HSBC, the multinational banking and financial services organisation, has successfully trialled quantum-secure technology for trading tokenised physical gold.
This development marks a significant advancement in protecting digital assets against future quantum computing attacks, a growing concern in the fintech industry.
Tokenising gold: A new frontier in digital assets
In 2023, HSBC became the first global bank to offer tokenised physical gold to institutional investors using distributed ledger technology (DLT). DLT, a decentralised digital system for recording transactions across multiple computers, enhances transparency and security in financial transactions.
Philip Intallura, Global Head of Quantum Technologies at HSBC, explains: “HSBC was the first international bank to offer tokenised physical gold and is now building on that innovation with cutting-edge cybersecurity protection for the future.”
Building on this success, HSBC expanded its offering this year with the launch of HSBC Gold Token for retail investors in Hong Kong. This product enables fractional ownership of physical gold, democratising access to this valuable asset class.
“The introduction of HSBC Gold Token for retail investors represents a significant step in making gold investment more accessible,” Philip adds. “It’s part of our broader strategy to leverage technology in making financial products more inclusive.”
Quantum-safe technology: Securing the future of digital assets
As part of the trial, HSBC tested the interoperability of its gold tokens using post-quantum cryptography (PQC).
PQC refers to a set of cryptographic algorithms designed to withstand attacks by quantum computers, which are expected to be capable of breaking many current encryption methods.
The bank demonstrated the ability to convert HSBC’s gold tokens into ERC-20 fungible tokens, a technical standard for tokens on the Ethereum blockchain. This conversion enhances the tokens’ utility and interoperability within the broader digital asset ecosystem.
To achieve this quantum-safe security, HSBC partnered with Quantinuum, a leading quantum computing company. Quantinuum employed PQC algorithms and its proprietary Quantum Origin quantum randomness technology to showcase comprehensive protection of digital assets from quantum computing attacks.
Ilyas Khan, Quantinuum founder and Chief Product Officer, elaborates: “As long-time partners in exploring commercial quantum applications, HSBC and Quantinuum are together building the next generation of financial services featuring quantum-hardened defences harnessing the power of today’s quantum computers to safeguard sensitive data now and into the future.”
Addressing future threats: The ‘store now, decrypt-later’ challenge
The trial also addressed the threat of “store now, decrypt-later” (SNDL) cyber incidents. SNDL is a technique where malicious actors steal sensitive data with the intention of decrypting it later using powerful quantum computers that do not yet exist.
Philip notes: “By addressing SNDL threats, we’re not just preparing for the future; we’re actively shaping it. This breakthrough demonstrates that we can future-proof our digital asset offerings against potential quantum computing threats.”
Implications for the finserv industry
The successful trial of quantum-safe technology for tokenised gold trading has significant implications for financial services. As digital assets become increasingly mainstream, robust security measures that can withstand future technological advancements are paramount.
The integration of quantum-safe technology with tokenised assets also opens up new possibilities for cross-platform interoperability. This could potentially lead to more efficient and secure trading of digital assets across different blockchain networks and traditional financial systems.
Ilyas adds: “The convergence of quantum computing and blockchain technology is creating new paradigms in financial security. Our collaboration with HSBC is at the forefront of this innovation, paving the way for a more resilient digital financial infrastructure.”
As quantum technology is further explored, the ability to protect digital assets from both current and future threats will likely become a key differentiator for financial institutions.
Philip concludes: “By combining tokenised assets with quantum-safe technology, we’re creating a new standard for security and innovation in digital finance. This isn’t just about protecting assets; it’s about building trust in the digital financial ecosystem of the future.”
