As bitcoiners dismiss quantum progress, NeverLocal turns light into money

This threat to Bitcoin's cryptography might turn out to be nothing more than a warm-up act.

Image from Amazing Stories v4, No. 6 - The Red Peril, by H.W. Wesso (1929)

While bitcoiners fight over whether or not quantum technology will break the cryptography securing the asset they love, two researchers work on how to make an all-new kind of internet money that really would work just like cash.

“Now we know how to build it in theory,” Fabrizio Romano Genovese, a co-founder of NeverLocal, tells Front Stage Exit.

Genovese and his co-founder, Stefano Gogioso, both Oxford Computer Science PhDs, explained (with palpable enthusiasm) the progress they have made toward creating quantum money. NeverLocal was founded to prove that quantum money really is possible, and that a business model could be built around it.

The more I dig into applications of quantum technology, the more convinced I become that the question of what it will do to Bitcoin is probably the least interesting question. Right here in the middle of this crazy transition into the age of artificial intelligence, we’re also on the verge of entering another dark forest: physics gone strange.

Quantum money actually predates Bitcoin by a very long time. Stephen Wiesner came up with the concept in the 70s, though he was not able to get his paper on the topic published until the early 80s.

Quantum money works like a marriage of cash and light, pennies inside sunbeams.

When I learned about this concept, it was like when I first learned about zero-knowledge proofs. It’s one of those things that make you think the universe still has a lot of mysteries left for humanity to work out.

So, with a physical bill, a transaction is settled as soon as I hand the money over. When I give a cashier a $20 bill and she puts it in the register, it’s settled. No ledger needs to be updated. The ledger is the bill itself.

Quantum money works the same way; it’s just that it’s a photon rather than a piece of paper — a photon with quantum data. This makes it much more delicate than paper, true, but it also means you could hand over a quantum stablecoin in New York to a cashier in Los Angeles and it would settle almost as fast as you hit “Send.”

I started looking into the latest in quantum applications as the drama around Bitcoin security heated up this year. Quantum money was easily the most exciting concept Quantum Punks were discussing.

But it seemed so magical that I assumed it wasn’t anything anyone would actually work on until quantum computing itself hit production grade.

But there is at least one startup working on quantum money now: NeverLocal.

“It is the only technology that we know of that can fully solve the double-spending problem by creating a completely private, completely peer-to-peer, non-decentralized cash-like instrument. There is no other way to do it. Everything else has compromises,” Gogioso says. “What cash really wants to be is an immutable private store of money, which is uncounterfeitable.”

Paper cash is, theoretically, that, but counterfeiting continues to be a problem, which undercuts the “uncloneability” promise.

And like cash, once quantum money gets working, it would be a technology that eschews some of the cumbersome awkwardness of cryptocurrency. No keys. No consensus.

And then there’s the security.

“It’s not just that quantum money is more convenient, it works better, etc. A lot of quantum money and quantum-money-adjacent protocols are guaranteed by physics itself,” Genovese says.

Quantum Money, the apotheosis of cypherpunk

Design upgrade

But quantum money, as theorized, would be very delicate.

If we gigantic and awkward humans want to check a delicate and perfect quantum state, we can, but the problem is that we can only do it once. Checking destroys it.

So, for example, if you sent me a $20 quantum bill and I wanted to verify that you didn’t actually send me a $5 bill, I could do that. But it would vaporize with nothing left behind but a statement saying:

$20 = TRUE.

But NeverLocal has come up with a scheme that should make this a little less painful. Basically, every note could have an arbitrary number of proofs built into each one. Checking one would destroy that proof, but it would come with many more.

With multiple proofs, though, a quantum note would theoretically be able to move through the economy without leaving a record of where it’s been (the note would be the ledger, just like cash), at least not until it needed to be reissued by the issuing authority after running low on proofs.

Something, something, Google

NeverLocal is not alone in pursuing quantum money. Google made noise late last year about its own designs.

While it’s tempting to talk about quantum money as a replacement for Bitcoin, that’s not how Google talks about it. The internet giant still conceives of quantum money as a centralized product.

Dar Gilboa, a quantum researcher there, told Decrypt, “We’re not solving the same problem,” because the company does not envision the product as decentralized.

And, honestly, I’m increasingly convinced this question of quantum vis-a-vis Bitcoin is going to look like weak tea in retrospect.

But — anyway — the NeverLocal team tells Front Stage Exit that decentralized approaches will be feasible, opening up quantum money as the true cypherpunk trump card.

But if you’re like me, you must be wondering: “Well, okay, if it’s light, where do you put it?” That’s still getting worked out, but recent work out of France has suggested that quantum memory is making progress.

And that’s just one thing.

Long story short, there’s still a lot being worked out.

Still, what’s striking to me is that anyone is even trying at this point, but the NeverLocal team thinks we might be only a few years away from actual quantum products.

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Realism

Not to oversell this, there’s still a lot to be worked out. The signal here is that entrepreneurs have placed their bet and some investors are backing them (the company is seeking its seed round, but it already has backers).

And, if this all gets somewhere, quantum money will probably first be used by giant companies doing enormous and arcane finance. For example, dark pools. The NeverLocal crew sees a lot of promise in dark pools.

So it’s probably going to be quite a while before you rent a Lambo in Dubai with light.

And I know this is all really weird, but the world is getting pretty weird. There are cars with no drivers traveling all over Austin and Phoenix now. A future that seemed inconceivable is taking shape.

After ten years of writing about weird stuff, here’s what I have found: New things come along and people don’t try them. They say they don’t try them because they don’t understand the weird new thing.

That’s not true, though, even if they aren’t lying. They actually think that’s the reason, but it’s not.

People don’t try weird new things because there is no network effect sufficient to entice them to overcome the cognitive load of encountering something unusual.

Once there’s a sufficient network effect, they will try the new thing. They won’t try or care at all to understand it beyond how to use it. Once they can reliably use it, they won’t try to understand it at all.

No one cares about understanding any technology. Hardly anyone understands anything we use. I have an air fryer. I have no clue what it’s doing. It works nicely, though.

But it might be sooner than you think. And what progress here almost certainly indicates is that other quantum applications are coming that will hit closer to home.

Here there be dragons

This frontier is especially weird because we can barely even conceptualize what we might be able to do with these machines, yet humanity is building quantum machinery as best we can.

It’s a race to get over a horizon. Is there a pot of gold on the other side? Are there demons? Nobody knows.

Perhaps more so than any other form of technology that humans have ever succeeded in deploying, we just really don’t know what the world after quantum looks like.

We’ve been toying around with the idea of intelligent robots for over a hundred years. But quantum? Like the branch of science itself, our imagining of that future is rough and probabilistic.

So, yes, quantum might break Bitcoin as we know it, but once you start to take quantum seriously it seems like that might be the least of the worries and/or the tiniest of the possibilities.

Looking out at the quantum future at this point seems something like it must have been to stand on the western shores of Europe, looking out at the sea and wondering how far one had to go before they hit some other kind of land.

Most people would stand there and say: “Well why would you go there if you don’t know what you’ll find?”

But there have always been those who would answer, “Because there must be something. And I want to see.”