It is quite often that two or more technical solutions are created to solve a problem and this can result in standards and format wars to see which one (or both) will survive. One of the classical cases in technology marketing often taught in business schools is the videotape format war in the late 1970’s and 1980’s.  Many articles have been written about this and you can see a few of them here, here, and here. It is well worth reviewing these because they can provide important lessons in technology marketing.

The two leading companies involved were Sony and JVC and they were both working to produce a reasonably priced video recording system that would allow consumers to tape TV shows so they could view them at a later time rather than being forced to view them in real time. Previously, commercial level video tape recorders were available for broadcasters, but these were much higher in price and unaffordable for home use. Sony had developed a technology called Betamax introduced in 1975 while JVC’s technology was called VHS (Video Home System) which was introduced in 1976. The two systems were not compatible with each other and tapes could not be interchanged between the two systems.

Sony Betamax and JVC VHS Videotape Recorders

Although Betamax had better video resolution and sound quality than VHS, it was also priced a little higher and initially could only record 1 hour of TV on a single tape. JVC’s system could record 2 hours from the outset, although both systems improved the video quality and recording length in subsequent years. The two formats battled for market share over the next ten years, but in the end VHS became the dominant format until the video tape recorder was supplanted by DVD’s and DVR’s.

So what does this have to do with quantum technology? There is analogous problem that researchers are trying to solve involving the security of the encryption technology that is used universally today in much of our digital communication. To exchange encryption keys for digital messages, the two communication parties use algorithms such as RSA, Diffie-Hellman or others which are based upon a mathematical problem that involves multiplying together two large prime numbers.  In order to break these codes, one would need to factor the resulting the large semiprime number to find the component factors and this becomes an intractable problem on a classical computer. However, in 1994, Peter Shor discovered a quantum algorithm that could potentially do this in a reasonable amount of time given a large enough quantum computer.  Although the current quantum computers are not yet large enough to accomplish this, it is expected that sometimes in the next 10-20 years, such computers will be available and the security of our entire digital communication infrastructure will be at risk.

So researchers are working hard to develop solutions to this problem and creating new encryption methods that are not vulnerable to breakage with a quantum computer. And like Betamax versus VHS, there are now two incompatible and completely different approaches to solve this problem. The first is called Quantum Key Distribution (QKD) which uses fundamental quantum mechanics principles such as the No Cloning Theorem to ensure that a communication cannot be intercepted without detection. The second is called Post Quantum Cryptography (PQC) that uses new software based techniques such as lattice-based and code-based algorithms which are not dependent upon factoring a large number and do not have any known weaknesses that could be exploited by a quantum computer.

So like Betamax and VHS, we do expect a market share battle over whether QKD or PQC will become the dominant solution. We do not believe that one will completely replace the other as both have strengths that make them useful in different situations. The strength of QKD is that key exchanges using this technique are guaranteed that they can’t be intercepted by the fundamental laws of quantum mechanics. However, its weakness is that it requires an optical link that has attendant issues with cost, flexibility, and distance between nodes. Conversely, PQC can be used with any digital communications medium including radio, electrical wires, and, of course, optical. PQC is also more compatible with existing communication infrastructure and would be easier and much less costly to integrate into a system. For uses such as cell phones, it really is the only way to implement quantum resistant communications because it would be impractical for these to use an optical link while someone is walking around. But PQC has a weakness too in that no one can be 100% sure that one of these algorithms won’t be broken by a clever algorithm developed by some future researcher.

It is interesting to note that the U.S. National Security Agency (NSA) has stated they prefer PQC based solutions over QKD solutions even for their own customers. They view PQC as being a more cost effective and easily maintained approach and do not anticipate certifying or approving any QKD approach. In addition, the NSA subsequently stated that of the various versions of PQC proposed, the class of quantum resistant algorithms they recommend are the lattice-based versions for cryptography and hash-based for digital signatures.

Our expectation is that while both PQC and QKD approaches will be in use, the PQC approach will have the dominant market share. QKD will be still be used for those situations where parties are located in fixed locations, have an overwhelming concern to protect highly valuable data and are willing to pay for it. These situations could include certain government and financial organizations. But for a large portion of the population, PQC will be a better fit for our increasingly mobile society due to its greater flexibility and lower cost. This will be similar to VHS which also won due to its greater flexibility and lower cost.

January 16, 2021