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Venture Capitalist Explains How Quantum Computers Harness Parallel Universes

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Recently quantum computing company D-Wave Systems announced that it had broken the 1000 qubit barrier – an important breakthrough, according to experts who speculate on the really weird physics behind quantum computing.

Quantum computers encode information in quantum bits, or qubits, which can be in a quantum superposition of zero and one states, and therefore they can process information in ways that have no equivalent in classical computing by exploiting subtle quantum phenomena such as quantum entanglement.

Computing With Parallel Universes

D-WaveIn fact, the exotic and really weird fringes of fundamental quantum physics play a role of growing importance in practical applications. In a short video released in January before the recent D-Wave announcement, venture capitalist Steve Jurvetson, a Managing Director of Draper Fisher Jurvetson who sits on the D-Wave Board of Directors, explains in simple terms how quantum computers can be so efficient: they harness the computing power of a huge number of parallel universes.

First introduced in 1957 by theoretical physicist Hugh Everett, the Many-Worlds Interpretation (MWI) of quantum physics says that the weird and counter-intuitive quantum superpositions extend across parallel universes. A qubit in a quantum superposition of zero and one states exists in two parallel universes. Similarly, two qubits require four parallel universes, and so forth. Doing the math, it’s easy to see that a system of 1000 qubits spans a huge number of parallel universes.

Jurvetson notes that Google bought the first D-Wave quantum computers, and Google researchers consider quantum computing as a path to Artificial Intelligence (AI), with first practical applications to image recognition, machine learning and deep learning. Then he moves on to explain, sort of, how quantum computers work.

The only physical explanation of how quantum computing works is that it uses the computational resources of parallel universes, says Jurvetson in the video. This interpretation is often mentioned by science writers, but it’s mostly ignored by those professional scientists who are afraid to of losing reputation by showing too much imagination. Venture capitalists see nothing wrong with imagination, if they can use it to make more money. Of course, imagination is good, but quantum physics is counter-intuitive and “visual” explanations should be taken with caution.

A Moore’s Law On Top of Moore’s Law

Since the number of parallel universes whose computing power is harnessed by a quantum computer increases exponentially with the number of qubits, a quantum computer with a few thousands of qubits could have a computing power greater than all existing computers combined, and adding even more qubits could result in a machine with more computational power than the entire universe.

Quantum Computing Performance

If quantum computers keep doubling the number of qubits every few years, Moore’s Law – the observed doubling in performance of computer systems every two years – would become even faster. “It’s a Moore’s Law on top of Moore’s Law,” says Jurvetson commenting the image above, titled “Rose’s Law” after D-Wave’s founder and CTO Geordie Rose.

But also the practical difficulty of building quantum computers increases exponentially with the number of qubits, so there is the possibility that quantum computing research might run into a barrier. Jurvetson spaaks of “a 10 percent chance that it doesn’t hit some roadblock.”

Images from Steve Jurvetson, D-Wave and Wikimedia Commons.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Giulio Prisco is a freelance writer specialized in science, technology, business and future studies.




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11 Comments

11 Comments

  1. Orchideric

    July 7, 2015 at 8:06 pm

    So, in other words, 90% chance it WILL “hit some kind of roadblock”.
    But interesting nonetheless.

    • Giulio Prisco

      July 8, 2015 at 6:35 am

      The fact that the practical difficulty of building a quantum computer increases exponentially with the number of qubits is a roadblock in itself – at some point the curve becomes practically vertical. But the interesting question is how far we can go before it becomes practically impossible to go further.

      Another problem is software – at this moment quantum computing is only suitable for certain very specific applications, and the challenge is how to extend its application scope.

      • Matthew Paul Chapdelaine

        July 21, 2015 at 12:05 am

        “how far we can go before it becomes practically impossible to go further.”

        I’ll bet they said the same thing about technology back in the 1700’s. There are always breakthroughs. History has shown that. I wouldn’t start worrying about a world where we hit a ceiling until our little human civilization goes type III galactic.

  2. Brad Arnold

    July 8, 2015 at 11:10 am

    What we need now is talented programmers to harness the power of the D-Wave. Cognitive computing directly via the D-Wave is better than optimizing AI algorithms with the D-Wave for use on conventional computer processors. Mark my words: the Singularity is coming faster than the experts think.

    • Giulio Prisco

      July 8, 2015 at 4:29 pm

      But slower that the enthusiasts think, in my opinion. Halfway between.

  3. Lish Lash

    July 8, 2015 at 5:21 pm

    “It gets pretty weird pretty quickly.” Ha ha, go go fast talking Venture Conman, best Tony Stark impressionist yet.

  4. Benjamin Philips

    July 8, 2015 at 7:39 pm

    “…but it’s mostly ignored by those professional scientists who are afraid to of losing reputation by showing too much imagination. Venture capitalists see nothing wrong with imagination…” So you’re saying we should thank VCs for all that scientific innovation, including quantum computing. What parallel universe are YOU living in?

