One of the illustrious lawyers in the Philippines attended one of my MCLE lectures a few months ago, and she is none other than Atty. Liwayway Vinzons-Chato, a past Commissioner of the Philippine Bureau of Internal Revenue (BIR) and a former Congressperson. At the end of my October 8, 2022 MCLE lecture for the University of the Philippines Institute of Administration of Justice (UPIAJ) on “Cyber Ethics in the Age of A.I.”, Atty. Vinzons-Chato interpellated me regarding “quantum money,” because I briefly discussed the current developments in quantum computing and Elon Musk. She claimed that she had been working with several entities abroad in bringing this type of currency into the Philippines. She further stated that she had approached several government agencies, among them the BIR, and the Bangko Sentral ng Pilipinas (BSP), regarding the legal treatment of this currency, and they cannot give her any coherent answer.
Her questions came timely, as it was during this period that I was writing a Report commissioned by the UPIAJ which I dubbed as “A.I., Technology, Morality and the Philippine Code of Professional Responsibility”. I wrote about this in my previous blog:
In my Report, I delved on technological developments, including quantum technology and its potential utilization in our lives.
I first learned of quantum money when I was doing my research for my Cryptology book way back in 2012. My book which was eventually published in 2016 and sold out in 2018 had a section on cryptocurrency, specifically Bitcoin, but did not include a section on quantum money, because they are fundamentally different. Atty. Vinzons-Chato’s questions piqued my interest to the extent that I mentioned it in my UPIAJ commissioned Report, and I have decided to write this article, which would probably be the first by a Philippine lawyer on quantum money.
The concept of quantum money was first introduced in a paper written by the physicist Stephen Wiesner in 1969 on “conjugate coding” (which was published only in 1983), which utilizes the principles of quantum mechanics like entanglement and superposition to work. For anyone interested, I have a PDF copy of this paper which I secured from an MIT online source. I read and strove to understand what I can of this paper, and also several secondary resources.
Quantum money and cryptocurrencies rely on cryptography. Cryptocurrencies like bitcoin still rely on the binary system of 1s and 0s of classical mathematics. Quantum money on the other hand operates on “qubits” based on the principles of quantum mechanics, particularly on superposition, which means that a qubit can both be a “1” and a “0”.
Cryptocurrencies are digital in their form. Of course, they can be exchanged for paper currencies using crypto exchanges, and even ATMs. But the quantum money envisioned by Wiesner in his 1969 paper apparently operate very much like the paper currency that we have, with the absolute difference that it is embedded with quantum bits via photons that exist in a superpositional state, which can only be verified when such bits are actually measured by a quantum device. In my Cryptology book, I explained further what superposition, multiverse and quantum entanglement concepts are which are essential to the comprehension of quantum technology.
The way I understood what Wiesner wrote is that there should be a system that is constructed which would provide a mechanism for a tangible currency, particularly paper bills, to be unforgeable. This “foolproof” concept requires the minting or printing of paper bills, which aside from having serial numbers, would also contain the properties of entangled photons that are used to transmit information. This information correspond to the original quantum state of each particular photon that is noted by the printer, or a bank, which should keep this information secret. It must be emphasized that the whole process of printing, embedding the photons on the bill and measuring the photon states are quite complicated as the photons are very fragile.
A counterfeiter would not know the original quantum state of the photons in an original bill with the specific serial number. Any attempt by the counterfeiter to verify or measure the quantum state of the photons in the original bills that they want to copy, would result in changing the photons’ original quantum state, which is the reason why the original bills are impossible to replicate.
To check for counterfeiting, a seller can verify the authenticity of the bill presented by a buyer, by comparing the current quantum state of the photons in the bill, with the original quantum state of the photons in such bill as noted by the bank or printer, with a quantum device. If the current quantum state is the same as the original quantum state, the bill is genuine. If the current quantum state has switched to an “orthogonal” state or a different quantum state from the original one, the bill is fake.
Since the thrust of the cryptocurrency revolution is to get away from the control of any central banking system, Wiesner’s concept has been adopted to the digital world. Quantum money in this evolution would not be printed by any central bank or traditional printer. It can be done via a digital system created with quantum computers that rely on the no-cloning theorem, which posits that it is impossible to clone the unknown quantum state. This would allow anyone to verify the authenticity of the currency without going thru a central banking system. Several quantum money systems have been proposed built on the mathematical concepts surrounding “knots”, modular forms and lattices that can work with quantum computers. These proposals are beyond the scope of this article and the reader would do well to research on the foundations and applications of these concepts.
But in all of these proposals involving quantum money, they require the application of a robust system of quantum computers, quantum key distribution and secure quantum channels where the original quantum states of the qubits can be transmitted and verified. Then too is the issue of having a quantum internet where transactions with quantum money can be facilitated or supported.
Atty. Vinzons-Chato did not provide the details for the mechanisms or structures that must be put in place for quantum money to become a feasible proposition in the Philippines, nor the names of the parties she had partnered with to bring quantum money to the Philippines.
As far as I know, none of these currently exist in the Philippines, and it is doubtful if any of the systems I mentioned, in their fully realized states, exist at all. There are banking institutions and entities like Google that have invested in quantum algorithms, technologies, and building of quantum computers. While some have announced breakthroughs, these are not enough to bring what is called the “quantum financial system” (QFS), and even fully functioning and commercially viable quantum computers, to life. The development of quantum money is steeped in secrecy due to intellectual property rights, finance and trade laws, e-commerce and cybercrime concerns. Some trade or industry reports stated that the Chinese had, or are continuously developing this type of currency, but the details are sketchy and the sources are unnamed. Even information from academia within the past decade have not revealed that quantum money has become an actual feasible option.
Any news or undertaking concerning quantum money must also be received with caution. For years, there had been, and still are, reports with dubious sources that allegedly outlined the systems and processes of how quantum money as a legal fiat can be backed by gold deposits. These must supposedly comply with the Global Economic Security and Reform Act (GESARA) which was taken from the National Economic Security and Recovery Act (NESARA), an unsuccessful proposal submitted by the late Harvey Francis Barnard to the U.S. Congress to reform the monetary policies and structures of the U.S. Government. However Barnard’s proposal was taken over by conspiracy theorists and purveyors of online scams.
Even so, now is certainly the time for the regulators from the banking, scientific, and technological industries, and those from the academe and the legal profession to become aware of this important prong in the QFS that is considered by some as the future of economic transactions. In my UPIAJ commissioned report, I mentioned my suggestion of establishing a Committee on Law and Technology (CLT) to look, analyze and anticipate the possible significant ramifications of emerging technologies. Quantum money, which I specifically cited in my Report, definitely fits the CLT’s purpose.
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