What will Quantum Computing Change?

Transcript

All of our systems, [music] every single one of them is at risk when we're in a postquantum world. Most of the classical cryptography community that deals with certification [music] and key exchange protocols knows this very well, has been working on this for years. They already have protocols that they could use if quantum happened [music] tomorrow. Unlike the foundations and communities that govern most of the crypto infrastructure, the Bitcoin community is fairly fragmented and a lot of the big voices are very opinionated and [music] so there the cultural

elements is the more I think important factor in Ethereum. It's a technical element that really makes a big difference. There's so [music] much stack to change. So you put it all together and these road maps um seem to be converging somewhere around 2030 where we're going to have enough logical cubits in play uh to threaten our elliptic curve. Welcome to Epicenter, the show which talks about the technologies, projects, and people driving decentralization and the blockchain revolution. I'm Sebastian and I'm joined by my co-host Brian Crane. So today we're speaking with John Lillick. He's an OG in the Ethereum space. He's been around for over 10 years. Uh he's previously at Consensus.

Uh was uh part of Polygon and has been talking to Brian and I about uh about quantum uh cryptography and crypto for a little while now. And so we wanted to get him on on the show to uh discuss, you know, his thesis for for quantum and how it it could impact the crypto industry. Uh and then we'll also have Stephano Gozo who's a researcher in quantum cryptography. He's a department lecturer at Oxford and he's the co-founder of Neville Local. They're a company that are accelerating real world applications in quantum computing. Hey guys, thanks for joining us.

>> Hello. >> Hello. Hello. Great to see you guys. >> Yes, pleasure to be here. So, before we get into the nitty-gritty about quantum computing and how to fix crypto, um because I mean it is a really super complex topic and I think like we all have a little bit of a grasp about like what it is and how it works. But it's I think you know for myself and a lot of people like super hard to kind of comprehend uh what quantum computing is and how different it is from your regular computing and what kind of applications it can have. Before that, this episode is brought to you by Nosis, building the open internet one block at a time. Nosis was founded in 2015 and has grown from one of Ethereum's earliest projects into a powerful ecosystem for open userowned finance.

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>> Yeah. I want to ask you, John, what got you interested in quantum computing? And what convinced you that this idea of quantum native finance is something that's interesting that we should be looking at that's possibly investable today and that it's something that will last into the future. >> Yeah. No, no, great question. So, you know, it's kind of like I mean, we've known each other a very long time and going back to, you know, the beginning of all this stuff, Ethereum and so on. And I remember many years ago, Brian and I were hanging out, I think we're in Germany with Carson Stooker and a few other people and we were talking about how amazing smart contracts are and like how everything's going to change, etc.

And it was like very exciting and new and we were just I mean just so happy to dive into all this stuff, right? Um, fast forward to today to some extent um I feel a little bit saturated almost like well at least in Ethereum what we're trying to do is just figure out how to rehypothecate things and it's not nearly as cutting edge as it felt maybe you know seven eight years ago. Um and so last summer or last year I guess towards late summer early fall I met Stephano and his co-founder Fabriio and I met a few other uh I call it the special ven diagram. these folks who are quantum physicists, computer engineers, and crypton natives. And that's when I had um like a mini panic attack almost like a existential breakdown moment when in reality, you know, I learned that the

quantum ecosystem is much more dynamic than I had realized up to that point. And I say this all the time. It used to be in the back of my mind that it's, you know, 40 years away. It's going to be this gigantic machine that looks like an alien spaceship that Google builds with the NSA and I don't need to worry about things. But in reality again if you look at the ecosystem there's of course the big tech companies and Google and IBM and Microsoft etc. But then you've got this tremendously dynamic startup ecosystem. You've got you know Saquantum, you've got ion Q, you've got so many of these innovative companies, Oxford Ionics, etc. And so um you sort of then look at let's say the capital markets or the you know venture fund ecosystem and you've got the biggest sovereign wealth funds, the smartest capital who have for a very long time

been investing in this space. Uh you know the UAE for example with their sovereign wealth fund has been investing in global foundaries for a long time. Um, and then you look at the policy side of it and it's kind of like you've got top, let's say, policy makers, politicians, etc. in in top leadership positions, you know, like Governor Pritzer of Illinois shilling Saquantum all the time. They're building this massive facility in Illinois and so on. Um, you know, elected officials, government leaders all over the world and all the major companies. You look at what's going on in China, etc. And you start to realize that actually this is super dynamic. There's a ton of capital coming in. The regulatory and let's say government will is there. The private sector both with big tech companies and with startups is extremely dynamic and

moving very very quickly. And the researchers are just tremendous. You meet some of these people and they're incredible people. Uh very f focused on this stuff. Okay. So what does that mean for us? Well, like in my case and probably many others uh you know watching this, I mean to some extent or a large extent, our life kind of depends on ECDSA. you know, whether it's our um asset base, our career, I mean, even just crypto being a part of your daily life that you enjoy, you know, participating in this ecosystem. Uh, and that, as it turns out, is a byproduct of it's a it's a it's a target of this like incredible ecosystem that's advancing. And I understand there's um maybe contentious views on the actual utility of quantum computing, um, whether it's in material

science or pharmacy or just making logistics better, etc. I I don't think it's so contentious, but in any case, it doesn't matter because our elliptic curve that secures everything. And what I mean by that is, you know, if you know my public key, well, you you're never going to guess my private key so long as I secure it properly. But with this technology emerging, then that becomes a very different, you know, reality, right? Which is to say, if you do know my public key, you can potentially crack my private key. Um, and so putting it all together and what I like to say also is you got to look at all the road maps because it is indeed true that the startups have a great incentive to say things that sound exciting because they're constantly raising money. But I don't think DARPA has that incentive or

TI which is kind of like the NSA of the UAE. Um, the SEC just put out a a pretty significant bulletin. um you look at you know black rockck increasing or you know sub substantially um enhancing their quantum risk disclosure I don't think Google or Microsoft has a re has a reason to pump things unnecessarily Nvidia etc so you put it all together and these road maps um seem to be converging somewhere around 2030 where we're going to have enough logical cubits in play uh to threaten our elliptic curve so that's kind of yeah the realization I had last last summer, last fall. Um, and Stephano and Fabitzio at Never Local really helped me

understand a lot of things and and for that I'm very grateful. Yeah, I mean I'm I'm a bit like you I guess but I guess earlier in the in the exploration of this. I mean I remember like just having some highlevel thing of like oh quantum computing could break cryptography and I remember actually I think I bought some coin once that was called quantum resisted ledger that was like you know probably like six or seven years ago cuz I was like oh that's and then never heard from it again until I think I really spoke with you. Maybe it's worth just explaining to people that risk very briefly. Right? So the risk of you know today right people are familiar they have a seed phrase right in many cases and then the seed phrase you can derive

a private key from that and then with the private key right you can sign a transaction and and then the transaction basically is oh the private key is associated with a public key right and then you can you can let's say have sort of I don't know one bitcoin associated with a public key and with the private key you can sign that transaction say hey I want to transfer that bitcoin and somewhere else and then someone else can go and take that transaction and they can cryptographically verify that okay it is really that private key that's associated with that public key and you know that's that's what the whole thing relies on right the whole uh crypto space so can can you just uh explain how how could quantum computing break this >> yeah I mean the the way I like to say it

