What Microsoft’s quantum computing breakthrough means for the world – Crypto News

Unlike classical computers (which use bits—either 0 or 1), quantum computers use qubits (which can be 0, 1, or both), allowing them to perform a lot more calculations at once. While quantum computing has made big progress in recent years, thanks to investments by tech majors such as IBM, Alphabet Inc. and Microsoft, they have also been struggling with stability issues and error rates.

Microsoft used a different approach to solve these issues, using ‘topological qubits’ built on Majorana particles. Simply put, these are theoretically far more stable and error-resistant. Some have expressed doubt over Microsoft’s claim and are seeking more evidence. The scepticism stems, in part, from an earlier claim that the company had made in 2018, only to retract it later on.

This time, it could be different. The main US government defence-tech agency has included Microsoft in the final phase of a programme that will determine whether it’s possible to build an industrially useful quantum computer by 2033—much sooner than most predictions. Besides, some believe that Microsoft, which has put nearly two decades of work into it, is unlikely to make the same mistake twice.

Quantum effects

The news, in turn, could impact many industries as they leverage the power and speed of quantum computing, especially in simulations. As the quality of simulations goes up, mirroring the real world better, it could crunch time to, for example, design new batteries or invent new drugs. It could also adversely impact some segments, such as cryptography.

Cryptography relies on complex mathematical problems that are computationally infeasible for classical computers to solve within a reasonable timeframe. A sufficiently powerful quantum computer could break this encryption in a matter of hours, potentially compromising sensitive data, secure communication channels, and critical infrastructure. It could especially impact blockchain technology and cryptocurrencies, which heavily rely on cryptography for their security. Their prices are already volatile. 

The added concern for investors would be how well they can adapt post-quantum cryptography (PQC)—a new generation of cryptographic algorithms designed to withstand attacks from both classical and quantum computers.

AI entanglement

The breakthrough also comes when artificial intelligence (AI) is advancing at great speed. At one level, commercial-scale quantum computing will accelerate that progress, by processing even larger amounts of data. At a societal level, there are concerns that such a combination of AI and quantum computing could widen the divide between people, organizations and countries that have access to these technologies and those that don’t.

While US-based companies, especially IBM and Alphabet, lead in quantum-computing patents, China has filed almost twice the number of patents as the US between 2004 and 2023, according to IPWatchdog Inc. 

This is driven by government spending. In a 2022 report, McKinsey said China had committed $15.3 billion in public funds to quantum-computing investments—twice that of Europe and eight times of the US. It’s not clear if the rivalry could democratize quantum computing eventually (the way DeepSeek potentially did in AI) or if it will strengthen the existing hierarchy.

Startup challenge

Venture capital investments in quantum computing startups saw a big shift in 2020, crossing $1 billion from an annual average of $200 million from 2015 to 2019. A key reason for this change was the demonstration of “quantum supremacy” by Google in October 2019 and by a group at the University of Science and Technology of China in December 2020. Microsoft’s latest announcement could trigger a similar surge in investor interest.

There is also greater diversity in the flow of funds. While early investments tended to favour hardware companies, there is growing interest in software, reflecting the need to develop algorithms and applications. The rush to invest in AI companies has raised questions about a bubble. Recently, ace venture investor Vinod Khosla warned that most AI investments would lose money as the market enters the greed cycle. If that becomes the dominant narrative among VCs, they could look at quantum computing in a bigger way.

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