This Guy's Investment Fund Is Making A $US5.6 Million Bet On Quantum Encryption

Sergei kouzmineSergei KouzmineSerguei Kouzmine

QWave Capital, an investment fund focused on emerging technologies that use the principles of quantum mechanics, recently put $US5.6 million into
ID Quantique, a company started in 2001 to make quantum encryption accessible and practical to use.

We’ve previously spoken to co-founder Nicolas Gisin, who defines quantum encryption as “classical encryption based on keys shared using quantum physics.”

Securely sending people the means to encode and decode messages using quantum encryption is expected to be of primary interest to banks and governments, at least at first.

Serguei Kouzmine is a managing and founding partner at QWave. He got us up to speed on all aspects of the investment and gave us an overview of QWave’s newest portfolio company.

BUSINESS INSIDER: What does ID Quantique do?

SERGUEI KOUZMINE: ID Quantique provides a variety of network security products and services to the financial industry, governments, and other enterprises using both conventional and quantum technologies. Right now, this comes down to three main services: quantum encryption, random number generation, and quantum-based scientific instrumentation products. The company pioneered the commercial usage of Quantum Key Distribution (QKD), a method in which one party sends a cryptographic key encoded with photons to another party.

BI: What will this investment do for the company? What are its next steps?

SK: QWave’s investment allows IDQ to substantially expand its marketing activities and overall business operation. Also, several new products have to be developed, including some scientific instrumentation.

BI: Does ID Quantique currently generate revenue? How?

SK: Yes, a number of banks, governments and other enterprises throughout Switzerland and Europe use ID Quantique’s technology. In the U.S., they also work with Battelle, an independent research and development organisation headquartered in Columbus, Ohio. Last week, ID Quantique and Battelle
announced that they had installed the first commercial quantum key distribution protected network in the United States using fibre optic lines installed between the headquarters campus and a satellite office in Dublin, Ohio. In addition to QKD, the company also sells conventional encryption products bought not only by commercial and government institutions but also by researchers. Random number generators and scientific instrumentation generate revenue as well. For example, RNGs are in use by slot machines. This helps companies in the gambling industry prove that their slot machines are “truly random.”

BI: For the laypeople, what is the general idea behind how quantum key distribution works?

SK: The first thing people need to understand about quantum key distribution is it doesn’t send any actual message data. Rather, it’s used to send a key that can then be used to encrypt and decrypt messages. The key is encoded with photons (particles of light) which are governed by the rules of quantum mechanics. One of the unique properties of quantum systems is that any attempt to observe or measure them will disturb the system and change it. If a third party tries to intercept the key, they will inevitably change it thereby notifying the sender and the receiver and aborting the communication. [A third party’s act of intercepting a key inherently alters the key, rendering it useless to them.]

BI: How effectively does it work? What can it do for the average person?

SK: Quantum key distribution is highly effective, which is why companies with significant security needs like governments and banks use it. The company’s mission is to enable 100% secure communication for anyone, anywhere in the world. As the Internet, computers and mobile devices become more and more pervasive, privacy is becoming increasingly important and encrypted communications enables people to maintain this. In the near term, we see it having an effect on the individual via industries like healthcare or electronic voting.

BI: Is it already practical to use, or is there more development to be done?

SK: QKD system is simply a pair of rack-mountable plug-and-play boxes which are very easy to use. The only complicated thing about those is that you need to connect them with a direct dedicated fibre optic line, preferably made of “dark fibre.” This system does not require routers like the traditional Internet. For now, these are the physical requirements and they can’t be improved upon. Of course, the holy grail for scientists in this field is to build a quantum repeater based on entanglement, which would help address the issue of scalability but is likely still several years away. While quantum entanglement can be used to ensure the security of messages over very long distances, it’s challenging to store photons for long periods of time and still ensure their quantum nature (or quantum memory).

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