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Quantum computing could one day transform industries, solve problems once thought impossible, and rewrite the rules of technology—but for now, it's more hype than reality.
Many people hold strong opinions about concepts like parallel universes, quantum entanglement, or Schrödinger's cat, often without fully understanding the complex principles of mathematics behind them.
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This widespread misunderstanding often leads to sensationalism, oversimplification, or outright misinformation, despite the endless fascination and debate these topics spark.
The same pattern of misinterpretation applies to quantum computing (QC), a field deeply rooted in the principles of quantum mechanics.
QC shares a reputation for being highly complex and often misunderstood by the general public, making it susceptible to overhyped claims and misconceptions.
For example, you may have heard assertions that encryption is "dead" following the introduction of Willow, Google’s state-of-the-art quantum chip.
While Willow represents a remarkable technological breakthrough, it does not mean quantum computing is ready for widespread adoption—far from it.
Predictions about when QC will reach mainstream usability vary wildly, ranging from 5 to over 10 years, reflecting the uncertainty of its timeline.
As quantum computing continues to generate buzz, understanding its realities is more important than ever.
Building an informed opinion not only helps separate fact from fiction but might also save you—or others—from falling into the hype surrounding speculative investments in this emerging field.
The Solution Before the Problem
Quantum computing is, in many ways, a solution still searching for its most impactful problems. In other words, we have yet to fully understand what it will ultimately be capable of achieving or how it will be most effectively utilized.
Quantum computing stands at the frontier of technology, brimming with potential yet grappling with its purpose.
While it promises breakthroughs in cryptography, optimization, and materials science, many of these applications remain largely theoretical or confined to niche problems.
The truth is, most challenges that quantum computers could outperform classical ones in solving aren't pressing concerns—at least not today.
The technology itself is still in its infancy, and its practical advantages over traditional computing have yet to materialize.
Take Shor's algorithm, for example—an approach that could theoretically crack modern encryption, potentially disrupting global cybersecurity. It’s a powerful idea, but we lack a quantum computer capable of executing it at a meaningful scale.
Much of quantum computing research is speculative, driven by the quest to uncover applications that don’t yet exist. It can be compared to biotechnology in several compelling ways, as the two fields share similarities:
Frontier science and complexity – In both fields, progress is driven by advancements in fundamental science, making breakthroughs hard to predict and understand without specialized knowledge.
Unclear use cases in early development – Both fields started with enormous promise but faced skepticism about their practical impact in the short term.
Speculative investment and hype – The hype surrounding both fields can lead to inflated expectations, making it challenging to separate realistic potential from speculative narratives.
Ethical and societal implications – Both fields have the potential to reshape society in profound ways, demanding ethical foresight.
Long-term vision and transformative potential – Both fields exemplify the idea of long-term innovation, where patience and persistence are essential for realizing their full potential.
Quantum computing is not the first technology created before its problems or applications were fully understood.
History provides several examples of life-changing technologies that were developed before their most impactful use cases became apparent:
Electricity – When electricity was first harnessed, its potential applications were not immediately clear. Early uses like arc lighting were impressive but limited in scope. It wasn’t until later that electricity became the backbone of industrial and residential life.
The laser – When lasers were invented in the 1960s, they were famously described as "a solution looking for a problem." Today, lasers are ubiquitous, used in everything from medical procedures to telecommunications, manufacturing, and entertainment.
The internet – Initially developed as a military communication tool (ARPANET), the internet's transformative impact on commerce, communication, and entertainment wasn’t envisioned until much later.
Blockchain technology – Blockchain began as the backbone for Bitcoin but has since evolved into a broader technology with applications in supply chain management, voting systems, and more. Many of its potential uses were identified well after its initial creation.
Radio – The discovery of radio waves preceded the realization of their full potential for communication, leading to the development of radio, television, and wireless technologies.
3D printing – Initially developed for prototyping, 3D printing has found uses in industries like healthcare (e.g., prosthetics, implants), aerospace, and even food production—many of which were not envisioned at its inception.
Quantum computing follows this tradition of innovation, betting on the idea that the future will reveal its true potential.
However, the field is also surrounded by a cloud of hype.
Optimistic narratives often paint quantum computing as an inevitable game-changer, creating a sense of urgency and advancement that doesn’t match reality.
While this enthusiasm fuels progress, it risks setting unrealistic expectations for a technology still finding its footing.
What Is Quantum Computing?
Let’s keep it simple—because while I could spend pages explaining quantum computing, the technical jargon would likely lose both you and me before we even finished this page.
Quantum computing processes information in ways classical computers can’t.
Using the principles of superposition and entanglement, it can solve problems that are currently intractable or would take an inordinately long time for traditional computers to handle.
Classical vs. Quantum Computers
Normal computers (like the one you might be using right now) work with "bits."
Bits are like tiny switches that can be either on (1) or off (0).
Everything your computer does, from showing you a video to saving your photos, relies on these 1s and 0s.
