Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carol and this is Here's Why, where we take one news story and explain it in just a few minutes with our experts here at Bloomberg. Move over, artificial intelligence. A new technological game changer is coming. Quantum computing, its supporters say, will deliver huge advancements and fields from drug development to financial modeling. And that's why governments as well as some of the world's biggest tech companies and venture capitalists are pouring billions of dollars into them.

Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carol and this is Here's Why, where we take one news story and explain it in just a few minutes with our experts here at Bloomberg. Move over, artificial intelligence. A new technological game changer is coming. Quantum computing, its supporters say, will deliver huge advancements and fields from drug development to financial modeling. And that's why governments as well as some of the world's biggest tech companies and venture capitalists are pouring billions of dollars into them.

It's a totally different avenue.

It's a totally different avenue.

It's not just supercomputers but better or AI but more powerful.

It's not just supercomputers but better or AI but more powerful.

It's entirely different way of computing.

It's entirely different way of computing.

Quantum computing.

Quantum computing.

He's, without a dad, one of the top technologies that the United States needs to lead.

He's, without a dad, one of the top technologies that the United States needs to lead.

If you suddenly lose that secrecy and that security, then it causes all sorts of vulnerabilities on a personal level, on a national level, from a security perspective, from a commercial perspective, and so you know, this is a big, big deal.

If you suddenly lose that secrecy and that security, then it causes all sorts of vulnerabilities on a personal level, on a national level, from a security perspective, from a commercial perspective, and so you know, this is a big, big deal.

So here's why you need to understand quantum computing. Bloomberg reporter Isabell Award is with me for more Isabella. First of all, what is a quantum computer and how different is it to the computers that we know today.

So here's why you need to understand quantum computing. Bloomberg reporter Isabell Award is with me for more Isabella. First of all, what is a quantum computer and how different is it to the computers that we know today.

They are an emerging type of supercomputer which can solve problems today's machines can't, and this is because they process information in an entirely different way, exploiting the quirks of quantum mechanics, hence the name, which is the field of physics which governs microscopic materials. I'll give you an example of this difference in approach. Sarah was a traveling salesperson and I wanted to sell my war his intensities, and I wanted to use a computer to figure out the most efficient order to visit these cities. In a normal computer would one by one and then compare the three hundred and sixty thousand odd possibilities, whereas a quantum computer could simultaneously take all these routes into account and then could return the likely best answer almost instantly.

They are an emerging type of supercomputer which can solve problems today's machines can't, and this is because they process information in an entirely different way, exploiting the quirks of quantum mechanics, hence the name, which is the field of physics which governs microscopic materials. I'll give you an example of this difference in approach. Sarah was a traveling salesperson and I wanted to sell my war his intensities, and I wanted to use a computer to figure out the most efficient order to visit these cities. In a normal computer would one by one and then compare the three hundred and sixty thousand odd possibilities, whereas a quantum computer could simultaneously take all these routes into account and then could return the likely best answer almost instantly.

Okay, so what can they be used for outside of travel planning?

Okay, so what can they be used for outside of travel planning?

The age old optimization problem I just gave you does have some useful logistical and transportation efficiency applications, but they can also be used to simulate atomic behavior, which can accelerate drug discovery or material development. They can also model more complex systems with lots of dynamic interacting parts, you know, be at the climate or be at the economy, and across fields. They can enhance an expedite machine learning for artificial intelligence.

The age old optimization problem I just gave you does have some useful logistical and transportation efficiency applications, but they can also be used to simulate atomic behavior, which can accelerate drug discovery or material development. They can also model more complex systems with lots of dynamic interacting parts, you know, be at the climate or be at the economy, and across fields. They can enhance an expedite machine learning for artificial intelligence.

So who are the big players involved in developing quantum computers then, and crucially use putting money into it.

So who are the big players involved in developing quantum computers then, and crucially use putting money into it.

IBM have really led the charge here, but Aws, Microsoft, Alphabetics, Google are all developing their own types of quantum chips as well.

IBM have really led the charge here, but Aws, Microsoft, Alphabetics, Google are all developing their own types of quantum chips as well.

And it's not just big tech.

And it's not just big tech.

Startups including Raghetti and Honeywell's Continuum are also competitive as well. As investors governments can vinced by the economic advantage that these machines, posts have poured billions into building them, none so much as China, who've invested fifteen billion US dollars they say so far, which is more than triple than any other country has.

Startups including Raghetti and Honeywell's Continuum are also competitive as well. As investors governments can vinced by the economic advantage that these machines, posts have poured billions into building them, none so much as China, who've invested fifteen billion US dollars they say so far, which is more than triple than any other country has.

So how far away are we from getting quantum computers into widespread use? They exist in some form already.

So how far away are we from getting quantum computers into widespread use? They exist in some form already.

Yeah, IBM at aiming for twenty thirty three for widespread use, but some startups say that they're going to deliver useful machines by the end of this decade. The challenge here is that it's estimated that to have an actually useful machine a quantum commuter needs to be tens of thousands times larger than the current machines, and normally, because of the very delicate nature of their microscopic building blocks, the more you scale up, the more likely something is to go wrong.