is okay by the grace of God if I'm lucky enough tomorrow morning to wake up still be alive two things will be true right the sun will be shining and my Bitcoin coin or my ETH or whatever will be secure provided that um I manage the private key in like a safe fashion. And so for example, you get crypto steel, you put your seed phrase on something like that and you put that in an underground vault somewhere in Switzerland that you know is very hard to access and you take safeguards to ensure that um your private key or seed phrase is never in any sort of digital form that can easily be stolen from you like you know people who have in the past put I don't know these files in their email for example. So, as long as you take those safeguards, then basically tomorrow morning when you wake

up, your Bitcoin will still be there. However, um and and it'll be very very very hard for anyone to like determine your private key based on your public key. Okay? Even if you take all the classical computing in the world today, you put it all together, it'll still take billions of years. And that is the thing that we rely on. Okay? Now what we're talking about here is basically a massive threat to that security assumption that gives us all comfort in the event that this ecosystem continues to develop to a point where we have sufficiently powerful enough quantum computers that can run certain types of algorithms wherein uh just with your public key in a very short period of time maybe on the order of hours or you know minutes or you know even less in the future again contingent upon this

technology maturing and this is like a hard problem I'm not saying it's a piece of cake. But if that state materializes, then you don't have that comfort anymore. Even if you take very strong precautions to protect your private key, it can still be basically calculated by these computers and somebody or some malicious actor could then get your private key and move your Bitcoin or ETH or USDT or whatever. That's >> cuz you basically just brute force, right? You'd say like, hey, I'm going to like get a transaction and then I'm going to make up a random private key and I'm going to create the sign the transaction of it. I'm going to check does it verify and then well it probably doesn't. So I'll try another one. I'll try another one. Now normally with a normal computer this will take like

forever. Uh but with a quantum computer you can do that fast. Is that's kind of the idea. No, >> that's the issue. Correct. We are relying currently on you know um primitives, cryptographic primitives that are susceptible to this type of computation provided that you have a sufficiently powerful quantum computer. And uh [laughter] that assumption is the thing that makes us all sleep at night and gives us the confidence um to build a multi-t trillion dollar ecosystem. And if that confidence is shaken or threatened without, you know, us taking the kinds of measures that we need to take, then exactly what you described is uh the problem.

>> So now I'd like to hand it over to Stephano and uh maybe let's get some clarity on quantum computing. What is quantum computing and how does it enable uh you know basically what John is is talking about which is the ability to brute force a private key in a way that you can't do that with a regular computer. >> Yeah. So the the question about the nature of quantum computing itself is is quite interesting. There is a sense in which um physicists fundamental physicists would say uh quantum is the real way the universe computes and it's just that our classical computing has been built upon an abstraction that is very stable. So we can have trillions quadrillions of bits very cheaply. We

can do trillions of computations per second in our large machines. Uh, and we do this with very little fault. There's few errors. Errors are very rare unless you're in hostile environments such as space or under certain sort of ruggedized conditions. Well, ordinarily our current civilization relies on the uh realization that if you engineer matter and electricity, so matter and energy to interact in a certain way, then it's very stable and it can be used to do lots of things. That's great.

Underneathed though, the world the rules of the universe are quantum. So quantum is the most successful physical theory we have. Uh by far the most successful physical theory. It explains almost everything that we want to derive. It might be hard to write down exactly the explanation but in principle people believe that up to some details it could be used to do so. So really quantum computing is mostly an engineering effort. It's pushing our ability to make matter and energy so typically photons but there is various ways to do this uh do things for us. It's um the original view um by the early uh fathers of quantum mechanics was that really what

quantum computing does is give us control over reality at its most fundamental level. So in that sense it's the most general description of quantum computing is you have very fine grain control over the way that nature works in some really small settings some really low energy settings superconducting circuits cool near absolute zero individual atoms individual photons with enough precision that the noise doesn't drown out the entire computation and makes it useless.

Now what people did over the years that was the original view of what quantum computing should do and for many years I think 60s7s uh people just thought okay one day we might have control over nature and we will do you know what physicists want to do we will predict the outcomes of very complicated um physical experiments without having to do them. Uh in particular we can understand chemistry and advanced materials things that we can't simulate. And that's some people came from maths and computer science and started realizing that really some of those fundamental ways that matter evolves can be used to do some interesting computational tricks. Uh one of the most famous ones is Shor's algorithm. Uh

Shor's algorithm does not uh really factor numbers in its entirety. There is a very specific subpro of number factoring. Number factoring is considered hard. It's the basis of RSA and one of its generalization is the basis of elliptic curve cryptography which ultimately brings us to crypto. But really the observation by some very clever people is that there is a little core inside the problem. There's one sub routine which relies on a specific property of numbers of natural numbers the way they multiply. And if you could do a certain kind of FIA transforms the same that we use to u change and clean up signals. It's what this podcast will

use to clear up our voice track in the end. a very basic piece of technology, but if we can do some of it fast, exponentially faster, then we could factor numbers really easily. And it turns out that quantum computers are very good at doing that. It's part of the natural evolution of quantum systems to be able to perform some of these transformations. You put them in the right configuration and by themselves, they will do it. As long as you can control the revolution without too much noise, then that's what the machine does. And this observation was then turned into a larger algorithm that can factor numbers very large numbers with thousands of digits. That's Shor's algorithm. And then derived algorithms that actually factor points on elliptic curves which are the algorithms that give us quantum risk today. So

ultimately like quantum computing is is just about controlling physics which is a fantastic endeavor in itself. one of the byproducts and I think by far the least commercially interesting to these companies they really don't I mean they say they use it as a benchmark quantum computing manufacturers but that's not really a product they will sell they're not going to go and say here I'm going to factor some large numbers for you they want to sell chemistry applications materials applications pharmaceuticals applications optimization in some cases um but one of the byproducts that was discovered in the '9s is that indeed u you can use it to break the primitives that we use for all of our cryptography today. And maybe we can go into the specifics of why this is relevant to

crypto in in a follow-up question. >> Yeah. Yeah. We definitely want to go into that in a bit, but I would love if you could expand a bit more on, you know, you mentioned like material, chemical, I like lots of different like let's say this quantum computing, you know, it comes about, what do you think the impact is going to be on the world? and um you know maybe in 5 years, 10 years, 20 years and and on different different areas of society like how how will normal people feel like wow the world's so different now all of a sudden because like quantum has like just changed things there are many fields um I I think it's worth making a distinction between quantum computing

which today really means universal quantum computing which is a huge multi- like multihundred billion dollar field that has been developed for the past 10 15 years. Um and quantum cryptography which is a younger field that is currently in its early phases even though some of the companies have recently exited for a few hundred million valuation. So that's um there is already quite a lot of investment but I would say in terms of what we could do there it's we're still quite early on. So going to quantum computing which is what most people talk about uh these days there are maybe three or four major areas of applicability that would bring a direct impact on people's lives. It's

not going to be in 2030. It may be in 2035 2040. It really depends on how quickly they can reach the correct scale. There are applications. It used to be that they that some of these companies sold applications in terms of enhancing AI uh and enhancing optimization. That was the big hype in like the early 2020s. Uh that is no longer believed to be the primary revenue stream for many of these companies because optimization problems to be competitive with current classical optimization techniques require hundreds of thousands of cubits logical tens of thousands of logical cubits. the number of variables that you'd have in one of these uh problem solution um techniques that we use today would have to map

essentially to cubits and that is that's a scaling that will take a while. Um in terms of AI there used to be a speculative uh belief that there could be an advantage in using quantum systems for quantum AI and that's been scaled back a couple of years ago. There's results that say that yes, but mostly for physics problems, not for general purpose problems. And also, we are literally in the AI boom. We have like trillion dollars in data centers being built on a weekly basis. And it's very hard for quantum computing to compete with that in the short term. Maybe in the long term it will, but in the short term that's that's difficult. Where it really seems that quantum computing will have a direct immediate impact is applications where you are trying to