Quantum computers use "qubits" instead of bits.
These qubits allow for a completely different way of computing, leveraging two key principles:
Superposition – While a regular bit can only be 0 or 1, a qubit can exist in multiple states at once—like being at home and at the beach simultaneously… at least until someone checks. This lets quantum computers perform many calculations at once, massively increasing their power for certain tasks.
Entanglement – When qubits are entangled, the state of one instantly influences the state of another, even if they’re miles apart. Imagine two friends on opposite sides of the world who always mirror or counter each other’s actions in perfect sync. This allows quantum computers to process and share information in extraordinary ways.
Why It Matters
Quantum computing has the potential to revolutionize fields like cryptography, drug discovery, and process optimization.
By solving problems that would take classical computers millions of years, it could unlock breakthroughs that were previously unimaginable.
While we’re still in the early days of this technology, the possibilities are as exciting as they are transformative.
Quantum computing might just change the world as we know it, or it could lead to its destruction… we just don’t know.
The Limitations
Quantum computing, despite its enormous potential, faces significant hurdles that must be overcome before it can deliver on its promise.
At the core of the challenge is the fragility of quantum bits, or qubits, which are the foundation of quantum computation.
Unlike classical bits, which are stable and can reliably represent a 0 or 1, qubits exist in delicate quantum states that are highly susceptible to errors caused by noise, environmental interference, and even slight temperature fluctuations.
This lack of stability makes building and maintaining a large-scale, fault-tolerant quantum computer incredibly difficult.
Obviously, this also makes mass adoption nearly impossible, as quantum systems require extensive control of their environment, including ultra-cold temperatures and isolation from external vibration.
Another major hurdle is scalability.
While researchers have demonstrated quantum systems with a few dozen qubits, creating a machine capable of running complex algorithms requires millions of qubits that can interact coherently.
Developing the hardware and infrastructure to scale quantum systems to this level remains a daunting task.
Error correction, a critical aspect of quantum computing, presents another barrier.
Because qubits are so prone to errors, quantum systems need sophisticated error-correcting codes to ensure accurate computation.
However, implementing these codes requires a significant overhead in qubit numbers and computational resources, further complicating the path to practical quantum computing.
Lastly, the development of quantum computing is heavily dependent on resources and expertise.
The field demands specialized materials, advanced cryogenic systems, and expertise in quantum mechanics, all of which make progress slow and expensive.
The technological ecosystem needed to support quantum computing is still in its infancy, requiring further years of collaboration between academia, industry, and governments to mature.
As you see, the road ahead is fraught with scientific, engineering, and practical challenges.
Overcoming these hurdles will require not only groundbreaking innovations but also patience, investment, and a clear focus on aligning the technology with real-world needs.
For now, QC is an emerging technology with a strong narrative, comparable to what we have seen with AI over the last 10 years.
Imagine
Like AI, QC captures people’s imagination, sparking excitement and speculation with every breakthrough.
After each advancement, we often hear the familiar “Imagine what it will be capable of in X years…”
It’s ironic, though, how those who struggle to fully understand the present technology are so eager to predict its future.
Both AI and QC are seen as transformative forces of our era.
AI has already made its mark, with advancements like machine learning and neural networks driving practical applications in areas like language translation, image recognition, and autonomous vehicles.
However, the early days of AI were filled with overpromises and unmet expectations, leading to periods of disillusionment known as "AI winters."
Today, while AI has reached impressive heights, it still struggles with fundamental challenges, such as interpretability, ethical concerns, and the need for vast amounts of data.
Quantum computing is following a similar trajectory.
Like AI, it promises groundbreaking capabilities—such as solving optimization problems, simulating complex molecular interactions, or breaking classical encryption—that could revolutionize industries.
However, it remains in its infancy, with practical applications limited by the technical challenges described earlier.
Much as in the early days of AI, progress in quantum computing is often nonlinear, with breakthroughs interspersed by periods of slower development.
Both fields also share a tendency to be misunderstood by the public and overhyped by the media.
Just as AI was once sensationalized as a harbinger of robotic overlords, quantum computing is often portrayed as a magical tool that will instantly solve humanity’s greatest challenges.
Let’s be real—it won’t! And if it does, it will be decades from now.
For now, speculators seem to be in search of a new narrative, and quantum computing has emerged as a leading contender—or at least one of them.
Investing in QC
While the technology and the narratives surrounding it are undeniably fascinating, investing in an industry still in its infancy is bound to be challenging and fraught with uncertainty.
In case you do, I strongly recommend to size it like you would an option position.
On one side, you have major tech giants like IBM, Google, Microsoft, and Amazon, all deeply invested in quantum computing hardware.
However, investing in these companies poses a challenge, as their quantum efforts are just a small part of their vast product portfolios.
Just as in the space exploration industry, you have emerging companies that will go parabolic. To be fair, many speculators are already positioned for this.
