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INSTITUTE FOR QUANTUM COMPUTING FOR QUANTUM INSTITUTE BY DR. THOMAS JENNEWEIN, ASSOCIATE PROFESSOR & ERIC CHOI, SENIOR TECHNICAL ASSOCIATE assessment 2014 market study & study market 2014 business opportunities business quantum quantum cryptography market study » 1. executive summary 1 2. introduction 3 2.1. Relevance and Implications of Quantum Information 3 2.2. About the Institute for Quantum Computing 4 3. overview of quantum cryptography 5 3.1. Inherent Vulnerabilities of Conventional Cryptography 5 3.2. Quantum Cryptography and Quantum Key Distribution (QKD) 6 3.3. Examples of Terrestrial QKD Implementations 11 3.4. Satellite-Based QKD: The Quantum Space Race 18 4.market overview 23 4.1. Financial Cost of Information Security Breaches 23 4.2. Current Market for IT Security and Encryption 25 5. competitive landscape 29 5.1. Current Commercial Vendors 29 5.2. Recent Commercial Market Activity 37 6.market potential 39 6.1. Discussion of Market Potential 39 6.2. Quantum Cryptography 41 6.3. Market Segmentation 43 6.4. Satellite-Based QKD 43 7. conclusion 45 8. endnotes 47 9.appendices 50 9.1. Appendix A: List of Acronyms 50 9.2. Appendix B: Acknowledgements 53 1. executive summary There is a serious threat to the current cryptographic systems upon which modern information and communications technology depends. Most current encryption techniques are based upon assumptions of mathematical complexity that are actually not proven. Therefore, a sudden or unexpected algorithmic innovation could immediately compromise many modern security systems. In the longer term, quantum computers will be able to quickly solve the mathematical problems upon which most current key establishment methods are based, rendering them useless. Only systems based on quantum cryptography can offer long-term data security. Since quantum cryptography relies upon fundamental laws of physics rather than mathematical assumptions, it will never be threatened by new I algorithms or more powerful computers. Quantum key distribution (QKD) QUANTUM FOR NSTITUTE establishes highly secure keys between distant parties by using single photons to transmit each bit of the key. Since photons behave according to the laws of quantum mechanics they cannot be tapped, copied or measured without leaving tell-tale signs of observation. Such systems provide the peace of mind knowledge that any eavesdropping can be immediately detected and addressed. Quantum key distribution is not science fiction, but a present day reality. A C number of companies are currently selling commercial QKD systems, and OMPUTING several other firms offer related products and services. QKD has attracted the attention of high technology firms such as Alcatel-Lucent, Raytheon, HP, IBM : and Toshiba. Terrestrial QKD networks using fibre optic cables or free-space U atmospheric transmission are in operation today for both research and niche NIVERSITY OF commercial applications such as secure bank transactions and data transfers. Due to some fundamental physical constraints, a complementary solution would be required to cover distances beyond a few hundred kilometers. Light W signals inevitably attenuate as they are transmitted through fibre optic cables, ATERLOO and conventional signal amplifiers cannot be used because they would compromise the quantum mechanical phenomena upon which QKD depends for the detection of eavesdropping. Free-space atmospheric QKD links are limited to line-of-sight, subject to local geographical constraints and ultimately 1 the curvature of the Earth. The only way to offer long-distance QKD services with current technology is to use satellites as complementary trusted nodes bridging the distance between geographically dispersed QKD ground networks, for example, between cities or continents. Teams in Canada, Europe, the U.S., Japan, China and other nations are currently engaged in a “Quantum Space Race”, vying to be the first to demonstrate QKD from space. The winning team would not only claim a historic scientific accomplishment but would also be the front-runner to seize a potentially lucrative future business opportunity. Currently, the market for quantum cryptography is estimated to be on the order of $30-million. Over the long-term, as regulatory requirements for quantum-resistant cryptosystems are expected to become enacted, it is anticipated that the market will grow significantly. IQC estimates the potential overall global market for quantum cryptography could reach $23-billion within twenty years. Satellite-based QKD for long-distance secure key distribution would be a subset of this overall quantum cryptography market. Such a service could be implemented with either a constellation of low Earth orbit (LEO) microsatellites or hosted payloads aboard geostationary (GEO) satellites. IQC estimates a potential global market for satellite-based QKD of up to $382-million per year within the next two decades. 