simulate some complicated physical system that doesn't quite simplify well with existing techniques. So if you want to do material science today or advanced chemistry today on fairly large atoms or fairly large molecules, think nuclear chemistry. Nuclear chemistry involves really complicated atoms. Uh they are very heavy. they have lots of electrons. They get to the point where the electrons behave relativistically. You need to take into account the fact that there's so much energy concentrated in the atom and they're so fast. Um the quantum computing revolution in that sector will be having machines that are able to just reproduce a physical system. You make like a digital twin of

a quantum system and then you configure the machine to evolve the system like it would in real life under real conditions. more slowly typically because you want to observe it or you want to ask certain questions about the evolution like its energy like the strength of certain bonds but you can reprodown because it's made of the same matter. The slowdown is there's a factor of course it's slower because it's the machine you need to control it. It has fewer degrees of freedom, but it's not exponentially slower. And this is where it will really make a difference. When you have large molecules and you want to study interesting quantum effects that

make them activate in an unexpected way, say metal organic frameworks in carbapture. That was one of the early examples people wanted to study. That's something that quantum computers with sufficient degrees of freedom could do easily. And so that's where I think most of the money will go in the early days because they don't require tens of thousands of logical cubits. Even if you have a few thousand good logical degrees of freedom, that is so much more than we can simulate with our classical techniques that it will already enable us to do more chemistry, more materials, more um more medicine. So that's I think that's where it will have the earliest impact, but it's not going to be something you're going to have on your desk anytime soon.

>> Can you explain what is a cubit and a logical cubit? I think that distinction [clears throat] needs some clarity. Yeah, I think that's one of the big controversial points in in corporate announcements these days is the how many logical cubits do we have? Uh the they're all abstractions. Maybe that it's worth starting with that. There's no such thing as a cubit. But in there's no such thing as a cubit in the same way as there's no such thing as a bit, right? There's not one bit. There are many technologies that when obstructed a certain way give you something that behaves as a bit. Typically, you need some some physical system that has two well- definfined states. Uh, and you have to have some way of moving it between those states, putting many of these systems together and change them

together. That's how bits work. Like you have many technologies that implement them and all you need are some basic requirements. Um, similarly, a cubit is an abstraction. Quantum systems have a lot more degrees of freedom. But what you do is you take a system which has two degrees of freedom like two sufficiently separated energy levels or a photon that has like polarization in two orthogonal directions something like that. Um and as long as you can modify those degrees of freedom in a practical way and that's where all these technologies come into play. Not everything is easy to change. Then you have a cubit. Like a cubit is a physical system with two sufficiently well- definfined states which you can modify at a quantum level. So without making it

collapse into one of the two states but maintaining the all the various other states that are physically possible. They're called superpositions typically. So that's really the physical side of things and I think most people in quantum computing or quantum information are happy to leave that to the hardware people like somebody comes up with a new idea for quantum hardware. The first thing they do is tell you how to build cubits and how to perform certain basic operations on cubits and then everybody else uses that as the basic abstraction layer and builds on top of it. Um, so there's really like the hardware people deal with making the like secret sauce, the basic building blocks, and then

people build algorithms on top of that. But then there's the question of are these cubits sufficiently stable? Can you modify them without introducing too much noise, without losing too many of them? If they're photons, photons are hard. I mean, photons are great because they travel for really long distances without interacting with anything else, right? We have photonss from 13 billion years ago. We have photons from the time of last scattering in the universe and we still see them as they were but they're very hard to catch and they're very hard to do operations on because they travel very fast and so every there's always a challenge. All of these architectures are a compromise between how many operations you can do what kind of error rate you get and and so on. If you want to get from sort of you have your let's say you have your Google chip

right it has a bunch of cubits on it the hardware people made them and there's maybe 100 or 200 of them and they're very noisy like the operations very quickly disturb them after a few dozen operations you lose pretty much every information after a few hundred operations or even a few thousand that's not enough to do anything useful and so what you do is you say okay can I take all of these like a 100 cubits and take a slice across their space that's robust to noise. Like I create an error correction code but a quantum one. So I don't just check for the errors. I really try to look at the whole space of these 100 cubits that has 2 to the 100 dimensions. It's humongous. And I try to find a two-dimensional slice. So a tiny

tiny slice which is really robust to noise where I can easily correct errors. I can bring the states back to this slice very effectively. And this is the uh foundation of quantum error correction. And one of the key results in quantum error correction is that the moment that you hit a minimum threshold of um accuracy. So you your operations go below a certain error rate then error correction starts improving itself. Uh so there is a point at which if your error is higher than this threshold then the error correction procedure introduces more errors than it can correct and so it will ultimately fail.

uh and there's if you're below this threshold then the error correction will remove more errors than it itself introduces and so you can just make your computation longer and correct errors forever and it's called the threshold theorem and this is the basis really of quantum error correction now this is what Google trusted when they say that they almost got one logical cubit what they mean is that they are close enough to the threshold with their hardware that soon I mean a year two years but soon enough they will be able to perform correction faster than errors accumulate. But there are other ways of making these error correction codes and some of them don't really correct uh all the errors, but maybe you have 30 physical cubits and you have a code that

corrects five errors out of 30. That makes it look like you have 30 logical cubits or 25 logical cubits, but really you don't. Not in the same sense as the Google cubits do. And so there's a lot of uh subtleties in how people count this. The real question is ultimately can you make these logical cubits these sort of error corrected abstractions in such a way that they individually behave as single cubits would with no error or exponentially small errors when the answer to that becomes yes that's when you get the logical cubits that are considered in these shores algorithm estimates so people say how many logical cubits do I need to run shores algorithm the answer is typically a few thousand

Uh and then you have to think okay a few thousand logical cubits really mean a few hundreds of thousands if it's one to 100 a few million if it's one to a thousand really depends on the architecture. Um but you have to multiply by some large factor to estimate how many physical cubits these companies have to manufacture before they can run these kind of schemes. But then there are some additional um improvements that people have made over time. you can connect smaller modules and the way that these cubits are put together can be made more performant than just building a large chip. All in all, the the strategy is always trying to figure out can I build enough physical cubits such that they have a sufficiently low noise and I take enough of them together and I can collapse them

into fewer logical cubits but they're really really good. >> Yeah, this is one of the things I say for you know us regular kind of crypto eugens who are you know thinking about this stuff. There's certain checkpoints, things you look for. Okay. Um, error correction is one of them. The Google will news was really big. I don't know that everybody really understood it. Stephano explains it very elegantly. But when we get to that point, um, that is one of the key requirements and I think it's going to be one of the massive accelerators of our ecosystem really waking up. I mean, it's a critical component and, uh, everybody's working on it. So John, earlier you we were talking about um the the state of quantum readiness in the crypto space.

Like by your estimation, what does that look like? Um how many projects are taking quantum seriously in order to prevent some of these these attack services that we that you described earlier? And um yeah, what's your what's your sense of you know, how this how the space is treating or addressing this issue? Well, let me preface by saying I have a tremendous amount of respect for all the researchers, Ethereum Foundation, Salana, everywhere near, etc. Uh, I think those are wonderful people. Um, however, in my opinion, just my opinion, but I think we're in a woolful state.

