Source: Bova et al., “Quantum Economic Advantage,” National Bureau of Economic Research, February 2022.
Commentary: In quantum mechanics, subatomic particles can exist in two different states simultaneously. Quantum computers replicate this state of simultaneous being to create additional space to store information. Whereas classical computers store information with binary bits of ones and zeros, quantum computers utilize quantum bits (qubits) that can be both one and zero, effectively doubling data storage with each qubit used. This extra storage allows for more computer calculations to be performed faster than in classical computers, granting quantum computers quantum advantage if they are able to solve problems too complex for classical computers. But a recent report by the National Bureau of Economic Research (NBER) finds that quantum computing need not have quantum advantage in order to maintain strict economic advantage.
The report presents economic models between a classical computing company and a quantum company. The authors demonstrate that in scenarios of quantum advantage, the quantum firm can produce effectively as a monopolist due to classical firms being incapable of entering the market to compete. More revealing, they analyze a well-known quantum algorithm, Grover’s Algorithm, to identify a rate of quantum speedup into their model for cases without strict quantum advantage. They find that applying Grover’s Algorithm allows the quantum computing company to complete specific processes in square-root the number of steps compared to the equivalent classical algorithm. Based on this quantum speedup, they find that even in circumstances without quantum advantage—and where the modeled classical firm is cheaper to scale—the quantum firm’s lower variable computing costs directly improve profitability by reducing the firm’s cost base and indirectly improve profitability by generating greater benefits to investing in market creation. Their findings indicate that even when there may be no strict quantum advantage and equivalent calculation is still possible on classical hardware, quantum economic advantage is nonetheless achieved. Quantum computing’s advantages pose enormous commercial, scientific, and national security implications, therefore any country hoping to lead in these issues must also be a leading investor in the technology.
