Tag Archives: electronic
Disruptive business models are often powered by alternative financing. In Part 1 of this series, I discussed how mobile is redefining money and banking and shared some of the dramatic transformations in the global remittance infrastructure.
In this article, we’ll discuss:
AI financial advisors and robo traders
Let’s dive right back in…
Decentralized Lending = Democratized Access to Finances
Peer-to-peer (P2P) lending is an age-old practice, traditionally with high risk and extreme locality. Now, the P2P funding model is being digitized and delocalized, bringing lending online and across borders.
Zopa, the first official crowdlending platform, arrived in the United Kingdom in 2004. Since then, the consumer crowdlending platform has facilitated lending of over 3 billion euros ($3.5 billion USD) of loans.
Person-to-business crowdlending took off, again in the U.K., in 2005 with Funding Circle, now with over 5 billion euros (~5.8 billion USD) of capital loaned to small businesses around the world.
Crowdlending next took off in the US in 2006, with platforms like Prosper and Lending Club. The US crowdlending industry has boomed to $21 billion in loans, across 515,000 loans.
Let’s take a step back… to a time before banks, when lending took place between trusted neighbors in small villages across the globe. Lending started as peer-to-peer transactions.
As villages turned into towns, towns turned into cities, and cities turned into sprawling metropolises, neighborly trust and the ability to communicate across urban landscapes broke down. That’s where banks and other financial institutions came into play—to add trust back into the lending equation.
With crowdlending, we are evidently returning to this pre-centralized-banking model of loans, and moving away from cumbersome intermediaries (e.g. high fees, regulations, and extra complexity).
Fueled by the permeation of the internet, P2P lending took on a new form as ‘crowdlending’ in the early 2000s. Now, as blockchain and artificial intelligence arrive on the digital scene, P2P lending platforms are being overhauled with transparency, accountability, reliability, and immutability.
Artificial Intelligence Micro Lending & Credit Scores
We are beginning to augment our quantitative decision-making with neural networks processing borrowers’ financial data to determine their financial ‘fate’ (or, as some call it, your credit score). Companies like Smart Finance Group (backed by Kai Fu Lee and Sinovation Ventures) are using artificial intelligence to minimize default rates for tens of millions of microloans.
Smart Finance is fueled by users’ personal data, particularly smartphone data and usage behavior. Users are required to give Smart Finance access to their smartphone data, so that Smart Finance’s artificial intelligence engine can generate a credit score from the personal information.
The benefits of this AI-powered lending platform do not stop at increased loan payback rates; there’s a massive speed increase as well. Smart Finance loans are frequently approved in under eight seconds. As we’ve seen with other artificial intelligence disruptions, data is the new gold.
Digitizing access to P2P loans paves the way for billions of people currently without access to banking to leapfrog the centralized banking system, just as Africa bypassed landline phones and went straight to mobile. Leapfrogging centralized banking and the credit system is exactly what Smart Finance has done for hundreds of millions of people in China.
As artificial intelligence accesses even the most mundane mobile browsing data to assign credit scores, blockchain technologies, particularly immutable ledgers and smart contracts, are massive disruptors to the archaic banking system, building additional trust and transparency on top of current P2P lending models.
Immutable ledgers provide the necessary transparency for accurate credit and loan defaulting history. Smart contracts executed on these immutable ledgers bring the critical ability to digitally replace cumbersome, expensive third parties (like banks), allowing individual borrowers or businesses to directly connect with willing lenders.
Two of the leading blockchain platforms for P2P lending are ETHLend and SALT Lending.
ETHLend is an Ethereum-based decentralized application aiming to bring transparency and trust to P2P lending through Ethereum network smart contracts.
Secure Automated Lending Technology (SALT) allows cryptocurrency asset holders to use their digital assets as collateral for cash loans, without the need to liquidate their holdings, giving rise to a digital-asset-backed lending market.
While blockchain poses a threat to many of the large, centralized banking institutions, some are taking advantage of the new technology to optimize their internal lending, credit scoring, and collateral operations.
In March 2018, ING and Credit Suisse successfully exchanged 25 million euros using HQLA-X, a blockchain-based collateral lending platform.
HQLA-X runs on the R3 Corda blockchain, a platform designed specifically to help heritage financial and commerce institutions migrate away from their inefficient legacy financial infrastructure.