Um, and I'll give you some concrete examples. Um, on the Ethereum side, you know, the whole Veral program just got cancelled not too long ago. And actually Stephano and Fabitio uh Stephano's partner for many years was you know telling these guys hey you're going to have to redo the plumbing eventually they figured it out but you know after however many years however much money and more importantly precious research you know research your time. So even just getting blockchain networks and ecosystems to understand this risk, take it seriously and invest accordingly. Um up to this point I don't think that's happened si you know to to sufficient scale not even close. Um we are starting to see some early indications. Um let me give you another sort of simple example

and this is just my you know dummy DGEN math here but let's say we have a $3 trillion ecosystem. Let's say you abscri ascribe a 1% chance to I don't know the ionq road mapap being accurate um which calls for 2500 logical cubits in 2028 and let's assume that results in 100% loss or close to it okay um in terms of crypto market cap because I think that if confidence is shaken in our elliptic curve um you know capital is going to flee very quickly okay rationally you sort of take three trillion times 1% times 100% loss we should be spending 30 billion a year right now on this. Okay, we're not spending anything. You look at, for example, Bitcoin, and there's a

guy named Hunter Beast, great guy. Have a lot of respect for him. Um, and he's leading the BIP 360 initiative and, you know, a few other people as well in the mix. Um, you look at a guy like Jameson Lop. Jameson Lop, I like to say, is the most constructively correct Bitcoiner I know. I mean, he's technical, he's rigid, he focuses on security. I mean he's a great Bitcoin ambassador and he's come out over the last few months you know at conferences and so on um surfacing the risk and I think talking about it in a very articulate and truthful manner and you know it's no his it's no secret right I've had lots of fights with bitcoin maximalists over the years but a lot of bitcoin maximalists have turned into like fundamentalists where everything is a scam and they just reject everything and I understand

there's utility in that I mean it's it can be an important thing because you know you just sort of hold your bitcoin and you don't get duped into like rug poles with all these other meme coins and so on. So I get that. But when you just outright re reject everything including like these technological like innovations uh where basically you call physicists and serious people grifters um what happens is it lowers the readiness potential for Bitcoin itself as a community to accept what's going on and take it seriously. uh and so you know there is a political or let's say community-based component to this because it's not like banks or financial institutions where I mean they can upgrade in a much let's say more simplified path because they don't have

decentralization they don't have coordination problems like we do or coordination costs so even getting communities to wake up to this is is hard and has been hard there is some let's say progress recently and then when you get even deeper into it and you sort of dig through all of their road maps and implementations and current, you know, working groups and so on. There's very little I have to give credit to the Ethereum Foundation. They just had an event in Cambridge. I I tweeted about it and stuff and it was really excellent. Vitalic, you know, is signaling um their intention to be quantum ready, Justin Drake and some others, Antonio who leads the Ethereum Foundation as as their lead quantum researcher. Wonderful guy by the way. Um so there there's things happening there

on the Salana side as far as I understand. I talked to Matt Zorg, great guy, VP of technology there. They're prioritizing BLS. Um, my understanding the current state is is very hard. We're not really known how to aggregate postquantum signatures, certainly not at the scale that they would need and BLS in any case would need to be redone. Uh, I can understand why they're going in that direction now in terms of performance and obviously that's Salana's edge. But if you have to then redo the plumbing a couple few years from now and at the same time the point Stephano just made about error correction we start to see these headlines coming in of like these you know tremendous innovations you then have to pivot very quickly and the problem there is you would have lost

precious time uh and you go down the line and you know I I mean not to denigrate Justin Sun in any way or anything like that I mean I think he's a great businessman but like Tron isn't exactly a bastion of technological innovation. Exactly. And yet it hosts what hundred billion worth of stable coins and so on. Right. So um the problem is quite complex. You look at Ethereum and this is the analog I like to use as far as our L2 uh ecosystem uh you know path. I mean when when we launched Ethereum it was a,024 shards of the L1. We're going to have this world computer and so on.

But the reality is that proved to be very hard. And then a couple few years later we get you know maybe one shard and now this kind of like L2 ecosystem and so on. And even that's taken seven or eight years and there's a lot of controversy around how efficient you know that technological kind of delivery challenge uh has been executed against. Okay. So this is hard. It's complex. Uh it requires users to take action. It requires a lot of social coordination across multiple networks. And I say this that we're all in it together. You look at Bitcoin. Most Bitcoin price discovery is against stable coin pairs. Like not a lot of USD is actually traded against Bitcoin. Where do all those stable coins live? They live on other networks. So it's all intertwined and I think when you look at it in aggregate um you know

our ecosystem is just at the genesis of taking this seriously wolffully underinvested in this space and uh you know half of the people in our communities think this is all a grift and a scam. So um I'm not super optimistic at the moment to be perfectly honest uh with respect to our quantum readiness. So let's just um I mean the scenario we talked about beforehand, right? Where basically someone can calculate you know someone who doesn't have your private keys can create a transaction to basically move your bitcoins to uh somewhere else right to their own address. Um, now I mean that of course I mean seems to I I guess there would really be a kind of a flip,

right? Where like from one day to the next basically the entire network becomes like untrustworthy, right? Because like someone could move all of like Satoshi's coins and your coins and my coin and why is anyone going to buy any Bitcoin then if they can just be taken away again, right? Like of course that also brings up the question, oh like how can you benefit from that as an attacker? Well, probably the best way would be to just short Bitcoin, right? If you you could go like very short Bitcoin on some like traditional financial system options, short the ETF or something, I guess. I don't know cuz like stealing the Bitcoin is kind of pointless. No. Uh >> I I >> depends if you're caught, >> right?

>> It depends if you're caught, >> right? If you of course if you are early, right? Like let's say uh you you you have the keys beforehand and you can steal some and you can sell it and you can do it before people realize what's going on. Then then maybe there's a high uh yeah and you could you could probably do some sort of data analysis, right? You're going to go try to uh steal some that people hopefully will not realize that there's Yeah. Because they're not paying attention. I mean of course you can Satoshi's coin although people will watch that.

>> Yeah. I think that's that's what you say when okay I think John is is also sold on this scenario. You wouldn't move them immediately. You you do this in a secret way. You do it on coins that have not been moved for a while. Probably nobody would notice and it would be one of those news. A whale finally decided to move their Bitcoin. Is it quantum? Is it not quantum? Do we know? I'm not sure people would immediately suspect it. And you could go on for quite a while and you could make quite a lot of money outside of the ecosystem in the meantime. Uh and then >> long you could really go with this, right? Because I mean maybe you think no one is noticing but then like you don't

really know, right? And then it's pretty quick. I mean it >> Well, let me let me let me paint you another picture in terms of a state actor. And I wrote this article. It's an open letter to JD Vance. I'm sure he'll never see it. He was at the Bitcoin Vegas conference. He said, "Okay, putting Bitcoin into the US economy with all these ETFs and all these financial products is an advantage over China because they're not doing it and China's never going to embrace Bitcoin and crypto because they're afraid of capital flight and they have these control mechanisms." Okay, I accept that is generally true. Um, however, if you accept the potential for, let's say, another big pump in our ecosystem, we get to 10, 15, 20 trillion. Now there's so much so many trillions leveraged into the US economy with Bitcoin as the

underlying with all these stable coins etc. For a state actor, Bitcoin becomes a military target. Now here's the thing. Bitcoin will not in my opinion warrant a military response or any kind of day taunt. Okay? You don't send a nuke into the US because you can be sure they're going to send a thousand back at you. So there's a day taunt and nuclear attacks don't happen for that reason. Um Bitcoin is not like the CIA. It's not the Federal Reserve. nobody owns it. Uh and so it becomes the perfect military target. In that scenario, as a state actor, what you're attempting to do is cause damage into your uh rival or adversar's economic system. And if we have trillions leveraged into our system and now Satoshi's coins, so this is an example of wanting to do a quantum

