Quantitative Trading, Quantum Computing and Quorum

Another week, another letter to conquer in this week’s Crypto Terminology: A to Z, where we will answer burning q-uestions on crypto terms starting with “Q”.

Traders have their preferred methods and strategies in optimizing their trades, based on different types of metrics available. A widely-used trading strategy is quantitative trading, which relies on numerical and back-tested data to guide a trader’s decisions, removing the possibility of having trading decisions muddled by emotions. In the crypto market, however, it is essential for traders to move outside of the quantitative, considering that fundamentals and external events, sometimes unforeseeable, can lead to short-term price gains or losses.

For example, on April 16, 2021, the price of memecoin DOGE saw a rally of more than 60% in 24 hours as a result of Tesla founder, Elon Musk, tweeting in support of it. Numbers remain an indispensable part of trading in the crypto market, but dynamic trading strategies are required to complement a dynamic market.

Quantum computing has been heralded as the next big thing. It makes use of the principles of superposition, entanglement and interference to solve even the most complex and difficult of mathematical equations, such as those seen in cryptography or blockchain. What does this mean for transactions on, let’s say, the Bitcoin network? 

Theoretically, a large number of quantum computers would be able to solve for individual users’ private keys, allowing malicious actors to steal your bitcoins from right under your nose, amongst other possibilities. This threat against the security of current blockchains and cryptography is being considered carefully.

Quantum computation is still in its infancy as of this moment, but experts predict that it could successfully materialize as early as in the next decade. But equally vulnerable for such exploits are the nuclear codes and the traditional banking and finance system, such as credit card information, along with everything that uses a password. Crypto experts largely agree that a better encryption method will surface ahead of quantum singularity — the time when quantum computers are able to crack the current state of the art of encryption. 

In the field of blockchain technology, quorum biasing is a form of governance utilized by projects or organizations to ensure that voting decisions remain fair. It is derived from the concept that results from a voting session with a larger number of participants are much more reliable than a session that only has few participants. This ensures that the voting outcome is more representative of the interest of all stakeholders, rather than a select few.