Multiverse Computing and Central Bank Modeled Cryptocurrency Adoption Simulation
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The Bank of Canada is experimenting with quantum computing as a way to solve complex financial problems, potentially those involving cryptocurrencies, that are beyond the reach of traditional computers.
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Multiverse Computing, a quantum software company based in Spain with offices in Toronto, says it recently built a simulation model from scratch in collaboration with Canada’s central bank.
“We wanted to test the power of quantum computing on a research case that is difficult to solve using classical computing techniques,” Maryam Haghighi, director of data science at the Bank of Canada, said in a statement. hurry. “This collaboration allowed us to learn more about how quantum computing can provide new insights into economic problems by performing complex simulations on quantum hardware.”
Quantum computing uses quantum theory to perform complex calculations and problems as well as to assess probabilities. Computers can process exponentially more data than traditional computing models.
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Multiverse computing relied on a technology called “quantum annealing,” a quantum computing method that attempts to determine an optimal solution from a wide range of potential solutions.
In this case, the company and the Bank modeled a simulation of the adoption of cryptocurrency as a means of payment by non-financial companies, coding all possible combinations of results in a network of ten people.
“It’s not possible to do that with conventional computers today, from what we’ve seen, because the number of possible configurations explodes for large systems,” said Sam Mugel, director of the technology at Multiverse. told the Financial Post. “For example, with only 10 players, like in this scenario, the number of possible combinations would be a number equal to one with 30 zeros behind it.”
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The Multiverse study ultimately found that for some industries, digital assets would participate in the payments market alongside traditional bank transfers and cash instruments. The extent to which each financial institution engages in the crypto space and the size of the market share they take depends on how these institutions respond to crypto adoption and the economic costs of crypto trading.
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“The crypto market is extremely volatile and notoriously difficult to regulate,” Mugel said. “Our technology will allow central banks to predict the effect of regulations.”
The Bank of Canada has been exploring the cryptocurrency space for years, particularly in regards to the possibility of a central bank digital currency (CBDC). Although the Bank has yet to find a reason to deploy a CBDC, it has laid the groundwork for central bank-issued digital currencies as early as February 2020.
More recently, on the policy side, the federal budget proposed $17.7 million in funding over five years for a legislative review of digital dollars led by the Department of Finance. The federal government said the first phase will explore digital currencies such as cryptocurrencies and stablecoins, with an extension to the possibility of CBDC should the need arise.
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