attack, not necessarily to profit, but to cause maximum let's say cascading waves of uh liquidations and so on and in order to cause economic damage. I can imagine a scenario where you know the PLA assigns their quantum cloud to the Lazarus group who obviously you know has been very uh adept at crypto hacks for a long time now for this purpose. Moreover, when you look at other networks, Ethereum hosts all the stable coins. Excuse me. Ethereum is a nonprofit foundation in Switzerland. Okay, Switzerland is not going to go to war with China or North Korea or anybody else over an attack uh to that kind of an entity. Same thing with Salana and so many these other things which are constructed as offshore nonprofit foundations. Okay, there is no day tant

um element to you know um basically preventing an adversary from causing economic damage as we continue to lever up this stuff into our economy. >> No question. I think if the capability becomes available, people will use it. I mean for whatever motivations they have. But is there I mean what is the way to deal with this? Can you can we somehow upgrade let's say Bitcoin or Ethereum to prevent that risk? And how would >> some of it some of it the the reality is that some of the risk comes from attacking addresses and getting you know compromising the part of the stack that's the cryptographic at the station.

That's where you sign transactions. That's where you sign operations on smart contracts. uh that can be fixed because what's happened until now is recorded on the ledger and as long as we switch to quantum resistant cryptography we can prevent it from happening in the future. There are challenges there which we can discuss. It's not as straightforward as changing the public certification stack that we rely on for internet or or any of our secure transactions although that's also non-trivial but people have talked more about it because crypto >> resistant is like >> no >> oh >> no sorry yes >> oh yeah okay this is not crypto this is

everything like you connect to a website you use https that's how these days you rely eye on the fact that there's not going to be somebody in the middle altering your transmission. Now, once there's the initial phase really of the uh of the communication, which is where you establish a symmetric key, um that is done by using certificates. So, things that rely on public key cryptography that are quantum weak. If you get into that stage, then that's it. You can play like you can play replays. You can put yourself in the middle of a conversation and pretend to be both parts. You can do whatever you want. Our entire technology relies on this.

Updates to Windows rely on this. Updates to anything actually rely on this. Signatures are like digital certificates and the chain of certifications that we have created are the basis for the entire world communication network. Um, and so that's all weak. >> So why it's easy to crypto? I mean, I it's when when John and I were talking about this a couple weeks ago, my argument was that like, you know, crypto in in comparison to everything else that can be impacted by this is such a minuscule kind of part of the economy that that that affects a minuscule uh portion of the population when in reality it's like all of our systems, every single one of them is at risk when

u when when we're in a postquantum world. >> Yeah. So if you think about it from like a let's say a wealth perspective first of all right and I mean I guess a a lot of people here probably a lot of people listening right they will have a lot a lot of their assets in in crypto so if that just gets wiped out to zero well that's pretty significant event >> it is pretty significant but I mean I guess like chaos in the streets starts happening much earlier when like everyone's bank accounts don't work right or like um you see what I'm saying like I mean there's like much more visible kind of risks to the entire global economy for most people if their coins are gone,

>> right? >> I think the the reality is that there's really three well two main reasons why this is different. Um the main one, the really big one is a cultural one or political I I don't know how we want to call it, but let's say cultural. Most of the cryptograph classical cryptography community that deals with certification and key exchange protocols knows this very well has been working on this for years. They already have protocols that they could use if quantum happened tomorrow. They would be able to deploy the changes to the browsers. They're already experimental uh features of some of the major browsers. You can enable it yourself if you want to try it. they wouldn't incur

a huge computational cost blah blah blah blah blah. There's a lot of things that they've already done. Unlike the foundations and communities that govern most of the crypto infrastructure, the older more traditional web 2 infrastructure, let's say, is handled by people that already took this very seriously and already like plugged the holes to some extent. It would be problematic if it happened from one day to the next, but you have centralized authorities. you have banks that would just refuse to transact for a day or something like that. Um, but really two, okay, this is a cultural problem. We could solve it tomorrow. We could all agree that quantum risk is real and tomorrow we do something. What do we do? How do we

switch the cryptographic primitives used by web 3? Because web 3 unlike web two made its most of it maybe not its entire fortune but most of it from very clever new applications of cryptography. Some of these are really really sophisticated like it's elliptic curve cryptography used to do lots of fancy stuff like zero knowledge proofs. Now not not all of them are ECC based but some nice ones are. um we built an economy on advanced cryptography and therefore there's a lot of primitives that people from outside web tree don't really care about like they've not worked on it because they don't need them and so it's up to the chains that use them to figure out how they're going to replace them in a

quantum resistant way. This is what the Cambridge workshop for the Ethereum Foundation was about. It was figuring out which parts of the stack need changing, what are the candidates and how we can do it in a way that makes everybody happy. And so even if everybody suddenly believed that quantum risk is real and they understood the potential impact on the economy h even if they all agreed to do something which is super hard because the entire point of decentralization is that there are so many different voices and so many different opinions that have to sort of coales for something to happen. Even then it would be challenging to change some of the infrastructure. But for example for Bitcoin most of the risk is in one place. It's in the attestation part. Uh it's in the signatures. We

could agree to pick one of the new schemes. Um and that might be relatively easy. There are there are various mitigations and there are proposals that have been put forward that are really uh well studied that would fix this in one way or another. But the problem there is the Bitcoin community is fairly fragmented and a lot of the big voices are very opinionated and so there the cultural elements is the more I think important factor in Ethereum it's a technical element that really makes a big difference there's so much stack to change >> so my question here so let's say if we look at Bitcoin um so is what would be needed

that you know the core developer makes some changes to the Bitcoin protocol and maybe the wallets and the miners obviously have to like switch to new software something like that or is it something where you know you then also need to have you know the individual Bitcoin holders you know kind of take action and and like let's say for example transfer their coins to you know some kind of new accounts that are now quantum proof. Yeah, you'd have to depends on the proposal. There are proposals that are less invasive, but to some extent at least some of the users would have to make active migration.

That is the biggest >> actively migrate and if you can steal the coins of those who don't actively migrate, I mean that's like almost impossible. >> How do you like imagine it uh from a from the point of view of how the game would look? you change the let's say that everybody agrees we have some new system however it is some new system that we put in place at some point uh we fork Bitcoin we patch Bitcoin uh everybody migrates now we have a new authentication system there's a new cryptographic at the station that is quantum secure quantum resistant how do you make sure that you migrate the wallet contents from the old system

to the new system whatever ever you do somehow each wallet owner has to establish that they are the owner of the new system. Now for many of the accounts this is doable by relying on something which is already quantum resistant. For example, the derivation of the private key for many modern wallets comes from a seed phrase and you can build proofs that you know the seat phrase. Coming up with like going back to the seat phrase from even the private key is hard. And so in some derivation branches, but they they exist. People use them. And so you could in principle say, okay, if you want access to your

funds again after the fork, you produce a proof that you knew the that you knew the seat phrase without revealing the seat phrase because that would break the security of your account. Um, some proposals exist. I think Vitalic backed one sometime ago for Ethereum that would do something like this. U that's fine except for the earlier accounts that were not based on this particular mechanism. And for those what do you do? Do you freeze them? Do you return the coins to the ecosystem? Uh, some of those may legitimately be dead and never used, and so taking them out of circulation might be a way to handle it.