    • Giulio Prisco

      July 9, 2015 at 6:46 am

      I am saying that VCs have also a role to play. The sad truth is that, in today’s sedate world, scientists and researchers know that their career will stagnate (or worse) if they even mention imaginative ideas. Especially young researchers with families to feed learn to shut up, or else. Yes, I wish I lived in a parallel universe where imaginative science is respected by the (parallel) establishment.

      • btcusury

        July 14, 2015 at 12:04 pm

        In “today’s sedate world”?

        “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.” – Max Planck, 1948

        • Giulio Prisco

          July 15, 2015 at 1:36 pm

          Exactly. The problems is that some “bureaucrats of science” don’t move away fast enough. I don’t wish anyone to die, but perhaps retirement in a tropical paradise would be a win-win deal. 😉

  5. Optimist911

    August 18, 2015 at 11:29 pm

    “Showing too much imagination” sounds like a good euphemism for “making crazy science-fiction claims.” Is there yet a definitive answer as to whether D-Wave’s system is actually a quantum computer, even in some weak sense? As I gather, classical algorithms perform just as well even on the very specific problem D-Wave was designed to solve. 1000 qubits on a real quantum computer would start to threaten RSA, but D-Wave doesn’t do factoring. I guess unlike bits, not all qubits are equal or even mean the same thing. The D-Wave system is a bit reminiscent of those crazy analog or electrical machines that engineers are given as puzzles to figure out why they don’t work in practice.

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Business

Overstock.com Shares Spike 17% After Chinese Private Equity Firm Pledges $270 Million for tZERO

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Shares of Overstock.com (OSTK) surged in after-hour trading Thursday after a major Chinese equity firm agreed to invest in tZERO, the blockchain subsidiary vying to reshape the investment world through a SEC-regulated alternative trading system (ATS).

GSR Capital to Invest Heavily in tZERO

CNBC confirmed on Thursday that Hong Kong-based GSR Capital will invest up to $270 million in tZero. The investment is based on a valuation of $1.5 billion, giving GSR an 18% stake in the new blockchain startup. GSR will also buy $30 million worth of tZERO security tokens.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi in a statement, as quoted by CNBC. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

The announcement came less than six weeks after GSR Capital signed a letter of intent with Overstock to purchase $160 million worth of security tokens.

Launched in December, tZERO’s initial coin offering (ICO) has raised $134 million to finance its ATS infrastructure, which will provide a regulated venue for securities trading. The company plans to build similar systems around the world.

Despite a highly successful crowdraise, documents submitted to the SEC earlier this year revealed a target of $250 million. Independent valuations had placed tZERO’s ICO anywhere between $200 million and $500 million.

Overstock.com Spikes

Overstock.com’s share price was up by as much as 21% after-hours. It would eventually settle at $45.40 for a gain of 17.6%.

As the following chart illustrates, the OSTK price rose 4.5% in regular trading on Thursday to settle at $38.60.

Despite the gain, OSTK has been a dismal performer this year. Share prices are down 40% year-to-date, vastly under-performing the Nasdaq Composite Index, which has returned more than 14%.  What’s more, the stock is trading at less than half of its 52-week high.

Overstock’s share price has been rocked by disappointing quarterly results and the cancellation of a proposed public stock offering. Last March, the company offered four million shares of common stocks before abruptly cancelling those plans. Noursalehi said the decision to pull the offering was due to “market volatility and price.” To be sure, OSTK had declined 20% following the initial announcement to issue common stock.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 551 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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A Closer Look at Boerse Stuttgart’s New Cryptocurrency Platform

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The Boerse Stuttgart group has is expanding upon past product launches to create a complete holistic ecosystem for digital assets, including cryptocurrencies. This comes on the heel of them launching the “Bison” app, which allowed users to trade cryptocurrencies with zero fees, similar in functionality to that offered by Robinhood.

The difference between Bison and Robinhood, however, is that the Boerse Stuttgart group is the second largest derivatives exchange in Germany. Another unique feature of the Bison app was its “crypto radar” feature.

This functions as a social media tool that aggregates more than 250k tweets and analyzes them to determine the “mood” of cryptocurrency investors.

Having an existing (and profitable) large financial firm expanding their brand to cryptocurrencies in any capacity reflects a market that is increasingly accepting the reality of institutional capital flowing into crypto markets.

The new ecosystem is composed of three distinct pillars. Bison represents the first of these pillars. The second is a branded platform for initial coin offerings to sell tokens. The third is a safe custody solution for digital assets.

This ecosystem, in turn, falls within Boerse Stuttgart’s so called “digitization” strategy and should serve as a bellwether of changes to come in financial markets. After all, as an established market player, Boerse Stuttgart Group has extensive knowledge in the fields of technology, regulation, and trading models respectively.

According to their own CEO Alexander HĂśptner, “On this basis, we can offer central services along the value chain for digital assets, all under one roof. Investors and market participants know that Boerse Stuttgart Group stands for quality, transparency, and reliability. As a Germany-based provider, we want to transpose this standard into the digital world. We will help to promote acceptance of digital assets.”

