Quantum crypto-economics: Blockchain prediction markets for the evolution of quantum technology

TL;DR

This paper introduces quantum crypto-economics, modeling the impact of quantum technology on blockchain-based financial systems and predicting how quantum risks could influence cryptocurrency markets.

Contribution

It develops financial models for quantum failure scenarios and proposes a framework for pricing quantum risk premiums in blockchain ecosystems.

Findings

Quantum technology poses significant risks to blockchain cryptography.

Models for quantum failure scenarios can inform risk management.

Pricing of quantum risk premiums can be integrated into blockchain markets.

Abstract

Two of the most important technological advancements currently underway are the advent of quantum technologies, and the transitioning of global financial systems towards cryptographic assets, notably blockchain-based cryptocurrencies and smart contracts. There is, however, an important interplay between the two, given that, in due course, quantum technology will have the ability to directly compromise the cryptographic foundations of blockchain. We explore this complex interplay by building financial models for quantum failure in various scenarios, including pricing quantum risk premiums. We call this quantum crypto-economics.