Um, the threat that they would have to be burnt might be enough to push the original owners to do the migration, but at the same time, for some of these people, revealing that they are the owners of those coins is a problem. and they do have a private voice in the process and they might just oppose it or there's the legitimate concern that this might fail in some way or it might impact some people too heavily that have a stake but not a visible one in how the ecosystem is updated. So it's it's challenging at some point something needs to be done to link the old the old proof to the new proof because the proof has changed and anybody otherwise anybody who has a quantum computer could

just say oh yes I am I am Satoshi hello um now probably that wouldn't be believed or it would be subject to huge scrutiny but there are many such cases not a huge majority not even I don't think it's a large minority even but enough that we are still discussing how to do this. >> There is a privacy uh component to this as well that I think uh I certainly didn't realize and it's this idea that you you can harvest large amounts of encrypted data doesn't have to be crypto. It could be anything. It could be your signal chats, could be your, you know, encrypted vaults on cloud storage and that when quantum computing is here that we will be able to decrypt those.

And um John, you've you've talked about um allegedly governments and and sort of nation states uh acquiring and harvesting tons of encrypted data for potential decryption later. How big is this threat and what do we know about it actually happening right now? >> Well, it's a great question. So, let me start by saying I'm a big fan of Monero and Zcash and, you know, Zuko and and so on and all those communities, okay? I had a conversation on Twitter with Fluffy Pony recently. I guess he goes by just Ricardo now, but I always think of him as Fluffy Pony. Great guy. And I asked him point blank and to his credit, he was very upfront. Um, they have a road map, okay, for postquantum.

However, it cannot account for the past, okay? So, if you are using Monero today, it's broken. In other words, and I'm not saying, and look, privacy is normal. I'm not saying it's not. I'm saying that it's also easy to infer that probably some people are using, you know, something like Monero in an illicit way. Um, and it's no fact, it's no secret. I mean, this isn't me saying anything controversial, but the dark market is favoring Monero. So, anyone who's using it right now for anything illicit, uh, tax avoidance, selling drugs, whatever, they don't have a way to offiscate the past, meaning that in the future when they go postquantum, the past can be ultimately revealed. Okay? Okay, so in a sense, Monero is already broken from that standpoint and and this is coming

straight from Fluffy Pony. I mean, he tweeted at me and I could I could send you guys the link later and I read their stuff and everything and they have a great road map and so on, but this is an issue, right? So, um, basically it's very simple. All of the encrypted communications transactions etc. happening now, which are indeed currently safe and secure, that can be harvested. And I'm certain I mean I think it's preposterous to think it's not being harvested and then later it can be unlocked and revealed. Okay. So that is a big problem that currently uh exists. Um I think specifically as it relates to this scenario I just described for certain kinds of transactions. Um I'm not sure that people understand this issue yet but um that is another kind of meta that I

think will uh enter into the ecosystem uh at one point um in the not too distant future. I mean if I can add one more point to that um this is a problem again it's useful to compare the issues we have in web 3 with the issues that exist in the broader economy in the broader internet in in web two technologies in what we use today for everything. It is a fact, an established fact that certain large government organizations have been harvesting lots of data, but that's mostly data that's in transit. And so, while it is easy to harvest to some extent for somebody who is really tapped into most of the global nodes, um it is not necessarily easy to harvest it in such a way that you have

all of the pieces that are necessary to ultimately decrypt it. We've been using sort of forward secrecy for a while uh in classic uh web two communications. Uh there's this problem has been known for decades. Um it wasn't patched immediately but it was patched a while ago. Uh there's also a lot of private data though and that private data is technically somewhere um some data center at uh if you're a bigger government organization perhaps you can compel the company to give it to you perhaps you can't. Some of these companies are compliant. Other companies make it a business point to not be compliant and so they will try their darnest best not to make that data

available in such a way that it can be easily decrypted. There's a challenge. There's a cost associated to doing this at scale. In classical infrastructure, we built an entire ecosystem where we keep all of our data on a large database that's distributed across tens of thousands of nodes for the very purpose of making it available to everybody at all times. It's literally the way we structured our applications in Web3 that anybody can get the whole history of Monero from the very start. In fact, they have to if they want to run a full note um from the very start and they can just, you know, keep it. All they have to do is ask someone else who has it and they will get picked. Uh so it's very easy if you have a quantum computer and

you're a private company and you're not, let's say, a large government organization. It's really easy to at least do this. You can very much take a large sufficiently powerful computer uh 10 15 of them. You run a full node for each one of the 15 biggest chains and then you keep it synced. That's all you have to do. You keep them in like a small warehouse for the next five ten years. And when you have access to quantum computing capabilities, you start decryting from the start. And most of that will probably be useless. It's just people who want the privacy in their transactions or their communications.

But not all of it. Some of it will be criminal. uh John correctly says there some of these technologies have been used for illicit transactions to various degrees like not everything is arranging assassinations. There's also some like milder cases of tax optimization let's call it. Um let's take this the least problematic one is still interesting to governments because they're like okay this person is not going to go to jail but we're certainly going to send them a bill for the money that they haven't paid yet and there's a revenue in that.

They might be like willing to pay a private company to provide this data. But more interestingly, these platforms are used by people who don't trust traditional infrastructure because not because they're doing something illicit per se, but because they're doing something which is not okay with their current government or with other governments they might be exposed to. So, think activists, um, think resistance groups. We have a few active conflicts in the world. Some of these people coordinate through encrypted channels that rely on lip cryptography. Some of the information they exchange will be relevant in five years or even in 10 years. And so that information is already broken. If you are a privacy focused application today and you sell

your services as privacy based on lip cryptography, I mean you're putting some people in danger significant danger if the information has to remain private for sufficiently long. We don't know how long, right? We don't really know if Psych Quantum has quantum computers today. They don't have public machines, but they did start building fabrication centers. Um, they have their fabs. So, exactly how far can they possibly be with the investment they have. Maybe they will not get there. Maybe they've already gotten there. The point is you might not know for a really long time.

>> Yeah. when when I was uh you know after I spoke with uh John in um in Khan and afterwards I mentioned it to a few people right sort of in the next day you know what about quantum what do you think about the quantum rest like talked a little bit about the conversation uh you know kind of you know technic you know L1 founders so a bunch of people who are like you know sort of very technical key crypto people and and I think the the most uh common response we got I got was like h basically and you know I remember John you were saying like well it could be like 2028 right like it's like a few year or maybe 2030 but like you know

it's close right so I think the most common response I got was like yeah I'm aware of quantum and I know it's a problem and then I know it will come but like it's way further away right it's more like you know 20 35 five or like it's it's basically far enough away that like I don't really have to worry about it now which I guess that is like really the crux of the question right because if it is 2028 pretty close right now I remember actually uh you know I think you John was saying like well I don't really want to invest in anything where I'm going to be locked up for four years right uh because like that might be you know

might mean you're going to be locked up when when sort of that happens. So yeah, I would love to get your takes on on this timeline like what do you guys personally think is likely and and how wide is the range here in terms of uh opinions that the experts have. >> Well may maybe I'll give a market oriented answer and and Stephano can give you a much more detailed answer. Uh but okay, one of the things I say is in my opinion quantum readiness will be one of the most bullish indicators of price going forward. So if you're an L1 founder or community, there is a tremendous incentive in my opinion to um signal quantum readiness and indeed uh

