The Dark Side of Quantum Computing

- By Chris Wood, Chief Investment Strategist at RiskHedge

We love quantum computing tech.

If you missed our quantum computing guide, go here.

The quick why: Everything that has to do with nature fascinates me. And quantum computing provides an entirely new window into nature. Like the first microscope, the first telescope, the first X-ray machine, or the first DNA sequencer, but even more profound.

When you get down to the scale of molecules and atoms, nature doesn’t follow the same rules we experience in our everyday lives. Classical physics—and classical computers—can only provide a crude approximation of what’s going on when you get down to the super small.

If you really want to understand how nature works and evolves over time, you need a system that speaks its native language, a system that obeys quantum physics.

A quantum computer can simulate quantum systems because it is a quantum system. And that opens up possibilities that will make your head spin.

If we can accurately simulate what’s happening at the atomic level, we can do things like design effective drugs for conditions currently considered “undruggable,” create new materials atom-by-atom with properties we specify in advance (lighter, stronger, more conductive), develop exponentially better batteries, solar cells, catalysts for producing clean hydrogen… all sorts of cool stuff that will improve billions of folks’ lives.

But there’s a dark side to quantum computing…

Not the technology itself, but what bad actors could (and will try to) do with it.

Because at some point, relatively soon, quantum computers will be able to crack the encryption used to secure all internet communication.

That means everything we do online—every exchange of information, every transaction—would be compromised.

This day is coming. It’s not a matter of if, just a matter of when.

Let me explain…

How encryption works, and why it’s suddenly vulnerable

Essentially all internet communication is protected by scrambling information using a secret code. We call this encryption. And most of it works thanks to a clever mathematical trick involving prime numbers—numbers that can only be divided by themselves and one, like 2, 3, 5, 7, 11, 13, and so on.

Here’s the trick…

Take two primes—say, 37 and 73—and multiply them together. You get 2,701. Simple enough. Any basic calculator can do that in a fraction of a second.

But to run that calculation in reverse—if someone hands you the number 2,701 and asks which two prime numbers were multiplied to get there—a conventional computer basically has to check each possibility one by one until it finds the answer.

That’s not so hard with small numbers. But the encryption standard used to secure most of the internet—called RSA encryption—uses prime numbers that are hundreds of digits long. To find the two primes hiding behind that product, a conventional computer would have to run through possibilities for trillions of years… longer than the age of our universe.

And that’s really the whole secret behind encryption. It’s not that cracking the code is impossible in theory, it’s that it would take so long that nobody could ever actually do it. It’s security through mathematical impracticality.

Here’s where quantum computers come in, and where the story takes a sharp turn.

Quantum computers take advantage of the strange rules of quantum physics—specifically two phenomena called superposition and entanglement. Superposition basically allows a quantum computer to explore many possible answers at the same time rather than testing them one after another. Entanglement basically allows different parts of the quantum system to coordinate and accelerate calculations in ways that have no classical equivalent.

So a quantum computer running Shor’s algorithm could crack the prime number problem on which RSA encryption relies in a matter of minutes, if not seconds.

The practical consequences are enormous. Big Banks like HSBC process trillions of dollars in payments every year. All of that is protected by the kind of encryption quantum computers could break. Raiding customer accounts and stealing their identities could become child’s play for bad actors. Cryptocurrencies—which are built on the same mathematical foundations—could be rendered worthless overnight. Complex financial transactions that hold the global economy together could collapse.

We’d effectively be forced back to a cash-and-barter economy, destroying trillions of dollars in wealth in the process.

And it gets worse. Nation-states and sophisticated bad actors have already been running what security experts call “harvest now, decrypt later” attacks for years. The strategy is straightforward and chilling: steal encrypted data today, stockpile it, and wait for the day when a quantum computer capable of breaking encryption becomes available.

At that point, everything that’s ever been transmitted digitally—classified government communications, corporate secrets, private medical records, personal financial data—can be decrypted and read by anyone.

Let me be clear: There are no maybes here. This is going to happen. We must accept the fact that when it does, our existing communication systems are no longer fit for purpose.

So, is all hope lost? Is a world without digital security an inevitability?

Thankfully not. But what’s required is nothing less than a new internet—upgrading or replacing essentially all connected hardware and software systems that exist today. It’s a massive undertaking, and the clock is ticking.

Here’s the good news: smart people in the tech world saw this coming, and they’ve been preparing for years.

The technology trying to save the internet

Most folks have never heard of NIST—the National Institute of Standards and Technology—a division of the US Department of Commerce. Its basic job is to develop and promote technical standards to keep American technology trustworthy, interoperable, and secure. It sets standards for everything from weights and measurements to cybersecurity protocols.

In December 2016, NIST issued an unusual public call for proposals. It was essentially a worldwide competition: submit your best ideas for new encryption algorithms—mathematical locking systems—that could withstand an attack from a quantum computer.

The goal was to create what we now call “post-quantum cryptography,” or “PQC.” New digital locking systems for a world in which the old ones can be picked in seconds.

Cryptographers from universities, tech companies, and government labs around the world responded. During the competition, 82 candidate algorithms got whittled down through multiple rounds of evaluation, testing, and public scrutiny by the global cryptography community.

NIST announced the first three finalized post-quantum encryption standards in 2024, with a fourth algorithm expected to be finalized soon. These standards specify how companies, governments, and developers should lock and unlock data in a quantum-resistant way.

