qubit can leverage a state known as quantum entanglement, whereby pairs or groups of quantum particles are linked so that each particle cannot be described independently of the others, even when the particles are separated by a large distance; opposite ends of the universe for example.

Einstein called this “spooky action at a distance” and it’s the theoretical basis for quantum teleportation.

At this point you may be wondering, what’s really in that pipe, Albert?

But don’t worry…

What matters (to those of us who aren’t quantum physicists) is that thanks to Qubits and the phenomena of superposition and entanglement, a quantum computer can process an immense amount of computations simultaneously, and much faster than a classical computer.

2. What are the practical applications of this stuff? 

First, a thought experiment. Imagine a phone book, and then imagine you have a specific number to look up in that phone book. A classical computer that uses transistors will search each line of the phone book, until it finds and returns the match. A quantum computer, because it has Qubits, can search the entire phone book instantaneously, by assessing each line simultaneously and returning the result much faster than a classical computer.

So, apply that to industry problems for which there are a seemingly infinite number of variables and combinations of those variables form a very large set of possible solutions. These massive variable problems are often called optimization problems.

For example, optimizing every airline route, airport schedule, weather data, fuel costs, and passenger information, etc. for everyone in North America, to get the most cost effective solution. Classical computers would take thousands of years to compute the optimum solution to that problem. Quantum computers, theoretically, can do it in a few hours, or less as the number of Qubits per quantum computer goes up, which is already happening …

Steve Jurveston, managing director of the investment firm Draper Fisher Jurvetson, and an early investor in D-Wave Systems, the company widely regarded as a quantum computing pioneer and standard bearer, dubbed the phenomenon of the increasing capacity of quantum computers as “Rose’s Law.” (Geordie Rose, is the CTO of D-Wave, so it’s named after him.)

Rose’s Law for quantum computing parallels Moore’s Law for semiconductor processor development. Basically, quantum computers are already getting really, really fast.

D-Wave is at the forefront of commercial quantum computing applications. But there are some details to take into account. Just listen to Steve Jurveston.

“D-Wave has not built a general-purpose quantum computer. Think of it as an application-specific processor, tuned to perform one task — solving discrete optimization problems. This happens to map to many real world applications, from finance to molecular modeling to machine learning, but it is not going to change our current personal computing tasks. In the near term, assume it will apply to scientific supercomputing tasks and commercial optimization tasks where a heuristic may suffice today, and perhaps it will be lurking in the shadows of an internet giant’s data center improving image recognition and other forms of near-AI magic. In most cases, the quantum computer would be an accelerating coprocessor to a classical compute cluster.”

If you’ve made it this far down the rabbit hole, you’re not alone in thinking, but what about me?

If a D-Wave machine isn’t in the cards, IBM is already offering “the world’s first quantum computing platform delivered via the IBM Cloud,” meant to unleash quantum processing power to the masses, and effectively render the following statement false, yet again.

They are not, and it is not simple.

3. What does cybersecurity have to do with quantum computing?

Modern cryptography (secret codes) relies on a mathematical function called prime number factorization. Basically, large numbers are broken down into prime numbers that can then be multiplied together to get the large number. Classical computers are not good at this and take a long time to crack cryptographic codes based on prime number factors. But, you guessed it, quantum computers are really, really good at it.

Governments all over the world are racing to build quantum computers that can render all modern forms of cryptography obsolete.

In an effort to develop hack-proof communications, the Chinese government recently launched into orbit what is said to be the world’s first quantum satellite. That satellite’s name is Micius. Micius is designed to develop quantum-encrypted communications over long distances.

This is not Micius.

There goes Micius!

Quantum encryption is the idea of sending entangled particles of light (entangled photons) over long distances in what is known as Quantum Key Distribution (QKD) for the purpose of securing sensitive communications.

In QKD, both the sender and recipient measure the polarization of entangled photons they receive, by assigning each photon a 0 or 1. This creates a quantum key, that can be used to decipher an encrypted message.

The most important point is that if the quantum entangled photons are intercepted by anyone, the system will show immediate signs of disruption and reveal that the correspondence is not secure.

Quantum computers rely on the fundamentals of quantum mechanics to speed up the process of solving complex computations. Often those computations incorporate a seemingly unfathomable number of variables, and the applications span industries from advanced genomics to finance. Also, quantum computers are already reinventing aspects of cybersecurity through their ability to break codes based on prime number factorization, as well as their ability to offer advanced forms of encryption for protecting sensitive communications.

Further reading: 

• 6 Charts Breaking Down The Nascent Quantum Computing Startup Ecosystem
• Quantum Computing: 17 Years Of Major Startup Financings In One Timeline
• 18 Corporations Working On Quantum Computing

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The post WTF Is Quantum Computing? A 5-Minute Primer appeared first on CB Insights Research.

In tandem with company investments, the European Union, US, and Chinese governments, among others, are also backing projects aimed at building commercial quantum computers. In the US, NASA, the NSA, and the Los Alamos National Laboratory are all involved in quantum computing projects. And in August this year, China launched the world’s first quantum satellite in the quest for more secure communications.

However, there are only a  small number of private companies in the industry that have been able to raise over $1M, which suggests that commercial application of quantum computers — for both hardware and software — is nascent at this point, despite the hype. CB Insights data shows that for private quantum computing companies, funding is sparse. The overall ecosystem supporting the development of these companies is still emerging.

