BOC taps software startup for crypto market simulations
The Bank of Canada is experimenting with quantum computing as a means of tackling complex financial problems, potentially those involving cryptocurrencies, that go beyond the scope of traditional computers.
Multiverse Computing, a quantum software company based in Spain with offices in Toronto, says it recently built out a simulative model from scratch in collaboration with Canada's central bank.
“We wanted to test the power of quantum computing on a research case that is hard to solve using classical computing techniques,” said Maryam Haghighi, the director of data science at the Bank of Canada, in a news release.
“This collaboration helped us learn more about how quantum computing can provide new insights into economic problems by carrying out complex simulations on quantum hardware.”
Quantum computing leverages quantum theory to run complex calculations and problems as well as assess probabilities.
The computers can process exponentially more data than traditional computing models.
Multiverse Computing relied on a technology called “quantum annealing,” a quantum-computing method that attempts to determine an optimal solution from a large array of potential solutions.
In this case, the company and the Bank modelled a simulation of cryptocurrency adoption as a means of payment by non-financial companies, encoding every possible combination of outcomes in a 10-person network.
“This is not possible to do using today's classical computers as far as we have seen, as the number of possible configurations explodes for large systems,” said Sam Mugel, chief technology officer at Multiverse. “For instance, with just 10 players, as in this scenario, the number of possible combinations would be a number equal to a one with 30 zeros behind it.”
Multiverse's study ultimately found that for some industries, digital assets would take part in the payments market alongside traditional bank transfers and cash instruments. To the degree each financial institution gets involved in the crypto space and the size of the market share they take on depends on how these institutions respond to crypto adoption and the economic costs of crypto trading.
“The crypto market is extremely volatile and notoriously hard to regulate,” Mugel said. “Our technology will allow central banks to predict the effect of regulations.”