IONQ - Market cap $9 billion / Revenues $83.5 million - MC/Rev 10,825%
IonQ is a leading company in the field of quantum computing, headquartered in College Park, Maryland. Founded in 2015 by researchers from the University of Maryland and Duke University, IonQ aims to build and commercialize quantum computers based on trapped ion technology.
This approach involves manipulating individual atomic ions to perform quantum computations.
IonQ's technology is noted for its potential to achieve high-fidelity quantum operations, which are crucial for reducing errors in quantum computing.
The company has partnerships with major tech players like Amazon Web Services (AWS) and Microsoft Azure, providing quantum computing services through these cloud platforms.
Recently, IonQ ($IONQ) has made significant strides with its acquisition of Qubitekk, which is pivotal for its expansion into quantum networking.
This move is seen as a step towards strengthening IonQ's position in the quantum networking space, an area crucial for scaling quantum computing systems. The acquisition allows IonQ to capitalize on Qubitekk's expertise, particularly since Qubitekk had already deployed the first commercially available quantum network in Chattanooga, TN.
With this acquisition, IonQ's patent portfolio expands significantly, potentially reaching over 600 US and international issued and pending patents, considering the addition of Qubitekk's patents.
These patents cover areas vital for quantum networking like quantum network security and hardware, which are crucial for developing a quantum internet.
The financial and market implications of this acquisition are promising.
IonQ expects the acquisition to boost near-term bookings and open up new revenue opportunities, potentially setting the stage for its quantum networking division to achieve cash flow positivity—a significant milestone for the company.
Investors have reacted positively to the news, reflecting the growing excitement around IonQ's progress in quantum computing.
IonQ’s latest moves highlight its growing competitive advantage in the quantum computing space.
By focusing on quantum networking through strategic acquisitions like Qubitekk and Entangled Networks (acquired in 2023), IonQ is carving out a unique niche.
This approach positions the company not only as a quantum computing provider but also as a pioneer in building the essential quantum networking infrastructure that will drive the next phase of quantum technology.
In a market dominated by giants like IBM, Amazon, and Google, IonQ’s emphasis on quantum networking sets it apart.
Its innovative strategy of connecting multiple quantum computers into clusters using photonic interconnects could make it a critical player—or even a strategic partner—for these larger tech companies as they work to build scalable quantum networks.
IonQ's forward-thinking approach positions it well to shape the future of quantum computing and networking.
This strategic move makes IonQ an intriguing option for those looking to speculate in the quantum computing sector.
Some other quantum computing-related stocks, such as Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc., saw significant price surges following the recent IonQ news.
However, these companies lack the product maturity needed to sustain such growth, making their valuations appear highly speculative, especially when we consider that QC is only at its infancy.
For example:
Rigetti Computing – With a market cap of $4.2 billion, it generated only $15.7 million in revenue.
D-Wave Quantum – Despite a $1.9 billion market cap, its revenue stands at just $14.8 million.
Quantum Computing Inc. – Valued at $2.1 billion, it reported a mere $0.5 million in revenue.
These numbers highlight the stark contrast between the high market valuations and limited revenue generation, underscoring the speculative nature of these investments in the current quantum computing landscape.
It’s reasonable to anticipate that the Defiance Quantum ETF may revert to the mean, given that its largest holdings include Rigetti Computing and D-Wave Quantum, which together make up 5.7% of the portfolio.
While quantum computing is likely to become a hot topic soon, the technology is not ready for mainstream adoption just yet. If you choose to invest in this space, keep in mind that it remains highly speculative at this stage.
That being said, with such minimal revenue, any breakthrough news could act as a catalyst, igniting investor enthusiasm and sending the sector soaring, as we have seen with the recent Google news.
Conclusion – Promising but Not Ready Yet
Quantum computing undeniably holds immense potential to revolutionize industries and solve problems once thought impossible.
It sits at the intersection of cutting-edge science and speculative innovation, captivating imaginations with its promise of a transformative future.
However, the reality is that this technology is still in its infancy, and its practical applications are limited by significant technical and infrastructural hurdles.
The parallels with past groundbreaking technologies, such as the internet or AI, remind us that the road to mainstream adoption is often long and nonlinear.
While breakthroughs may spark excitement and speculation, the challenges of scalability, error correction, and real-world use cases mean that widespread implementation is still years, if not decades, away.
For investors, quantum computing presents both a fascinating opportunity and a cautionary tale.
A company like IonQ stands out as a leader with its strategic focus on quantum networking, making it an intriguing option for those willing to take a calculated risk.
However, many other players in the space are heavily overvalued relative to their revenue and lack the product maturity required for sustainable growth.
As the quantum computing narrative gains momentum, it’s essential to separate the hype from reality.
Whether you’re intrigued by the technology or considering an investment, patience and careful evaluation are key.
Quantum computing might one day reshape our world, but for now it’s a promise on the horizon—one that requires time, innovation, and the steady refinement of its potential.
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