The key to their ambitions focuses on solving two major problems. The first is that KYC procedures tend to be overly complex for average investors, as well as time-consuming. The Boerse Stuttgart group’s own KYC solution allows traders to pass KYC and start trading within minutes, as opposed to more typical solutions that take a few days.

The second issue they are tackling the liquidity and accessibility of ICO tokens post-sale. They solve this by allowing tokens launched through their platform to be traded within their broader ecosystem using Bison.

According again to the CEO, “At the trading venue tokens issued via our ICO platform can be traded on the secondary market. This is an important success factor for ICOs. At the same time, we are responding to demand from both retail and institutional investors for a regulated and reliable environment for trading with cryptocurrencies. Furthermore, established cryptocurrencies like Bitcoin or Ethereum will also be traded.”

This approach will likely serve to establish the Boerse Stuttgart group a prime recipient of crypto-intrigued institutional capital. After all, the early bird gets the worm. A key component of this future success also rests on how well they partner with authorities.

This exact point was also emphasized recently by the CEO, who said, “In designing the strategic projects we closely cooperate with all competent boards and committees, and especially with the supervisory authorities.”

While it remains to be seen whether retail investors make use of this ecosystem, it seems reasonable to assume that larger investors will flock to a simple crypto-specific ecosystem backed by an old guard stalwart of finance.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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MasterCard Could Be Your Best Friend

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Since just after the financial crisis, I have been searching for a way to beat MasterCard and Visa at their own game. These two brands dominate the business of processing debit and credit card transactions.  I have always considered this duopoly as the enemy of mankind, but could turn out to be a hasty judgement.

MasterCard and Visa don’t actually process transactions as much as they offer an electronic network and charge fees for the use of their name.  They collect about 0.11% per card swipe which ain’t much until you consider they are running more than 150,000 transactions per minute through their network.  Pretty nice business to be in. All together, the two will generate about $30 billion this year.

The problem with both of these guys is that it is impossible to get around them.  If you buy something anywhere in the world with a debit or credit card, it is almost guaranteed to run on either the Visa or MasterCard network.  In which case, in addition to the 0.11% taken out for the network, the store that accepts your purchase pays anywhere from 3% to often as much as 5% in total for processing fees.  And if you travel abroad and charge something, well forget about it. Everywhere along the network are intermediaries taking their nick of your wallet.

When foreign currency transaction fees are taken into account, that is where more intermediaries are included.  That is where the costs add much higher and that is often where the consumer is hurt most.

Fighting Back

The whole idea behind blockchain technology is to make transactions of all types fast with little or no dependency on intermediaries.  All this makes MasterCard and Visa the enemy of cryptocurrency developers. But neither of these brands are sitting still applying for patents on blockchain based payments methods.

The natural reaction is to sell to sell your crypto and find some easier way to earn a decent return.  We disagree: we think there is crypto to be made from MasterCards strategy. Here is why you should be encouraged.

ome time back, MasterCard applied for a patent on blockchain technology that created a link between crypto and fiat currencies. MasterCard is not alone, as there are any number of crypto projects with the same idea.  Recently we looked at TenX and there are others.

Using TenX for comparison, MasterCard’s recently awarded patent offers to convert crypto to fiat using the existing MasterCard network.  TenX and many others plan either create their own high speed mainnet or use the Ethereum platform.

In head to head competition, this gives MasterCard a sizable advantage since MC is pretty much accepted by merchants everywhere.  As much as I hate the duopoly represented my MC and Visa, right now they could turn out to be the best thing to happen for one simple reason.  They will unquestionable accelerate mass acceptance of crypto.

Their existing network and transaction speed, immediately solves the lingering Bitcoin/Ethereum issue of scalability.  In addition as observers have pointed out, both MC and Visa have had systems in place to identify fraudulent transactions.

Having said all of this, is MasterCard going to kill all other crypto payment wanabys like TenX and others? Before concluding the answer is yes, consider this.  In their recently released quarterly review to shareholders, MasterCard reported net income of $2.33 billion on revenue of $5.24 billion. That is a whopping profit margin of 44.5%!  This towers over extraordinarily profitable companies like Apple at 20.3% or the average US corporation at less than 10%.

When MasterCard’s blockchain system goes into use, it will plump up those already MC margins. So, as a crypto investor, you have to ask yourself, do you actually think that MC will pass on those savings or wallow in the cost savings?  The answer is pretty obvious.

MasterCard Could Be The Best News

Crypto naysayers are the first to deny that Bitcoin and others are a legitimate medium of exchange.  This is based largely on the limited number of mainstream merchants that are in the crypto loop. MasterCard could help take crypto mainstream and that would be a good thing for major names like Bitcoin, Bitcoin Cash and Ether.  And with the payments processing business dealing in over $50 trillion in transactions annually, there will be room for startups offering high speed scalability at lower cost. It will not happen this year but it will happen.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 97 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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