Blockchain and tokenization are going through their own fintech and regulation shakeup right now. In a future blog, I’ll discuss the various efforts to more readily assure smart contracts, and the disruptive business model of security tokens and the US Securities and Exchange Commission.
Parallels to the Global Abundance of Capital
The abundance of capital being created by the advent of P2P loans closely relates to the unprecedented global abundance of capital.
Initial coin offerings (ICOs) and crowdfunding are taking a strong stand in disrupting the $164 billion venture capital market. The total amount invested in ICOs has risen from $6.6 billion in 2017 to $7.15 billion USD in the first half of 2018. Crowdfunding helped projects raise more than $34 billion in 2017, with experts projecting that global crowdfunding investments will reach $300 billion by 2025.
In the last year alone, using ICOs, over a dozen projects have raised hundreds of millions of dollars in mere hours. Take Filecoin, for example, which raised $257 million in only 30 days; its first $135 million was raised in the first hour. Similarly, the Dragon Coin project (which itself is revolutionizing remittance in high-stakes casinos around the world) raised $320 million in its 30-day public ICO.
Some Important Takeaways…
Technology-backed fundraising and financial services are disrupting the world’s largest financial institutions. Anyone, anywhere, at anytime will be able to access the capital they need to pursue their idea.
The speed at which we can go from “I’ve got an idea” to “I run a billion-dollar company” is moving faster than ever.
Following Ray Kurzweil’s Law of Accelerating Returns, the rapid decrease in time to access capital is intimately linked (and greatly dependent on) a financial infrastructure (technology, institutions, platforms, and policies) that can adapt and evolve just as rapidly.
This new abundance of capital requires financial decision-making with ever-higher market prediction precision. That’s exactly where artificial intelligence is already playing a massive role.
Artificial Intelligence, Robo Traders, and Financial Advisors
On May 6, 2010, the Dow Jones Industrial Average suddenly collapsed by 998.5 points (equal to 8 percent, or $1 trillion). The crash lasted over 35 minutes and is now known as the ‘Flash Crash’. While no one knows the specific reason for this 2010 stock market anomaly, experts widely agree that the Flash Crash had to do with algorithmic trading.
With the ability to have instant, trillion-dollar market impacts, algorithmic trading and artificial intelligence are undoubtedly ingrained in how financial markets operate.
In 2017, CNBC.com estimated that 90 percent of daily trading volume in stock trading is done by machine algorithms, and only 10 percent is carried out directly by humans.
Artificial intelligence and financial management algorithms are not only available to top Wall Street players.
Robo-advisor financial management apps, like Wealthfront and Betterment, are rapidly permeating the global market. Wealthfront currently has $9.5 billion in assets under management, and Betterment has $10 billion.
Artificial intelligent financial agents are already helping financial institutions protect your money and fight fraud. A prime application for machine learning is in detecting anomalies in your spending and transaction habits, and flagging potentially fraudulent transactions.
As artificial intelligence continues to exponentially increase in power and capabilities, increasingly powerful trading and financial management bots will come online, finding massive new and previously lost streams of wealth.
How else are artificial intelligence and automation transforming finance?
Disruptive Remittance and Seamless Transactions
When was the last time you paid in cash at a toll booth? How about for a taxi ride?
EZ-Pass, the electronic tolling company implemented extensively on the East Coast, has done wonders to reduce traffic congestion and increase traffic flow.
Driving down I-95 on the East Coast of the United States, drivers rarely notice their financial transaction with the state’s tolling agencies. The transactions are seamless.
The Uber app enables me to travel without my wallet. I can forget about payment on my trip, free up my mental bandwidth and time for higher-priority tasks. The entire process is digitized and, by extension, automated and integrated into Uber’s platform (Note: This incredible convenience many times causes me to accidentally walk out of taxi cabs without paying!).
In January 2018, we saw the success of the first cutting-edge, AI-powered Amazon Go store open in Seattle, Washington. The store marked a new era in remittance and transactions. Gone are the days of carrying credit cards and cash, and gone are the cash registers. And now, on the heals of these early ‘beta-tests’, Amazon is considering opening as many as 3,000 of these cashierless stores by 2023.
Amazon Go stores use AI algorithms that watch various video feeds (from advanced cameras) throughout the store to identify who picks up groceries, exactly what products they select, and how much to charge that person when they walk out of the store. It’s a grab and go experience.