Big tech companies are already moving. Companies like Alphabet (GOOGL) and Apple (AAPL) have begun integrating the new standards into their systems. According to internet infrastructure firm Cloudflare (NET), over 60% of human-generated (non-bot) traffic that flowed through its servers in February 2026 was already protected by quantum-resistant encryption. And IBM, whose researchers helped develop two of the winning algorithms, has been integrating them into its enterprise products.

But it’s not enough for a handful of tech giants to update their software. The entire internet must be re-encrypted. Every device that connects to a network—every router, switch, smartphone, laptop, server—is vulnerable under current standards. Upgrading all of it will take years and require hundreds of billions of dollars of investment.

Devices that are roughly six years old or more may not be upgradable at all—their processors and memory simply aren’t capable of running these new, more complex algorithms.

Those devices will need to be replaced entirely. In most cases, more modern devices will need—at a minimum—significant software and firmware updates, and some will require new hardware too.

You can think of it like every lock in every building, on every car, in every city around the world needing to be replaced—and the new locks won’t fit in all the old door frames.

And the urgency is not theoretical. The arrival of a capable quantum computer creates a hard deadline that won’t negotiate. Anyone sitting on large troves of sensitive data—big tech companies, governments, militaries, financial institutions, healthcare companies—feels it.

That urgency is creating a very real—and very large—investment opportunity, which I’ll discuss next week.

But before that, there’s one more piece of the puzzle to understand: a technology that goes beyond just replacing old encryption with new encryption, and instead makes eavesdropping essentially impossible.

Quantum Key Distribution: The Unhackable Network

PQC basically works by relying on different kinds of math problems experts believe are hard for both classical and quantum computers to solve.

That’s a solid approach, but it’s still a lock. And no matter how good a lock is, someone eventually finds a way to pick it.

Quantum Key Distribution (QKD) takes a fundamentally different approach. It doesn’t just make the lock harder to pick. It makes eavesdropping detectable—and therefore useless—by taking advantage of the same area of physics as quantum computers (quantum mechanics).

But whereas quantum computers exploit superposition and entanglement to explore many possible solutions at once and zero in on the right answer super-fast, QKD exploits a fundamental law of quantum mechanics that says if you try to observe or measure a quantum particle you change its state.

This isn’t an engineering limitation or technical obstacle that could eventually be overcome with better tools. It’s a bedrock feature of our reality at the quantum scale.

QKD leverages this principle to transmit encryption keys—the secret codes that lock and unlock data—using single particles of light (photons), sent one at a time down a fiber optic cable.

Because each photon is a quantum particle, any eavesdropper who tries to intercept and read it will inevitably disturb it in a way that’s detectable by the intended recipient. So the moment someone tries to spy on the key being transmitted, it gets corrupted and becomes unusable—and the parties communicating know their channel has been compromised.

You can think of it like a secret note you want to pass to a friend, but the ink is made of a special quantum substance that permanently smears the moment anyone other your friend touches the paper. Not only is the eavesdropper unable to read the note, you know instantly that they tried.

What’s really cool is that this isn’t some thought experiment. It’s working technology, deployed in the real world today.

Toshiba has been a pioneer here. It’s been researching quantum cryptography since 1999 at its Cambridge Research Lab and holds a string of world records in the field—including the first successful QKD over 100 kilometers of fiber more than 20 years ago. More recently, in 2022, Toshiba teamed up with the UK’s leading telecom provider, BT, to launch the world’s first commercial quantum-secured metro network in the London area.

In 2023, HSBC became the first bank to join the network, conducting a commercial trial that involved using QKD to protect transactions over the fiber-optic cables between HSBC’s global headquarters in Canary Wharf and a data center in Berkshire about 40 miles away.

The network has expanded further since then. And other customers conducting trials include hospitals (protecting medical scan data) and government agencies (protecting sensitive communications).

Meanwhile, China has been building its own quantum-secured network with remarkable ambition. As probably the biggest sponsor of the “harvest now, decrypt later” attacks I mentioned earlier, it understands what’s at stake better than most.

In 2016, China shocked the world by launching the first satellite capable of transmitting quantum keys through space rather than fiber, overcoming the distance limitation of ground-based fiber networks. The country has since constructed a national quantum communication network connecting banks, government agencies, and industrial facilities across the country.

Not to be left behind, scientists at the Centre for Quantum Technologies in Singapore have been developing QKD nanosatellites roughly 200X smaller than China’s to build an unhackable global network that’s accessible to anyone.

Toshiba has also been working with Singapore-based space company SpeQtral on the country’s National Quantum-Safe Network Plus project, helping to build out this vision commercially.

When the dark side of quantum computing comes, PQC will probably provide the everyday encryption to protect most folks and organizations, while QKD will likely provide the extra layer of security necessary for extremely sensitive, high-value connections.

What does all this mean for the world’s internet infrastructure?

Short answer: Everything needs to be upgraded, some of it needs to be replaced, and none of it can wait much longer.

And like any massive infrastructure project, it creates big investment opportunities for folks paying attention.

P.S: Read our guide on how to invest in quantum computing here.

P.P.S: Read about Quantum vs AI here.

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Chris Wood is Chief Investment Strategist at RiskHedge. To get more ideas like this from him, check out his substack Grow or Die.