2 2.introduction 2.1. RELEVANCE AND IMPLICATIONS OF QUANTUM INFORMATION Each force of Nature that humanity has harnessed has had a lasting impact on society. Fire, steam, electromagnetism and the splitting of atomic nuclei represent the most compelling examples. What could be the next force of nature that we can harness? What forces remain untamed? Quantum theory was discovered at the beginning of the 20th Century and is used to describe the behaviour of atoms, molecules, photons (quanta of light) and their constituents. As a better understanding of this domain was I developed, we have often been left perplexed about the seemingly paradoxical QUANTUM FOR NSTITUTE behaviour of nature at the atomic scale: particles that cannot be pinpointed because of the uncertainty principle; photons and atoms that act as if they are in two places at the same time; the interchangeability of particles and waves. For most of the 20th Century, these phenomena were thought to be only curiosities. Over the last 25 years, however, physicists and chemists started to develop better technologies with which to explore the intricacies of the quantum domain. They were able to demonstrate that indeed Nature behaves C precisely as this theory predicts. A great deal of thought and experiment has OMPUTING been applied attempting to understand the phenomena presented by quantum mechanics. : Ironically, it is quantum mechanics that poses both the greatest threat to U NIVERSITY OF conventional cryptography and the best means of securing it. Today, most encryption technologies are based on unproven assumptions of mathematical complexity. There is a significant likelihood that practical quantum computers will be able to solve these problems, and this probability is too significant to W ignore. Quantum cryptography, however, which relies upon the same ATERLOO fundamental physical laws, will deliver long-term data security, never to be threatened by new algorithms or increased computational power. 3 2.2. ABOUT THE INSTITUTE FOR QUANTUM COMPUTING The mission of the Institute for in Canada and has allowed the Quantum Computing (IQC), a institute to gain important know- research institution located at the how that is leading to collaborations University of Waterloo, is to with other universities and aggressively explore and advance organizations including the application of quantum Communications Security mechanical systems to a vast array Establishment Canada (CSEC), the of relevant information processing Canadian Space Agency (CSA) and techniques. The idea for founding a the University of Calgary. Since large-scale quantum information 2010, IQC has been working with program in Waterloo was a result of partners in government and discussions among founder and industry to advance concepts for former co-CEO of BlackBerry Mike demonstrating long-distance Lazaridis, the University of Waterloo quantum key distribution via Earth- and Professor Michele Mosca, and orbiting satellite (see Section 3.4.1). the founding Executive Director of the Perimeter Institute for Figure 1 – IQC Executive Director, Professor Raymond Laflamme Theoretical Physics, Howard Burton. IQC was officially established in October 2002 and has since built an international reputation as a leader in quantum information science and technology. The Institute is devoted to interdisciplinary research bridging foundational issues to technology development through both theoretical and experimental investigations. The main themes of research are quantum computing, communications and sensors. IQC is strongly involved in the standardization of quantum key distribution systems within the European Telecommunications Standards Institute (ETSI). The Institute operates a free-space quantum link test-bed that can transfer entanglement and cryptographic keys between buildings on the campus of the University of Waterloo (see Section 3.3.1). This is a double-link configuration, where the entangled photon pairs are sent along two different paths of about 1.3 km in length. IQC’s test system is unique 4 3. overview of quantum cryptography 3.1. INHERENT VULNERABILITIES OF CONVENTIONAL CRYPTOGRAPHY A serious catastrophe is looming that threatens to compromise the current cryptographic systems upon which the information and communications technology (ICT) infrastructure of the modern world depends. It is cryptography that allows us to leverage a relatively small amount of physical security and trust in order to be able to use the wider untrusted ICT infrastructure in a practical manner with reasonable assurances of privacy and security. Reliable cryptography is absolutely fundamental both
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