so here's a scenario. Ethereum is quantum ready. Salana is not. uh two years from now some big news comes out of a breakthrough and smart capital allocators you know you look at a guy like Gibbanni Gawkberg RE7 you look at Gauntlet etc they're deploying hundreds of millions billions of stable coins into DeFi and generating yield and building great businesses this is smart money they're going to look at something like that and they already are starting to pay attention to this stuff and they're going to say okay um all the TVL we have on Salana put that on Ethereum uh even though we don't have >> that that relies on that 2year I mean the thing of quantum readiness being a real factor only only is to the extent that people think it's a massive issue

and it's an issue soon right if people think it's an issue further down the line and of course it also depends on what do you think other people think right so correct that is true but here's the thing and I wrote this article called the institutional force function now that public companies and all these big institutions they have fiduciary responsibilities and so the quantum risk disclosures you know, Black Rockck significantly updated and others, etc. If you're if you're one of these institutions, you definitely don't want to be sued in the event something happens. And when you're in a situation where like that event is when that will happen is unknown, but you have pieces of information like Google Willow was a big piece of information. Um the point Stephano made earlier about error

correction. If we get to that threshold and we see that also proliferate, right, it gets public and everyone talks about it, that is another point of information. So in terms of reducing your liability for these large institutions, you don't want to get sued where somebody says, "Well, you had all this information and you didn't take action." Okay. So there's a lot of motivators um that I think will flow funds to networks that are quantum ready even though uh we don't exactly know when something might happen as we keep going along and we get more and more information, more and more news and so on. And just one more quick point to make on that. Um, as far as when and so on, um, I don't think it's a conspiracy and I think Stephano agrees that the first run of this kind of capability

will go to the military intelligence apparatus, you know, the CIA, the NSA, whatever, etc. Okay. Um, you look at the example I use is the SR71 Blackbird, that super futuristic spy plane. They started building that in the 50s. Okay. um when you look at it today it looks like an incredible modern aircraft but you know it flew at Mach 3 in in in the 60s and 70s and so on right so um I think advanced states of you know basically strategic technology is something that um you know these governments definitely uh you know focus on so what I'm saying is I don't think there's any good reason to suggest that we're going to know okay in some very public way when this capability exactly

exists. this because I think it'll go to this military intelligence apparatus first and they may have strong incentives to keep things quiet. But here's another scenario and this is about confidence. If the confidence if people start to get nervous that's enough for cascading waves of liquidations and the prices to trend to zero. Even if your coins are quantum safe but everybody's scared and you're holding your crypto and it's just losing 50% 60% etc. That's already bad enough. And what I'm saying is when you look at, for example, Ross, okay, and the Silk Road thing, the FBI agents went to jail, too, right? I'm not accusing any government official of doing something nefarious. I'm just saying there's a lot of different ways this stuff can leak.

And so, even if the military intelligence apparatus gets the capability first and somehow that gets out, that is enough to cause concern and a loss of confidence. Um, anything along those lines will start to send prices trending down. And that's when I think smart money allocators and others they're going to just you know not have as much risk on chain in various positions and so on. So that is another element to this too even before we have the quantum computers um that perception and that is definitely an unknown uh and it's something that I think people are going to start factoring into their risk calculations.

>> Stephan I want to give you the opportunity to also talk about never local and uh this idea of contextual cryptography. Um yeah, what what is what what is your vision for quantum money and uh how are you guys building this? >> Yeah. Uh first I I'd like to add one like the technical point to what John just said just briefly. Um we don't think that quantum risk will come in the early 2030s because we have some opinions. We most of us are scientists. We look at what the progression is, what the timelines projected by the companies are and whether they're on track. And if there's a line that kind of goes straight and it continues to go straight and the points continue to fall on the line month after month, year after year,

and there's a spread across some companies, but they're roughly all in the same neighborhood. I mean, then you draw that line to like the 2030s and you ask when will we hit the magic number and that's not in the 2040s, that's not in the 2050s, that's in the mid 2030s very realistically. So I just wanted to say it's there's a lot of perception risk like people at some point might just switch and say oh this is real because of some announcement uh because of some demonstration because there's some insider information. But even if you don't have that uh you just have lines going up pretty much on track. You have the cost of the algorithms going down because people make more and more efforts to make them practical now that the end is in sight.

And I mean you you draw an intercept and try to figure out roughly where they meet. uh there is the risk is there. It's not uh it's not really a matter of opinion anymore. It's a matter of I mean people publish timelines, dots fall on timelines. Timelines say 2035. Um so in that sense it's a it's a simple uh consideration to make these days. There's so much progress that that you can track it. It will happen. Maybe it won't happen. There's going to be some roadblocks. Who knows? But uh there is some numerical evidence >> five but then who knows? It could be faster.

uh 2035 is where roughly they go, but they might have an acceleration. They might not be telling you exactly what capabilities they have, or they might be lying about it. That's also possible. They might just all be overhyping what they're doing. There's a spread, of course, but at the very least, we know that in principle that's the that's where the line hits the target. Um but yes, sorry. Um never look up. So this is where we switch from quantum computing to what I initially said is is quantum cryptography which is slightly different discipline slightly different investment pool more than anything else.

The underlying technology is similar in many ways but the applications and uh potential customers and the efforts to bring it into the world are uh different. They're they're at a different stage in terms of development. They are different in terms of the applications that people want. Um so the state of things today is that there's quite uh quite a few providers of quantum network infrastructure. What people call the quantum internet doesn't yet exist but there are small versions of the quantum internet. There's large companies, Toshiba, Mitsu, uh, that go around and put some small geographical fiber optic networks in place for some

early customers that buy access to these networks and use it for some prototype applications. They go to some company that sells them some quantum key distribution equipment of more or less accurate versions. um and they I'm not sure what they do with it honestly. Uh they they try to integrate it with their infrastructure and they start seeing what the challenges are and whether they could use it to get more secure communications. Um the state of it is there's one large company that that makes quantum key distribution hardware.

There are many smaller companies that make quantum key distribution hardware. The large one, the most well-known one is ID Quanti. Quantique was acquired uh maybe was it two and a half years ago at this point by SK Telecom uh for around 5060 million dollars that was the valuation at the time. It was recently sold to ionq for $250 million and that's a fairly strong indicator that if the ecosystem is growing then there is an interest in having applications running on this ecosystem. Uh some of it is academic or uh government-ledd. China has the largest network for this kind of applications on the coast. It's a mix of fiber optic and satellite based. Uh there's some in Europe, there's some in the US. It's growing. It's very early

stage. What we realized when we started thinking about what do people do with quantum technology in cryptography uh with Fabitzio was that there is really one application that gets sold which is this quantum key distribution. It's a a quantum version of the key distribution protocols that we use today to secure our communications. It's establishing symmetric keys, but it has in principle uh a a very useful property which is called device independent cryptography. Uh it's device independent security. Um it's the idea that you can establish these keys without trusting the hardware. So imagine that you you're a large organization and you want to put a

significant amount of money on some private communication between you and some other parties. You're a casino let's say in the um in Switzerland and you don't want to be exposed to supply chain risks which today are really very much a possibility. you buy some specialized chips from somebody um if there's enough money uh someone will try to put a back door on it uh so you don't want that and you say is there a way to do so where I can verify that the protocol works I can test it and I don't need to trust the manufacturer or the people who shipped it to me and the answer to that is no if you use classical hardware but yes if you use quantum hardware which is really

revolutionary it's a big difference between classical and quantum cryptography that you can reduce the trust to operating the protocol but not the hardware that implements it. And quantum key distribution is sold with this promise today. But really the versions that are sold make a certain make compromises to become practical already and those compromises erode some of the security promises um to some extent. Um but in principle you could make it so that there is no trust left in the infrastructure. There is no trust left in the hardware. You as long as you operate it and the counterparty operates it and you both make sure that the environment in which you operate them is secure. Something you can do in your

