Investments bet on post-quantum cryptography

According to many insiders, it represents one of the most fascinating and promising technological frontiers of the next five to ten years. Having come under the magnifying glass of McKinsey analysts, quantum communication has emerged as a rapidly expanding sector, driven by a mix of cybersecurity needs, growing demand for quantum networks, and both public and private investment. We are not talking about a futuristic vision confined to research labs, but about a technology that is current and already available, ready for deployment at scale and with potentially revolutionary impacts on the security of communication protocols and the quantum computing infrastructure itself.

But what is it about, concretely? It is about applications ranging from the distribution of quantum keys (the so-called Quantum Key Distribution, QKD) to guarantee the inviolability of communications by exploiting advanced encryption systems to network nodes that become fundamental for interconnecting modular computing systems based on qubit technology and enabling forms of distributed computation to arrive, not least, at a true global 'quantum internet'. Three, in short, are the macro-categories that make up quantum communication (security, networks and services), and among the vertical branches that characterise it, the most mature one to date is (data in hand) post-quantum cryptography, due to its greater simplicity of implementation and the possibility of integrating faster into existing infrastructures.

According to McKinsey surveys, in 2023 the turnover of quantum communication reached an estimated value of between 0.9 and 1.0 billion dollars on a global basis. This is already a significant figure in itself, but one that is destined to grow rapidly over the next decade: by 2035, in fact, it is expected that this sector will reach 14.9 billion in the best-case scenario (the worst-case scenario stops at 10.5 billion), with an estimated compound annual growth rate of between 23 and 25 per cent.

The most promising segment is precisely that of post-quantum cryptography, the underlying objective of which is to ensure the protection of systems from attacks by future quantum computers while continuing to use conventional IT infrastructures. However, it is not yet clear, analysts explain, whether this initial momentum attributed to Post Quantum Cryptography will maintain constant development speeds over time or whether it will slow down if significant vulnerabilities of this technology emerge (the security of distributed quantum keys is instead guaranteed by the fundamental laws of physics). The lower hardware complexity required, the lower adoption costs, and a state of maturity that is growing steadily, also as a result of standardisation promoted by bodies such as the US government agency NIST (National Institute of Standards and Technology), all combine, however, to make PQC a potential business of between USD 2.4 and 3.4 billion by 2035, and thus about one fifth of the overall size of the quantum communication market. In this sense, it is interesting to note that, geographically speaking, North America is the candidate region to lead the sector by the end of the next decade, although Europe is considered to be at the forefront in this field, and especially in that of Quantum Key Distribution, thanks to the drive of institutional initiatives (such as those of NATO, for example) and a very lively ecosystem of innovative start-ups. As far as the user classes of these solutions are concerned, however, the main share of demand (between 62% and 66%) is currently held by the public sector, while investment in the private sector is expected to accelerate significantly in the telecommunications and cybersecurity sectors, which could account for between 16% and 26% of the total market by 2035, taking advantage of the need to protect critical digital infrastructures (networks and data centres) and the long wave of adoption of quantum technologies by telcos, BigTech and cybersecurity companies.

The fast-paced development of quantum communication, McKinsey's report concludes, can therefore be explained by a number of key dynamics, and prominent among them is the growing concern about the risks associated with the so-called Q-Day, i.e. the moment when quantum computers will be able to decrypt classical encryption algorithms, opening up new threat fronts for sensitive data. Some sectors with high data protection requirements (such as finance, insurance, healthcare and defence) could be significantly impacted and consequently the urgency to adopt advanced solutions such as the aforementioned PQC and QKD increases, with many organisations ready to marry both technologies through hybrid models. The analysts' feeling is that the dawn of a new era of digital security has arrived, placing governments and businesses at a crossroads between advanced research and industrial-scale application: the next few years will therefore be decisive in determining not only the winning technologies and the required infrastructure 'stack', but also the players who will play the leading role in this market and in the increasingly interconnected world of tomorrow.