Computers can do amazing things these days. They can translate human languages in real time, recognize faces, and use population data sets to predict the incidence of genetic diseases.
But if you can count to 10, then you have technically achieved a mathematical feat that no supercomputer ever has.
Heck, if you can count to two then you’ve out-counted the overwhelming majority of the world’s computers, including many supercomputers.
As you may know, traditional computing is built on simple tabulations performed in binary code, or base-2. Most computers can only really “think” in terms of 1 or 0 — or more precisely, whether a particular circuit in their processor is on or off.
When you ask Google what 24 times 83 is, you’re really asking it to multiply 011000 by 01010011. Google’s server performs this operation in binary — powering lots of tiny circuits on or off in the process — and arrives at the answer, 011111001000 (actually off-on-on-on-on-on-off-off-on-off-off-off), which it then shows as “1,992.”
Supercomputers like the IBM Summit, pictured above, use many processors wired in parallel to perform big computations as quickly as possible — but until recently, they were still bound by the mathematical limits of base-2 computing.
Today, however, that’s changing thanks to quantum computing — an innovation that uses relatively recent discoveries in theoretical physics to expand computers’ capabilities beyond binary.
As we’ll discuss in this report, quantum computing has the potential to be as impactful as the invention of computing itself — if not more. And due to a host of government- tech industry- and pandemic-related reasons, 2021 looks to be the year when quantum computing will enter the commercial mainstream — and make early investors a lot of money.
But first, we should probably define what quantum computing is — and to us normies who don’t have a Ph.D. in mathematics, that’s easier said than done.
What Is Quantum Mechanics?
According to Energy and Capital’s resident scientists, quantum computing is…
Quantum mechanics are…
We’re going to try to hit a balance of comprehensiveness and comprehensibility in this explanation, but it will inevitably oversimplify, fudge, and gloss over a lot of stuff for ease of understanding...
There’s a set of interrelated ultra-small-scale phenomena that physicists and mathematicians became aware of in the early 20th century which seem to break our understanding of how the world works.
Early quantum physicists like Erwin Schrodinger and Max Planck noted that our linear understanding of numbers doesn’t seem to apply at scales smaller than the atom, requiring us to replace our traditional idea of “quantity” with discrete “quanta” — specific, arbitrary-seeming values that aren’t continuous or logically related like “1 foot, 2 feet, 1 yard” are, for example.
According to quantum mechanics, at small enough distances, fundamental spatial ideas like “position” and “velocity” fall apart. Subatomic particles like electrons and quarks actually occupy probability density plots — areas in which they might be, with some areas being more likely to contain them than others.
You don’t need to understand this concept or the image above, which depicts the various quanta of probability plots a hydrogen atom can occupy. I certainly don’t.
What’s important is that within these probability plots — at these tiny quantum scales where position doesn’t actually exist — very strange things happen in the eye of a human observer.
Particles can appear to exist in two places at once, and can become “entangled” in such a way that one will behave exactly like the other no matter the distance between them (like a voodoo doll). They can sometimes appear to instantaneously teleport from one place to another, effectively traveling faster than light in a way that should violate Einsteinian laws of physics.
Until recently, these quantum mechanical phenomena, known as superposition, were curiosities known only to physicists; they were thought to be too small in scale and too esoteric to have any relevance to the real world. But then, in the early 1980s, engineers figured out how to manipulate computer logic gates using quantum superposition effects.
So what are logic gates, then?
We’re close to an actual definition of quantum computing now — don’t worry.
How Quantum Mechanics Is Opening up a Whole New World of Computing
In simple terms, logic gates are devices that take one or more inputs — in computing terms, ones or zeros, ons or offs — and check whether a given set of conditions about these inputs is true. If the inputs pass the logic gate’s test, the logic gate “says yes,” or outputs a 1. If they fail the test, the gate “says no” and outputs a 0. They’re the building blocks of computer logic.
Below is a simple schematic of a computer chip containing four logic gates, each of which tests whether its two inputs have charges or not. If they both do, then each gate passes on a charge, or 1, as its output. If they don’t, then it doesn’t, or passes on a 0 as its output.
This is where the magic of quantum computing happens. Using electron superposition, a quantum logic gate can take in various inputs, and in addition to saying “yes” or “no” it can say “maybe” — or more correctly, “both charge and no charge at the same time.”