To inform our analysis (in Exhibit A), we used the Trends tool on the CBI Platform, which analyzes millions of media articles to understand the rate of adoption of emerging technologies and innovations.

Exhibit A: Quantum computing is emerging — but it’s still niche

The first graph above for the term “quantum computing” highlights that the technology is an increasingly talked about trend in the media (the upward sloping blue line represents the increase in the number of media mentions beginning in mid-2015). However, when we compare “quantum computing” against a more well-known trend — “machine learning,” in the second graph denoted by the orange line — it’s apparent that “quantum computing” is in fact a young tech trend, which still hasn’t quite emerged from the Discovery Phase. That is, niche scientific journals and enthusiast bloggers are writing about the technology alongside occasional mentions in some major news outlets.

These folks are early adopters or enthusiasts or innovators, and tracking what they are talking about is a great predictor of the next important technology trend.

Exhibit B: Deals and dollars are scarce except for a few private companies doing all the raising 

Since 2012, there have been fewer than 40 funding deals to private quantum computing companies for a total of $196M invested. Deals peaked in 2014 at fewer than 15 and fell below 10 in 2015. Last year saw quantum computing startups reach their highest recorded level of total funding yet, at $101M invested.

Through the end of this year, quantum computing companies are projected to see far less investment, with roughly $17M put into the category.

It’s important to note that over the 5-year time period, deals to three companies — D-Wave Systems, Cambridge Quantum Computing, and Quantum Biosystems — accounted for 88% of the industry’s total funding. Likewise, in 2015 those three companies took 98% of the total money invested in private quantum computing companies. Therefore, it is possible that one or more mega-round(s) could boost the industry’s funding total through 2016 above the run-rate projection.

D-Wave is the most well-funded private quantum computing company with $137M raised to date, followed by Cambridge Quantum Computing ($50M), and Quantum Biosystems ($25M).

Exhibit C: The ecosystem is growing; albeit around a few companies

The data underlying these images comes from CB Insights Business Social Graph —  a tool for analyzing thousands of relationships between companies and their investors to uncover strategies, trends, industry consolidation, etc.

 Click on the image below to enlarge. 

Key takeaways from Exhibit C (above): 

• D-Wave Systems has been at the center of the commercial quantum computing ecosystem for the last sixteen years.
• Ecosystem connections between companies and investors proliferated in the most recent period from 2012 to 2016 year-to-date (9/23/2016).
• Companies are rising in the ecosystem, including Rigetti Computing, Qubitekk, Cyph, QxBranch, Post Quantum, and Quintessence Labs.
• Mainstream VCs along with other investors are already betting on private quantum computing companies, including Y Combinator, Goldman Sachs, Draper Fisher Jurvetson, etc.
• Targeted funds have emerged with a mandate to invest in quantum computing startups, including Quantum Wave Fund and Quantum Valley Investments.

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Using CB Insights data we analyzed major fundings for private quantum computing companies. Our analysis includes major equity rounds with a disclosed amount raised by a startup, including seed/angel, Series A, or convertible note rounds, as well as unclassified rounds raised by stealth companies like Eagle Power Technologies.

Starting with D-Wave’s first funding round in 2000, the industry has developed slowly, only to see a rush of newer companies obtaining their first financing more recently.

A few startups, like Rigetti Computing and Qubitekk, are embarking on the capital-intensive challenge of building the hardware necessary to create a commercially viable quantum computer (something D-Wave has already done). Other private companies, like ID Quantique or Post Quantum, are offering security products and services based on quantum encryption. Still others, including QC Ware and Cambridge Quantum Computing, are focusing on software aimed at enterprises running quantum computers. And a few, like Quantum Biosystems, are developing niche quantum computing-based applications, such as advanced genomic sequencing.

Below we’ve put together a timeline of the funding rounds to quantum computing-focused companies, to give a sense of how financing to the industry — and enthusiasm for the technology — has developed.

Click on the image to enlarge.

Key takeaways from the timeline: 

• Fifteen private quantum computing companies have received equity funding since 2000 — for a total of nearly 40 equity funding rounds through 2016 year-to-date (9/7/2016).
• The private company D-Wave Systems offers the world’s only commercially viable quantum computer and has customers that include Lockheed Martin, Google, and Los Alamos National Laboratory. D-Wave was the first private company to bet big on quantum computing, and the company has dominated the field since it raised its first round in 2000. It has since raised the most rounds (11) and the most money ($137M) of any private company in the industry.
• There were nearly 4X as many quantum computing funding rounds in the last three years compared to the previous fourteen years combined. In fact, there were 27 disclosed equity rounds between 2013 through 2016 year-to-date (9/7/2016), compared to just 7 in the 14 years between 2000-2013.
• 2014 saw the most activity with 11 rounds. So far in 2016, there have been three funding rounds to the companies Optalysys, Eagle Power Technologies, and Post-Quantum.
• Five companies on the timeline have not yet obtained a follow-on funding round, including ID Quantique, 1QBit Information Technologies, QC Ware, Eagle Power Technologies, and Cambridge Quantum Computing.
• Of companies with equity funding, the most populated market segment is in “quantum encryption,” for secure communications. Quantum encryption companies on the timeline include: Qubitekk, QuintessenceLabs, Nano-Meta Technologies, ID Quantique, and Post-Quantum.

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