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Disrupting the Disruptors: Quantum Computing and IoT’s Impact on Digital Assets

In recent years, digital currencies have been all the rave. However, the idea that digital assets are exclusively some form of currency is slowly falling by the wayside as different use cases are emerging and being rapidly adopted. This May, The Fintech Times is looking to showcase some of these new methods and explore how the digital asset ecosystem is evolving.

Digital assets are often considered emerging technologies that are disrupting the traditional financial ecosystem. However, there is tech that is already impacting these disruptors and could change the course of digital assets’ development. Two of these new technologies are quantum computing and the Internet of Things (IoT) – so how are they impacting digital assets?

Digital asset security is called into question
Rafael S. Lajeunesse, CEO and co-founder of ReachX
Rafael S. Lajeunesse, CEO and co-founder of ReachX

Businesses and consumers exploring digital assets need to think about security, however, according to Rafael S. Lajeunesse, CEO and co-founder of ReachX, the fintech accelerating investment banking, they must be aware of other impactful technologies.

“Understandably, concerns have been raised about what security risks quantum computing poses for digital assets. Quantum computing could compromise the vulnerabilities of cryptographic hash functions through quantum algorithms and quantum-powered attacks. While these attacks would require major levels of computing power, they ultimately pose a risk to the future of digital assets, so I believe measures must be put in place to mitigate these risks.”

Long term protection
Lars Mueller, DLT Product Development at Delta Capita
Lars Mueller, DLT Product Development at Delta Capita

While firms should be cautious about quantum computing, the tech can also be a massive aid in protecting digital assets explains Lars Mueller, DLT Product Development at Delta Capita, the mutualised managed services provider.

“The impact of quantum computing in digital assets is primarily focused on cryptography, particularly the concerns that quantum computers can break current security systems – especially those with centralised architectures—by exploiting vulnerabilities in widely used public-key algorithms.

“Decentralised architectures and the implementation of quantum-resistant cryptographic technologies such as lattice-based, code-based, and hash-based cryptography will be crucial for ensuring the long-term security of digital assets.

“IoT offers the ability to integrate real-time data into digital assets via sensors and devices that can be used to track the provenance, condition, and usage of physical or digital items represented by digital assets. Whilst this increased connectivity and data integration offers new and exciting opportunities in trade finance, for example, it also raises new challenges in ensuring the security and privacy of digital asset data.”

Addressing vulnerabilities
Bryan Feng, the head of Unlimit Crypto
Bryan Feng, the head of Unlimit Crypto

DePINs, or decentralised physical infrastructure networks, enable real-time interactions inside physical infrastructures through tech like IoT and smart contracts. For Bryan Feng, the head of Unlimit Crypto, the paytech, DePINs can greatly improve gaps in digital assets’ cybersecurity armour.

“Fundamentally, IoT is a crucial part of the increasingly popular DePIN narrative. DePIN offers an alternative to traditionally centralised physical infrastructure and promotes a more participatory economy. Alongside enabling the tokenisation of real-world-assets, DePINs will also spread operations throughout a much wider network and decrease the potential points of failure.

“For DePINs to achieve success, significant regulatory hurdles must be overcome, future interoperability and scalability carefully planned, and the privacy and security of users prioritised.”

Specialised trading algorithms

Dierk Wilhelmsmeyer, CEO and founder of Tradevest, the AI-powered Banking-as-a-Service provider notes how quantum computing can be used beyond security for digital assets: “Quantum computing is on the verge of a paradigm shift in the world of computer technology.

“With its unprecedented computational power, this technology could solve problems that are currently impossible for traditional data centers or computers due to their existing performance capabilities. To even begin making a quantum leap into the world of tokenised assets, the tradeability and transferability of tokens must be combined with AI-based use cases.

“This development promises to deliver exponentially increased computational power through parallel, self-learning algorithms, especially where blockchain, high-performance databases, and modern artificial intelligence converge.

“This will not only revolutionise the way we handle large data volumes on the blockchain but also enable specific applications in the security and encryption of digital assets, including the development of blockchain-based securities for digital assets and the creation of specialised trading algorithms and risk management strategies.”

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