This superpositioned answer allows a quantum computer to effectively work on multiple possible solutions to a problem simultaneously, while a traditional computer has to try one option, drop everything else to see if it works, and then move on to the next one if it doesn’t. This makes quantum computers much, much, much faster than traditional supercomputers.
When you stack millions of these “multitasking” quantum logic gates on top of each other — as quantum computers do — you get a machine that can solve trial-and-error problems like decryption many orders of magnitude faster than even record-holders like the IBM Summit.
And that has cybersecurity engineers sweating.
How Quantum Computing Will Change the World
You see, most sensitive data today — from your Facebook messages to the CIA’s orders to its undercover operatives — is transmitted between computers using Rivest-Shamir-Adleman encryption, or RSA.
RSA scrambles sensitive information into extremely complex math problems, which can be solved very quickly with the proper decryption keys.
The problems theoretically can be solved without the keys through trial-and-error computing, but they have historically been considered safe because no one has had the computing power to do so in any feasible amount of time.
It is theorized, however, that even a modestly advanced quantum computer could break RSA in a few hours with its multitasking trial-and-error capabilities.
This algorithm — which is currently protecting bank account passwords, military secrets and more — could be gone in less than a day once someone tinkers enough with a machine.
On the positive side, quantum computers can also use their superpositional abilities to simulate molecular-scale phenomena, which classical supercomputers struggle with. In part, this is because molecules are small enough to be subject to quantum effects, which are difficult to model on a non-quantum computer. Its effects on health care could thus be transformative.
As an example, one of the most mysterious processes studied by medical researchers today is protein folding. Our body’s molecular building blocks seem to “know” how to properly arrange themselves, despite having hundreds of billions of possible positions.
Doctors are starting to realize that this protein-folding process can tell us a lot about how the body works — and abnormalities in protein folding seem to play an important role in prion diseases like Alzheimer’s. But we have no idea how it works — and until recently, we only had very clumsy ways of simulating it.
Before quantum computing, the scientific world’s best guess at how to model protein folding was — I kid you not — to make a puzzle video game out of it called Foldit, and thus to use a stable of gamers to trial-and-error the possible positions.
Foldit did have some impressive accomplishments; its 57,000 players have been collectively cited in more than half a dozen scientific papers. But its first usable insight came more than two years after the game’s 2008 launch.
Here, quantum computing once again takes a problem that previously took years to chip away at and makes it completely solvable in hours.
IBM’s quantum computing team has a quantum protein-folding algorithm on its website that can replicate the work of thousands of Foldit users in a few clicks.
In sum, the development of commercial, mainstream quantum computers could be a Y2K-scale event in the computing world — except, like, actually important. And we’re closer to that point than one might think.
2021 Will Be the Year of Quantum Computing Thanks to Alphabet, China, the EU, and COVID-19
Back in October of 2019, Google’s parent company, Alphabet (NASDAQ: GOOG), announced that its quantum supercomputer, Sycamore, had achieved “quantum supremacy.”
That means Sycamore, pictured below with Alphabet CEO Sundar Pichai, successfully performed a calculation in 200 seconds that no classical computer could complete in any feasible amount of time. Researchers estimated that a state-of-the-art classical supercomputer would have taken 10,000 years to complete the same one.
This technological milestone likely would have made waves at 2020’s biggest quantum computing conferences, like Lisbon’s International Conference on Quantum Communication, Measurement and Computing in June, or Albuquerque’s Adiabatic Quantum Computing Conference in September.
It likely would have signaled to the engineering community that real-world, potentially RSA-breaking applications of quantum computing aren’t as far off as they once appeared. And it likely would have generated renewed interest in quantum computing among investors.
But it didn’t — because the vast majority of this year’s quantum computing conferences were canceled due to COVID-19. Some conferences are holding special makeup sessions this winter, while others are simply attempting to cram their canceled 2020 content into their regular summer 2021 sessions.
In other words, Alphabet won’t get the chance to tell the world about its quantum computing breakthrough in detail until next summer — and history shows that that could have dramatic effects on a handful of stocks. (More on that in a moment.)
That’s not the only catalyst driving quantum computing investment in 2021. In the time we’ve spent waiting for Alphabet’s Sycamore presentation, two more notable events in quantum computing history have occurred.
First, in December 2020, a team at the University of Science and Technology of China in Hefei achieved quantum supremacy on an even larger scale.
