The behavior of quantum dots (QDs) in solution and their interaction with other surfaces is of great importance to biological and industrial applications, such as optical displays, animal tagging, anti-counterfeiting dyes and paints, chemical sensing, and fluorescent tagging. However, unmodified quantum dots tend to be hydrophobic, which precludes their use in stable, water-based colloids. Furthermore, because the ratio of surface area to volume in a quantum dot is much higher than for larger particles, the thermodynamic free energy associated with dangling bonds on the surface is sufficient to impede the quantum confinement of excitons. Once solubilized by encapsulation in either a hydrophobic interior micelle or a hydrophilic exterior micelle, the QDs can be successfully introduced into an aqueous medium, in which they form an extended hydrogel network. In this form, quantum dots can be utilized in several applications that benefit from their unique properties, such as medical imaging and thermal destruction of malignant cancers.