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Quantum Physics: Why Every Investor Should Care

Quantum Physics: Why Every Investor Should Care

  • Quantum physics often sounds like the stuff of science fiction, but Klee Irwin, director of the Quantum Gravity Research institute, outlines the global implications of quantum mechanics in the rapid advancement of artificial intelligence.
  • New discoveries in particle physics challenge our understanding of consciousness and the space-time continuum. The results of these experiments present risks, opportunities and existential questions for humanity.
  • Large language model mathematics may finally crack the code on one of the most enduring questions in modern science. Klee explains the economic impact and why every investor should care.

What is consciousness? That question sounds more like a doctoral thesis than a relevant discussion for hedge fund managers, but new advances in quantum physics and artificial intelligence are increasingly bringing the worlds of science and investment strategy together.

“Quantum physics is how reality works at the most irreducible levels,” says author and physicist Klee Irwin. “When you understand how reality works, you get a lot of benefits.”

Klee is the founder and director of Quantum Gravity Research (QGR), a non-profit research institute at the forefront of discovering a unified theory for all forces in the universe — what scientists often call the “theory of everything,” an elusive explanation of how general relativity fits with quantum mechanics.

Why does this “theory of everything” matter? Quantum physics is the science behind the billions of transistors inside an iPhone and the big computing power inside generative AI models like ChatGPT. According to Klee, the rapid advancements in artificial intelligence mean quantum mechanics will have an even more pronounced societal impact in the next few years, and the scientific implications of a “conscious” AI could have seismic repercussions on a macroeconomic scale.

“[Large language models] will sweep the face of the earth over the next 36 months and radically and violently transform the socio-political distribution of wealth that has worked to create metastability for a long time,” Klee predicts. At the very least, informed investors should take notice.

Klee joined host David Dorr on a recent Galactic Macro episode of Top Traders Unplugged to unpack the mechanical concepts driving recent breakthroughs in physics and explain how QGR’s work fits with the exponential development of quantum computers and AI. Here’s what you should know.

Quantum physics for the layperson

In simple terms, quantum mechanics describes the movements and behaviors of particles smaller than atoms — such as electrons. Our ability to control the flow of electrons is the foundation of every modern electronic device, including phones, computers and smartwatches.

Curiously, electrons can behave both like particles and like waves, a phenomenon often called wave-particle duality. To put it into perspective, compare sounds, which exist only as waves, or a grain of sand, which is only a particle. Because quantum objects act like both waves and particles, they have intriguing applications in high-powered computers.

We often think of computers as storing data in binary code — a bunch of 1s and 0s. Yet just like a quantum object can be a wave and a particle, a single quantum computer bit can be set at 0, 1 or both 0 and 1. It’s counterintuitive, like saying a light switch can be on and off at the same time. Strange as it sounds, though, this ability for bits to hold multiple states at once gives way to an enormous processing capability for complex equations. As quantum computers develop in the coming years, they’ll likely solve problems in all disciplines from accelerating pharmaceutical research to optimizing supply chains to improving the accuracy of machine learning models.

In addition to the technological possibilities, Klee adds another reason to care about quantum physics: It could give answers to the deeper metaphysical questions about the existence of the universe.

Evidence of wave-particle duality

Klee refers to the famous double-slit experiment, a demonstration of light dating back to the early 1800s. When an experimenter shines a light at a screen with two small openings (the “double-slit”), the light pattern on a second screen behind the first one is spread out, characteristic of a wave.

Strangely, however, when experimenters attach a detector capable of monitoring the number of photons hitting each spot on the back screen, all of a sudden the pattern is in two straight lines, characteristic of particles moving through the slits like little bullets from a gun. When the detector is switched off, the light interference pattern resumes the shape of a wave. In other words, the photons’ behavior depends on whether or not anyone is watching.

“The double-slit experiment and this weird measurement problem are what we call empirical, which means we just observe it to happen,” Klee says. “But we don't have a theory that tells us that it was going to happen or why it happens.” Scientists can replicate the experiment again and again, but there’s no consensus explanation for it.

As it turns out, the quantum forces at play are even stranger than we first realized. John Wheeler, a man Klee calls “a titan of modern physics,” proposed in a 1978 paper the concept of delayed choice in the double-slit experiment. Basically, Wheeler wondered if the measurement problem would still happen if the photons had already begun their journey before the detector was switched on or off.

The effect of conscious choice

Wheeler’s research and subsequent experiments showed that, indeed, the later placement of a detector changed the early behavior of a photon. If a photon passed through an undetected double-slit and then through a double-slit with a detector, both stages of the experiment showed the photon as a particle, as if it somehow knew at the first stage that it would be measured at the second stage.

