Many have become familiar with the concepts of bitcoin and cryptocurrency, the practical applications of computer science and cryptography toward real-life “alternative currency” with a total circulated net worth of about $10 billion today.
The underlying concept is to employ the theories of cryptography to create a pure person-to-person (p2p) medium to transfer value. The intended advantages over traditional currency are: cutting out the middle man; savings in time and money; immunity to government or any 3rd party interference; the universality of a currency not confined to a single country or jurisdiction; relative anonymity afforded to its users; a relatively strong resistance against counterfeiting; the convenience of existing entirely in digital form; and the irreversibility of transactions.
Many will point out that several of these attributes have bred cryptocurrency’s shortcomings, such as: a lack of regulation or means of consumer protection; the inability to get help if something goes wrong; the extreme volatility; relatively minimal proliferation as an acceptable form of payment; the potential for permanent loss; and its notoriety for use in criminal activity.
Lesser known is one of cryptocurrency’s scientific peers: quantum money. Like cryptocurrency, it applies concepts of cryptography toward a secure medium of value transfer. It differs in that it exists in physical form; it is fiat in every way. In fact, even the conceptual “Mintchip” more closely resembles Bitcoin in that is behaves as p2p currency.
Its main thrust of value is the use of cryptography to create a 100% airtight, self-policing defense against counterfeiting. In traditional physical fiat, every bill is marked with serial number. Aside from examining for the standard security features, anti-counterfeiting policing in its truest sense is performed by verifying if that serial number already exists or should exist at all. The likelihood of discovering fraud this way isn’t the greatest. If security features can be added, they will be replicated sooner or later in the not-too-unlikely event the counterfeiter deems them worthy of such.
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The concept of a “bit” means everything is either on or off, 1 or 0. This would be applied in any traditional digital setting, such as with Bitcoin. A “quantum bit”, or “qubit”, however, means that you can exist in more than one state at a given point in time, as per the phenomenon in quantum mechanics. By keeping a foot in each state, a would-be counterfeiter ends up changing the would-be copy to the wrong state, which is then rejected by a central database.
The concept provides for a perfect defense against counterfeit-ability, more so than Bitcoin. With Bitcoin, there exists a slight window to alter and thereby duplicate transaction ID’s, or “malleability”- its own form of counterfeiting. This issue has been front and center in the MtGox debacle and was even encountered by other exchanges.
However, thus far quantum money’s development is nowhere near that of Bitcoin. Though both employ decades-old cryptography concepts, and furthermore, active work in quantum money well pre-dated cryptocurrency (2009), HPC Wire reports that the idea has been called “impractical owing to the fact that the necessary technology does not yet exist”.
Indeed, on the homepage for the NASA Quantum Future Technologies Conference website, it is acknowledged that:
“Despite a comprehensive and rapid advance of quantum technologies in recent years with several breakthrough areas emerging there has been no in-depth systematic discussion so far on how the quantum revolution can benefit National Aeronautics Space Administration (NASA) missions and objectives.”
It would also seem that quantum money has little to offer the world practically over and above traditional money other than enhanced defense to counterfeiting. This has provided less impetus for practical development than cryptocurrency, which despite its drawbacks, offers a revolutionary approach to value transfer.