Their quantum computer, Jiuzhang, is a product of the Xi Jinping government’s $10 billion-plus investment in the country’s National Laboratory for Quantum Information Sciences. According to data posted by the team, Jiuzhang can perform some tasks 100 trillion times faster than the world’s fastest classical supercomputers — and is 10 billion times faster than Sycamore.
The Hefei team’s accomplishment implies that much like the 5G race, the U.S. is at risk of losing the quantum computing race to China — badly.
Then in March 2021, the European Union released its 2030 Digital Compass plan, which calls for massive investments in quantum technology. “It is our proposed level of ambition that by 2025, Europe will have the first computer with quantum acceleration paving the way for Europe to be at the cutting edge of quantum capabilities by 2030,” the document said.
So to review, quantum computing is a technology that uses the flexible nature of… reality to solve problems in a way that is literally billions of times faster than the fastest classical supercomputers. In the last year, it has made the jump from “theoretical goal” to “actually existing technology” in several different places, independently.
It has the power to break encryption — and in effect, secrecy — as we know it, and to unlock secrets about the human body’s chemistry that could eradicate the most mysterious and devastating neurological diseases in our lifetimes. And the world’s three largest superpowers — the U.S., China, and the EU — are obsessively throwing money at it.
So how do you invest in it?
You could buy Alphabet or IBM (NYSE: IBM), with the logic that these are the most visible companies involved in quantum computing. Alphabet has certainly been a great stock to own in the last year, and IBM has… tried…
But if we’re being honest, quantum computing makes up a negligible share of both companies’ revenues — and at Energy and Capital, we’ve found something better.
We’ve found what appear to be the first two pure-play quantum computing stocks on the market. Let’s learn about them…
180 Degree Capital Corp. (NASDAQ: TURN)
Founded in 1983 and based in New York City, 180 Degree Capital Corp. is a computer investment technology concern with substantial interests in quantum computing.
Its core portfolio companies include D-Wave Systems, a startup developing cloud quantum computing systems for airlines, healthcare companies, manufacturers, and more. It also has investments in Nanosys, a manufacturer of quantum dots for LED displays, and a quantum-inspired data management and storage firm called Quantum Corporation.
180 Degree Capital is profitable on an earnings-per-share (EPS) basis, and has been beaten down to an incredibly low price-to-book-value (P/B) ratio of less than 1 after years of lack of interest in quantum computing.
As you can see, however, it has performed admirably in the last year — mirroring a trend from past years where it has tended to jump during periods of interest in quantum computing.
2021 should be an even better year for 180 Degree Capital.
Quantum Computing Inc. (OTC: QUBT)
Founded in 2018 and based in Leesburg, Virginia, Quantum Computing is a software company which develops applications to help companies incorporate quantum computing methods into their operations.
In 2020 they unveiled their Qatalyst cloud-based quantum optimization software, a product that seeks to give companies access to quantum computing speeds without the need for specialized hardware. In this respect, it is positioning itself to be the pre-Y2K software fixer of the quantum computing revolution.
The firm is highly speculative — and as you can see, its stock has sold off significantly in the last year. But it has staged a notable recovery in the days since the EU’s quantum computing announcement — and as the technology proliferates over the next year, its quantum computing-oriented software products could see their market size expand significantly.
Energy and Capital’s quantum computing watchlist: Buy Alphabet (NASDAQ: GOOG), 180 Degree Capital Corp. (NASDAQ: TURN), and Quantum Computing Inc. (OTC: QUBT) at market.
Like Y2K on Steroids
We have compared the quantum computing revolution to Y2K several times in this report, and at a glance, that comparison might seem unflattering. After all, Y2K failed to deliver the apocalyptic failure of computer systems that it promised.
But it’s easy to forget that Y2K’s anticlimactic nature was the result of a successful mad dash to patch millions of computers to fix the date-related software bug that could have taken down many systems.
The government-sponsored advent of quantum computing this year — and the likely subsequent breaking of RSA encryption — will have a similar impact on the world of computing.
Investors can wait and then scramble to try and make money reactively — or they can buy in now and ride the quantum computing revolution to new fortunes.
Here at Energy and Capital, we believe in getting ahead of world-shaping technological trends like these — and that’s why Bull and Bust Report subscribers have already been profiting from a series of stocks central to another computing revolution — one that is comparable in scale to the advent of quantum computing.
Spatial computing has the power to reshape the digital world forever — and Bull and Bust Report subscribers are already making money from it. Click here to learn more.