“Obviously, according to the classic normal view, actions in the present change things in the future,” says Klee. “But if your actions in the present are changing things in the past and the future … now you're into the concept of feedback loops.”

It’s the kind of circular logic found in time-travel movies. The present changes the past, but the past changes the future, so which change came first? For the philosophically minded, there’s another question: How sure are we that the researcher is making a conscious choice at all in the double-slit experiment? Is there some other, outside force interacting with the researcher across time that influences their decision?

Retrocausality and its implications

This is where many people wish to blow the whistle and call time out. Forces of consciousness affecting particles in the past are certainly outside of most of our perceived daily experiences. But David is quick to relate Wheeler’s delayed choice experience to trading.

“Anybody who spends time staring at screens of moving markets all day long like I do, you get uncanny feelings that a position you're watching reacts to the fact that you simply have the position on,” David says.

This is called retrocausality, the idea that an effect can precede a cause. It’s what some people may refer to as intuition or a hunch, the foreknowledge that something is about to happen, and, as it turns out, the concept may have some scientific backing. In 2011, Cornell professor Daryl Bem published a paper called “Feeling the Future.” The article detailed his research on “the anomalous retroactive influence of some future event on an individual's current responses,” perhaps more commonly known to us as premonition.

Test subjects viewed a random series of calming and frightening images while monitors detected the subjects’ impulsive galvanic skin responses to the intensely negative images. In the experiment, Bem’s team showed that participants could reliably anticipate what kind of image they were going to see before it flashed on the screen. Imagine hairs standing up on your skin before you see something scary.

“It was experimentally very, very clear that somehow the human being is able to know if it's going to be the scary image or the cute image before the random number generator even makes its choice,” Klee says. “There’s no explanation for that other than theories and guesses, but that's experimental empirical evidence that somehow — whatever consciousness is — it can interact across time.”

Although harnessing retrocausality at a large scale remains a speculative concept, the hypothetical implications for communications and computing are profound. Wouldn’t every investor love to use future knowledge to execute a trade in the present?

The emergence theory

Part of the challenge in explaining observed phenomena like retrocausality is that quantum physics and general relativity — Einstein’s theory about space and time — aren’t quite in agreement.

“General relativity says down to the core of its axioms, quantum mechanics is just wrong. And quantum mechanics says the same thing about general relativity,” Klee says. “And yet we know that both theories are at least partly correct because they make good predictions. But we also know that there are holes and blind spots and assumptions.”

Klee’s Quantum Gravity Research institute seeks to unify these two perspectives on the physical world by considering information as the fundamental building block of reality. Because quantum mechanics suggests that reality is both forward causal and retrocausal, meaning that both the past and the future can affect the present moment, it is theoretically possible that the same principle could apply to information packets in quantum computing.

He offers the analogy of mentally playing tic-tac-toe against yourself. It’s more complicated than just solving a mathematical equation because you have some freedom to place the Xs and Os in any spot, even while you’re thinking about the strategy for both sides. Now, imagine that problem-solving on an exponentially complex scale.

“From what we know about the laws of physics today,” Klee says, “there’s no implication that human consciousness is the upper limit of how energy and matter can self-organize into thinking minds.” Klee postulates that a future high-tech computer, an “emergent pan-consciousness substrate,” could create itself to solve the most complicated problems of the universe. Taking this idea to its logical extreme, the self-simulation hypothesis suggests that the universe thought itself into existence.

(The self-simulation hypothesis is related to the more familiar and materialistic simulation hypothesis, which supposes that our perceived reality may be an imitation of truth, similar to the shadows in Plato’s Cave.)

Developing a conscious AI

David jumps in: “When you start talking about quantum physics in this elusive definition of consciousness, [you] often run into resistance.” For many people, simulations and higher consciousness sound too much like “The Matrix” or other speculative fiction to be taken seriously in the business world.

But artificial intelligence is changing the conversation. Many people are asking if AI can become conscious, creating more open minds to the implications of quantum physics. For Klee, it’s too late to wonder if quantum computing can succeed in solving enormously complex problems.

“The genie is out of the bottle,” he says. Quantum computers can undoubtedly benefit humanity, but they also can be put to malicious use. “The immediate risks are cybersecurity and job displacement,” Klee adds. “As we get into the second half of 2024, we will start to see major impacts because it only takes a few percentage points of global average unemployment to tip the scale.”

Klee predicts a greater need for government subsidies to battle the societal instability and economic fallout of rapidly growing unemployment. As QGR races to develop next-gen large language models for mathematics, humanity will face tremendous risks and opportunities from the breakneck pace of computing. These concepts of quantum physics will no longer seem theoretical but instead will be an inescapable part of our daily lives.

This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up to our Newsletter or Subscribe on your preferred podcast platform so that you don’t miss out on future episodes.