Things change at a surprising speed, especially when it comes to technology. And it should not scare or worry anyone, as every technological update can make things a little easier for all of us, even though it seems harder to understand at first. Socializing, gaming, and finance all of them can and do feel the impact of technology.
But among them all, the financial sector seems to be the one that changed the most. Just imagine that some decades ago, people did not even imagine that they would use credit cards. The main and one of the few payment methods was cash.
Fast forward to 2009, another significant payment method emerged: cryptocurrencies. Once crypto became popular, users also learned about cryptography, blockchain technology, and many more concepts that are in to shape the future.
But things do not stop here. Once developers started discovering the power of technology, all they could do was try to discover and improve further. So, while we’re still used to paying by card, through Apple Pay, or with crypto, a new financial system is slowly but surely evolving.
What Is the Quantum Financial System?
The quantum financial system (or QFS) is an advanced theory that may become the new financial system replacing the current SWIFT (Society for Worldwide Interbank Financial Telecommunications). Basically, experts believe that QFS has the potential to become the new global financial system and redefine how people from all over the world use and perceive money.
It is essential to note that the quantum financial system is not implemented, and it may be decades before we can say that we successfully switched from SWIFT to QFS. Instead, QFS is a theory, a hypothetical financial system that is believed to improve plenty of processes.
At the moment, many financial institutions are working to make QFS real, but truth be told, the technology behind the concept requires years to be developed to the point where companies can start using it.
How Does QFS Work?
The quantum financial system relies on quantum computing to process data significantly quicker through features such as superposition and quantum entanglement. Unlike the processes used by the SWIFT financial system, quantum computing has the power to solve problems of surprisingly higher complexity.
But How Does Quantum Computing Work?
We all know the good old 0 and 1. Every developer has interacted with them, and the 0-1 system has contributed to countless projects and still is the concept that allows us to interact with computers. However, with the quantum financial system, things are entirely different.
Instead of using bits, this technology relies on quantum bits or qubits. Qubits are units of quantum information described in a 2-level quantum mechanical system. You can imagine this system as a 2-dimensional vector space over complex numbers.
Unlike a traditional bit, which is either 0 or 1, and there is no in-between, a qubit can be both 0 and 1 at the same time, and when you try to determine it, it may change its values. A traditional bit can be entirely encoded in a qubit. On the other hand, a qubit can hold more information, and it is hardly possible to encode it in a bit.
The reason for this change is pretty simple: traditional bits can work with binary results (the 0-1 system we’ve talked about), whereas the electrons in the qubit can perform significantly more complex problems, calculating all the possible combinations at the same time. This process can be called superposition.
Now, you might ask yourself why we need systems that process more complex problems in less time. Well, imagine that an international transfer can now take even days to be processed. However, with quantum computing, QFS can process such a transaction instantly. This can significantly improve the entire financial sector and provide users with better ways to interact with digital assets.
SWIFT vs QFS
Basically, QFS and SWIFT are so different that you can’t even compare them. However, you can compare the benefits they provide.
The first and maybe most important factor we should discuss is security. After all, why use a financial system if you are left with no assets to use it with, right? So, developers focused on building a financial system that is almost impossible to hack. Thanks to quantum key distribution, QFS uses advanced encryption methods that make transactions remarkably safer.
Then, it’s also about speed. We already mentioned that, unlike SWIFT, QFS can provide lower times for all types of transfers. And when it comes to speed, it all sums up to qubits. So, we discussed how qubits are more complex, so they can solve more complex problems. This can lead to a surprising speed QFS provides, thus improving transaction times for worldwide users.
Furthermore, transparency also plays a vital role in the financial sector, and many believe that SWIFT still has to work on this. However, QFS has been designed to be as transparent as possible, also being able to track financial transactions in real-time. A higher level of transparency can contribute to reducing the risk of fraud and ensuring that transactions are processed legally.
QFS – Benefits and Risks
You have probably already figured it out – there are plenty of benefits coming with the quantum financial system. It could not be any other way, especially when it comes to a concept that uses cryptography, blockchain technology, AI, and quantum computing, which are some of the most advanced technologies at the moment.
However, just like with other new and advanced concepts, QFS cannot be all flowers and rainbows. It also implies some risks that, if considered, may turn into new opportunities to improve the technology behind the financial system.
Benefits of QFS
- Improved computational power through quantum computing;
- Advanced data analysis;
- Significantly higher security levels;
- Improved transparency;
- Lower transaction time;
- Risk analysis.
Risks and Challenges of QFS
- Scalability issues;
- Regulatory compliance;
- Compatibility issues;
- Cybersecurity risks;
- High development costs.
What banks are using the quantum financial system?
At the moment, there is no bank to be actually using QFS. All financial institutions can do for the moment is work to develop the technology.
How can QFS help finance?
QFS can provide higher security, lower transaction time, and a level of transparency that the SWIFT financial system can hardly achieve.
Is it worth investing in quantum computing?
Yes, but there is a catch. You can’t actually invest in quantum computing like you would in stocks or crypto. However, you can support companies that are involved in developing quantum computing technology.
Is quantum computing a threat to banking?
Quantum computing is rather a help than a threat to banking. It can improve almost all financial processes. However, there are some risks involved in using QFS, such as scalability issues, regulatory challenges, or cybersecurity risks.
Technology evolves faster than we can imagine, and once it has an update, it shares the new features with as many industries as possible. This also happens with the financial sector, which may see a significant update in the following years: switching from SWIFT to QFS (Quantum Financial System).
The quantum financial system might use AI, quantum computing, and many other technologies to provide a better way of using, transacting, and perceiving assets. Although QFS is still a hypothetical concept that might develop in the near future, experts believe that it will come with significant changes for financial institutions and worldwide users.
We already mentioned that QFS is such a new technology that it’s unclear how it will develop in time, so it is extremely important to constantly follow the technological updates concerning the quantum financial system.
* The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.
SOURCE : coindoo.com