PHOTO BY Steve Jurvetson from Menlo Park, USA; CC BY 2.0,


Companies need to have an overview of the implications of the arrival of quantum technologies.

This is my attempt at summing up my work on all this so far:

1. SECURITY: The largest companies as well as governments are working on protecting themselves from quantum disruption of existing security systems – whether they are working as efficiently and effectively as they should is a different question! But it is not clear to me that less-large companies are doing much to prepare for quantum disruption of their existing security systems. Whether your company is large or not-so-large, if you need (free) help with this matter, in terms of an outline of the sorts of things your company can do, drop me an email and I will send it to you for no charge and no obligation:

2. PRODUCTS: The largest telecoms companies and other large providers would have been expected to have got into the field by now, but (so far) there are only a very few companies that are involved – for good reasons, as well as not-so-good reasons. What that means is that less-large companies (if they have the will, and a 5-10 year horizon) can get into the field for a relatively small budget.

3. SERVICES: Very few companies are offering services in the field of quantum technologies, so this is also a field which companies (large and not-so-large) can start eyeing, if they have a 3-5 year horizon.

4. INVESTORS: quantum technologies are a field about which you certainly do *NOT* need to inform yourself if you are a short-term investor. I expect those who are NOT short-term investors to include governments, large companies, pension funds, reinsurance and insurance companies, but also *individual* investment analysts if they expect to work, of if their investment horizon is, beyond the next 3 to 5 years

5. EXECUTIVE DEVELOPMENT: If quantum computing is not already part of your curriculum, then you are programming your organisation for obsolescence in something like 5 years. If you want to avoid such obsolescence, do ensure that you include at least the following: the basics of quantum physics, an update on the current state of development in quantum technologies, and a discussion of the implications for your company.

6. RECRUITMENT INTERVIEWS: Do you already establish whether ALL potential recruits (including those who are intended NOT to work in IT) are at least somewhat up to date on quantum technologies? If not, do ensure that your company trains everyone involved with recruitment for your company both in the minimum they need to know, and for the best ways of checking on the level of knowledge and awareness of potential recruits.

7. TRAINING: Are basic modules on quantum technologies (quantum physics, and an update on the current state of development in quantum technologies) included in your training programmes for every recruit? Let me emphasise that that includes not only everyone working, and expected to work, *in* IT, but also everyone working, and expected to work, *outside* IT.

8. BUSINESS PROCESSES: Though some companies have indeed worked out the security-related implications of quantum technologies for each business process, I am concerned that very few seem to have done thought through the implications for each business process itself. The least your company can do is some scenario-planning in the light of developments in quantum technologies, given that it will probably take your company at least 3-5 years to implement changes in key business processes.

9. GOVERNANCE: There is huge discussion about relatively unimportant things like diversity in Boards, when essential developments such as AI and quantum technologies are being ignored. Adequate attention at Board level means asking at least the following:

9a. Do Board members have regular briefings (at least once a year) on latest developments in what I call “horizon technologies”? These include quantum technology and AI, though of course companies in different fields need to keep other specific business-portfolio-relevant “horizon technologies” on their radar.

9b. Has the Board created a mechanism for ensuring that there is an up to date dashboard of the portfolio of technologies in the company which are fully-integrated, those which are partially-integrated, those which are experimentally-integrated, those which are being evaluated for integration, and those which are being watched on the horizon? Is the key person responsible for each of these named, with at least 3 successors in line for each? Are the budgets for each of these adequate?

9c. How does the Board currently benchmark against key competitors the company’s level as revealed by the dashboard?

9d. Is the dashboard regularly vetted (at least every 6 months) by a qualified external board of experts?

9e. Is “technology-competence” adequately defined for members of the Board, members of the top Executive Committee, other senior executives, mid-level executives, and tech professionals? Are these definitions regularly vetted (at least every 6 months) by a qualified external board of experts? Are Board members and other members of the company regularly assessed in relation to the definitions of competence required at those levels? Are proper incentives in place to encourage company executives to keep up with the increasing levels of competence required? Are appropriate training and development opportunities in place?

I’ve probably missed at least one or two things in my summary and overview above.

Happy to have corrections/ amendments/ additions/ caveats/ questions. Best via an email to me:

Smart Contracts are one of the three aspects of FinTech that have drawn most attention; the others are: digital currencies (Bitcoin, Ether, et. al.), and distributed ledgers (Block-chain, Ethereum, et. al.).