basement let's say or in your data center then the rest of the network is abstracted away and you don't have to care. You don't have to care about people splicing into your fiber optics. You don't have to care about people bugging or backdooring the hardware that was um sent to you because the protocols exploit fundamental properties of quantum systems in such a way that you can get security out of fundamental randomness as it's called. It's it's an interesting technological advancement. I I watched one of your talks and uh the way you describe quantum money I think it sort of resembles a little bit the idea of cash where when you accept a like a 5 bill or a dollar or whatever

you don't need any ver external verification to verify that these funds are uh that that this is a legitimate uh uh payment instrument and that you now own this payment instrument which we we sort of need with with blockchain. s we need that um the verification of a consensus whereas with quantum money you wouldn't need that the own the very ownership of the instrument would be an indicator that it is legitimate and that you own it. Is that a good way to look at it? >> Yes. Um a simplified way to put this is to say that you can't clone quantum states. That's the toy version of quantum money. You have a it's one of the fundamental properties of quantum

states that the information encoded within cannot be copied. You can modify it, you can destroy it, but you can't really copy it in a deterministic way. Now, of course, this is too simp. It's the basis of the original protocols for quantum money, but it's too simplistic for practical quantum money. And so, you have to do other things to make it practical. But ultimately, it is yes, it's truly peer-to-peer digital cash. That's the that's the way to put it. It's something you want you want cash to be digital. You want value to be transferable both locally and across networks because you don't want to be bound by the fact that we are physical beings carrying a wallet around

otherwise it's easy that's cash. Um you want it to be unconable. You want the value to be anchored to something which retains like the truth of who owns it. Ownership has to be unequivocal. Uh you cannot manufacture new currency. You cannot copy the currency you have. The cash you have is the cash you have. Now, of course, physical cash like let's say paper bank notes are an approximation of that. But over time, we have evolved uh mechanisms to protect the copying of value in lock step with the technological advancements of the various eras that we've gone through.

So, we had things that were hard to get, then coins which had some manufacturing uh techniques that made them recognizable. Then we made banknotes, then harder bank notes, then more security features in banknotes and we are today with our current cache. Um what we did unfortunately in the move to the digital commerce uh world. So in the digital commerce era is to sacrifice quite a lot of these features. The ability to transact without intermediaries, the ability for self-custody, all of these were features of cash for ages. um you had your own value. You carry it around. You can give it to anybody you want. There's pretty

much an agreement that that is the value. Uh and it's for prices to determine the exchange rates, but but the value of the bank note you carry around is almost undisputed. Um when we moved to digital commerce, we decided to sacrifice some of this um for transactability across distances. We created intermediaries and those intermediaries got more and more control over it and we lost quite a lot of what we had with physical cash. Um to the point that today if you talk to let's say mainstream finance analysts the commonly held view is that cash is essentially an obligation by somebody to pay you. That's that's how they see

cash. They say okay cash is not really cash. the value is the network value and cash is the obligation to somehow be able to redeem it which it didn't used to be the case. um you could carry around cash that the bank didn't play any role if once we centralized cash it was the pound you didn't it didn't matter whether you were banking with Bartlays or with HSBC I'm London based that's why I'm picking like UK banks um it didn't matter you you went to the shop and you paid with the with the bank note nobody cared where it came from and it wasn't an obligation by specific bank now we turned it into that and that has a number of side effects that we may or may not like um And one of the things that can be done with quantum technology is restore most of those properties is

make something which can retain value because it cannot be copied and can be potentially carried around if we improve certain parts of the quantum information quantum cryptography stack the hardware stack enough. We could even have it in our pockets in wallets and retains the digital nature that our modern worldwide internetbased commerce demands where you want to be able to exchange value across a distance as well as in person. And so it's hard to design something like that classically because classical information can always be copied and so you have to rely on something on top of it. Consensus is the solution we came up with in web 3. Thanks. That that is that

is a very very interesting point and and I feel like at some point it will be uh you know worth going deeper and maybe doing some follow-up conversations on that and and I think on sort of the possibilities that get unleashed with quantum. Uh we've gone for a long time. We just want to maybe one very brief last question for you John. uh you know you spent like uh 2 3 minutes on it or something. So you know you're obviously an investor as well right so you've been investing in crypto for for a long time. Uh what is like how does that impact your approach to investing in your

portfolio sort of all your your knowledge and your views on the impact of quantum? Yeah, I mean, uh, you know, I think about it as a paradox. On the one hand, um, you know, it's kind of like there's this, and you could look at it at a governmental level. For example, ADGM, and I've talked to them about this. They're funding investment into quantum computing, and at the same time, they're developing this crypto ecosystem. Everybody's in the UAE, and so they're funding their own demise. And so, you need a hedge. Okay, the hedge is first of all, knowledge. to the best of your ability understand this stuff. You know, this kind of a podcast is one great start. Um, everybody who is in our space and went deep into understanding

smart contracts and ZK and all these things, they have to start to understand what um, you know, quantum information systems mean, one-time programs, one-time applications, etc. Okay? And so, the knowledge base has to go up. But then aside from that, you need to act, in my opinion, you need to put together a plan. Okay? Um, I believe that we are still safe for quite some time. I think we have another big uh, let's say pump left in our ecosystem. Maybe a couple. I think we're going to get to 10 trillion, maybe even 30. Um, and so definitely I want to participate that and I continue to, you know, hold Bitcoin and other assets, Ethereum and so on. I continue to invest in projects, but the time horizon has changed. Yeah, it's true.

like I don't really do cryptovc deals anymore if like my tokens are four or five years out from now. Um and as a VC you assume that risk and that's fine. Uh but not if these assumptions around security are in question. Um and so that's one change. Okay. Another change is I've definitely pivoted. I mean I did the preede round for never local. I was very fortunate to be in that position. I'm actively looking at other areas you know in a similar kind of direction, right? I think it's very hard to get into the big quantum deals, but you can do things like buy shares of psychantum and secondary markets and so on. So I think constructing some part of your portfolio to cover this as well. Uh and then you know closely monitoring I mean I vibecoded this uh silly little thing.

It's called quantum ready.info. Uh you know and I'm trying to kind of like basically show the readiness of all the different blockchains. I monitor that stuff on a daily basis in the event that I see things that I deem to be like significant in terms of yeah like Stephano said before error correction and so on then I have this knowledge base to inform what I'm going to do with my crypto assets. I right now in this moment would be lying if I told you that in 2028 for example I'm going to be comfortable like I am now having my you know wealth onchain. So maybe at that point uh I kind of step back a bit, go offchain, go into quantum safe bank account and just observe and see what

happens, right? I don't know, maybe, maybe not. Um but I think it's very important for all crypto investors to not have it just in the back of their mind as this vague nebulous idea of like 40 years away and then just be comfortable with that. It's exciting and it's interesting and it's intellectually stimulating to learn and get into this stuff on a daily basis and then it helps inform how you construct your portfolio and manage your risk and I think that's like the appropriate way to think about it at least for me at this time. >> Well, thanks guys. Thanks uh for this very lengthy conversation. Uh it's been really really fascinating and I think we will need to touch back touch touch touch base again in the future about this topic as uh as things continue to

uh to evolve. So John keep us updated on the latest and um and Stephano would have happy to have you back on at some point as well uh to track progress on Never Local. >> Thank you very much to you both. It was a pleasure. Thank you.