Yeah, IBM at aiming for twenty thirty three for widespread use, but some startups say that they're going to deliver useful machines by the end of this decade. The challenge here is that it's estimated that to have an actually useful machine a quantum commuter needs to be tens of thousands times larger than the current machines, and normally, because of the very delicate nature of their microscopic building blocks, the more you scale up, the more likely something is to go wrong.

So that is really where Google actually broke ground.

So that is really where Google actually broke ground.

In December, you might have had their Willow chip made quite big news, not so much because of the size of their chip, but because as they scaled up the rate of errors was reduced. Still, even so, they say that useful machine is several years away, but that show of capability and actually being able to build these big machines imminently drove a rally in quantum stocks.

In December, you might have had their Willow chip made quite big news, not so much because of the size of their chip, but because as they scaled up the rate of errors was reduced. Still, even so, they say that useful machine is several years away, but that show of capability and actually being able to build these big machines imminently drove a rally in quantum stocks.

When you say big machines, that makes me think that it's pretty unlikely that we're going to end up with quantum computers showing up in people's homes in the way that we've become used to having personal computers.

When you say big machines, that makes me think that it's pretty unlikely that we're going to end up with quantum computers showing up in people's homes in the way that we've become used to having personal computers.

Yeah, you're absolutely right.

Yeah, you're absolutely right.

These are bulky, energy intensive, highly specialized machines that cost tens of millions to build.

These are bulky, energy intensive, highly specialized machines that cost tens of millions to build.

Quite a big house as well. Yeah, yeah, you're not going to have a quantum laptop.

Quite a big house as well. Yeah, yeah, you're not going to have a quantum laptop.

And actually even banks, for example, they won't have their own quantum computers. Instead, it's more likely that researchers would pay for run time on external machines.

And actually even banks, for example, they won't have their own quantum computers. Instead, it's more likely that researchers would pay for run time on external machines.

So you mentioned banks there, I mean, what would a world with quantum computers do for say, the banking industry.

So you mentioned banks there, I mean, what would a world with quantum computers do for say, the banking industry.

Across the board, research and development is going to be revolutionized as kind of previously impossible problems become solvable. And actually the banking industry is going to be one of the earlier industries to fill this impact.

Across the board, research and development is going to be revolutionized as kind of previously impossible problems become solvable. And actually the banking industry is going to be one of the earlier industries to fill this impact.

Just thinking of some examples.

Just thinking of some examples.

You know, I mentioned simulation, Well, risk could be simulated if far more detail. I mentioned optimization, Well, that could apply to collateral and commercial banking, or derivative pricing, or even portfolios in investment banking. And actually quantum algorithms have already been developed to optimize the latter.

You know, I mentioned simulation, Well, risk could be simulated if far more detail. I mentioned optimization, Well, that could apply to collateral and commercial banking, or derivative pricing, or even portfolios in investment banking. And actually quantum algorithms have already been developed to optimize the latter.

This really sounds like another massive technological revolution on the way. Are there downsides or risks to this technology?

This really sounds like another massive technological revolution on the way. Are there downsides or risks to this technology?

There are, like with any critical technology, if you know, a user with malintent gets access. So the consequence of their enormous compute is that in theory, hackers could use quantum computers to crack current cryptography and access sensitive data, and experts do see this as likely to happen within the next fifteen years or so. Of course, there's a huge personal data implication here. You can imagine the chaos that would be unleashed by accessing someone's Internet exchanges or financial transactions, and we have seen firms like Apple or telecoms companies take steps to protect users, but governments are actually more concerned by the commercial threat here, the idea that hostile states could steal intellectual property from foreign firms and copy drugs technology, et cetera without having to spend the billions on R and D in the process. So globally, companies are already being urged to update their encryption now in preparation for when these ultra powerful computers arrive.

There are, like with any critical technology, if you know, a user with malintent gets access. So the consequence of their enormous compute is that in theory, hackers could use quantum computers to crack current cryptography and access sensitive data, and experts do see this as likely to happen within the next fifteen years or so. Of course, there's a huge personal data implication here. You can imagine the chaos that would be unleashed by accessing someone's Internet exchanges or financial transactions, and we have seen firms like Apple or telecoms companies take steps to protect users, but governments are actually more concerned by the commercial threat here, the idea that hostile states could steal intellectual property from foreign firms and copy drugs technology, et cetera without having to spend the billions on R and D in the process. So globally, companies are already being urged to update their encryption now in preparation for when these ultra powerful computers arrive.

Thanks to Bloomberg reporter is Abelle Award for more explanations like this one from our team of twenty nine hundred journalists and analysts around the world. Search for Quick Take on the Bloomberg website or Bloomberg Business app. I'm Stephen Carol. This is Here's why. I'll be back next week with more. Thanks for listening.

Thanks to Bloomberg reporter is Abelle Award for more explanations like this one from our team of twenty nine hundred journalists and analysts around the world. Search for Quick Take on the Bloomberg website or Bloomberg Business app. I'm Stephen Carol. This is Here's why. I'll be back next week with more. Thanks for listening.