When did the term “smart contract” originate?  Apparently, in the mid-1990’s.  Who first used the term?  Apparently, Nick Szabo, a computer scientist and cryptographer. Here is his definition of a smart contract: “A computerized transaction protocol that executes the terms of a contract”.  That suggests something pretty basic, and the capabilities of Smart Contracts are pretty basic at present.

A fuller but still pretty simple and good explanation of Smart Contracts is available at:

The only problem with this, and with most other discussions, of Smart Contracts is that they are led by those who have a vested interest in popularising them.

As a result, they minimise, instead of acknowledging, the challenges entailed by Smart Contracts.  For example, in the short history of Blockchain we have already seen a lot of “accidents”.  By contrast, there is a seamless series of General Ledger entries with banks since the Middle Ages. This chain (although privately managed) has proven very reliable.  In banks, cheating and fraud may well have taken place in this or that way, however I cannot recollect any such incident in relation to ledger entries (have you experienced any fraud caused by your bank regarding your bank account? Or do you perhaps know anyone who has experienced cheating in relation to ledger entries regarding their account?).  In other words, Blockchain – so far as reliability is concerned – claims to solve a non-existing problem. Moreover, it is not clear whether the Blockchain solution regarding reliability is in fact less good than what we have already.

Here are some further difficulties:

1. Failure risk due to power failure (common in certain countries, and not unknown in others)

2. Failure risk due to hacking (theoretically impossible, but in practice not so; think Mount Gex, think DAO, think CoinDash, think Bithumb, think Bitcoin Savings & Trust, think Bitcoinica, think BitFloor, think BIPS, think Picostocks – should I really go on?)

3. Failure risk due to technical issues – e.g. in the programming (whether deliberate or accidental).

4. Legal risk: in the absence of a legal framework around Smart Contracts, it is uncertain who is liable for what if there is a failure of any sort.  Related to this is the central issue of the absence of a Smart Contract Standard, on which depends entirely the possibility of real-time analytics – and, indeed, the possibility of reducing the regulatory burden without resulting chaos, fraud or exploitation.  In order to understand this, please read the article, “From Digital Currencies to Digital Finance” by Brammertz & Mendelowitz (Dr. Willi Brammertz is Chairman of the ACTUS User Association, and Dr. Allan Mendelowitz is CEO of ACTUS) which is to be published in Vol. 19, Issue 1 of the Journal of Risk Finance.

5. Oligopoly Risk: at present, Smart Contracts are being sold to the public on the basis of savings “Smart contracts save you money by taking out the middleman”. It is true is that existing middlemen and middlewomen will be taken out by Smart Contracts. But it is not quite true that there will be no middlemen/ women any longer. The new middlemen/ women will be the owners of the technologies that make Smart Contracts possible – that is, the owners of the tech infrastructures involved. Here are the basic infrastructures involved: the energy system, the IT system, the Blockchain, the Blockchain Platform (e.g. Etherium or whatever else), and the payment medium (which could be Bitcoins or, in future, US Dollars or whatever). The important points about all this are the following:

A.  Capitalism encourages fizz at the start of any new technology but, later, encourages consolidation. Think of the number of car manufacturers at the start of the motor car industry compared to the number of such manufacturers now. In other words, Capitalism always tends to drive towards monopoly but, for various human, social and political reasons, is stopped short of that, resulting in oligopoly.

B.  All oligopolies tend to want to increase their profits, so that what appears free or cheap in the fizz phase, or even in the consolidation phase, tends to become more and more expensive when the industry is run by an oligopoly  – and that continues to be the case till incumbents are challenged by the rise of newer technologies and related new business models.

So what does all this mean for you?

Should you be a party to a Smart Contract?  Well, not till at least the legal issues are sufficiently sorted – unless you are simply experimenting with models to learn from them (and even then, I would be careful).

Should you invest in technologies associated with Smart Contracts?  Yes, to the extent that you have money that you are prepared to lose, considering that the most profitable phase in which to invest in any industry is the fizz phase – though that is also the riskiest phase.  As winners emerge, and the industry begins to consolidate, it becomes less and less risky, but it also becomes less and less likely to be dramatically profitable.

The golden rules remain: do not invest if you are not prepared to lose all the money you have invested *and* do not invest if you don’t understand the industry as a whole as well as the specific company and the related business opportunity involved.