Let’s extrapolate the notion of seamless, integrated payment systems from Amazon Go and Uber’s removal of post-ride payment to the rest of our day-to-day experience.
Imagine this near future:
As you near the front door of your home, your AI assistant summons a self-driving Uber that takes you to the Hyperloop station (after all, you work in L.A. but live in San Francisco).
At the station, you board your pod, without noticing that your ticket purchase was settled via a wireless payment checkpoint.
After work, you stop at the Amazon Go and pick up dinner. Your virtual AI assistant passes your Amazon account information to the store’s payment checkpoint, as the store’s cameras and sensors track you, your cart and charge you auto-magically.
At home, unbeknownst to you, your AI has already restocked your fridge and pantry with whatever items you failed to pick up at the Amazon Go.
Once we remove the actively transacting aspect of finance, what else becomes possible?
Extraordinary transformations are happening in the finance world. We’ve only scratched the surface of the fintech revolution. All of these transformative financial technologies require high-fidelity assurance, robust insurance, and a mechanism for storing value.
I’ll dive into each of these other facets of financial services in future articles.
For now, thanks to coming global communication networks being deployed on 5G, Alphabet’s LUNE, SpaceX’s Starlink and OneWeb, by 2024, nearly all 8 billion people on Earth will be online.
Once connected, these new minds, entrepreneurs, and customers need access to money and financial services to meaningfully participate in the world economy.
By connecting lenders and borrowers around the globe, decentralized lending drives down global interest rates, increases global financial market participation, and enables economic opportunity to the billions of people who are about to come online.
We’re living in the most abundant time in human history, and fintech is just getting started.
Abundance Digital Online Community: I have created a Digital/Online community of bold, abundance-minded entrepreneurs called Abundance Digital. This is my ‘onramp’ for exponential entrepreneurs – those who want to get involved and play at a higher level. Click here to learn more.
Image Credit: Novikov Aleksey / Shutterstock.com Continue reading
Superconductors are among the most bizarre and exciting materials yet discovered. Counterintuitive quantum-mechanical effects mean that, below a critical temperature, they have zero electrical resistance. This property alone is more than enough to spark the imagination.
A current that could flow forever without losing any energy means transmission of power with virtually no losses in the cables. When renewable energy sources start to dominate the grid and high-voltage transmission across continents becomes important to overcome intermittency, lossless cables will result in substantial savings.
What’s more, a superconducting wire carrying a current that never, ever diminishes would act as a perfect store of electrical energy. Unlike batteries, which degrade over time, if the resistance is truly zero, you could return to the superconductor in a billion years and find that same old current flowing through it. Energy could be captured and stored indefinitely!
With no resistance, a huge current could be passed through the superconducting wire and, in turn, produce magnetic fields of incredible power.
You could use them to levitate trains and produce astonishing accelerations, thereby revolutionizing the transport system. You could use them in power plants—replacing conventional methods which spin turbines in magnetic fields to generate electricity—and in quantum computers as the two-level system required for a “qubit,” in which the zeros and ones are replaced by current flowing clockwise or counterclockwise in a superconductor.
Arthur C. Clarke famously said that any sufficiently advanced technology is indistinguishable from magic; superconductors can certainly seem like magical devices. So, why aren’t they busy remaking the world? There’s a problem—that critical temperature.
For all known materials, it’s hundreds of degrees below freezing. Superconductors also have a critical magnetic field; beyond a certain magnetic field strength, they cease to work. There’s a tradeoff: materials with an intrinsically high critical temperature can also often provide the largest magnetic fields when cooled well below that temperature.
This has meant that superconductor applications so far have been limited to situations where you can afford to cool the components of your system to close to absolute zero: in particle accelerators and experimental nuclear fusion reactors, for example.
But even as some aspects of superconductor technology become mature in limited applications, the search for higher temperature superconductors moves on. Many physicists still believe a room-temperature superconductor could exist. Such a discovery would unleash amazing new technologies.
The Quest for Room-Temperature Superconductors
After Heike Kamerlingh Onnes discovered superconductivity by accident while attempting to prove Lord Kelvin’s theory that resistance would increase with decreasing temperature, theorists scrambled to explain the new property in the hope that understanding it might allow for room-temperature superconductors to be synthesized.
They came up with the BCS theory, which explained some of the properties of superconductors. It also predicted that the dream of technologists, a room-temperature superconductor, could not exist; the maximum temperature for superconductivity according to BCS theory was just 30 K.
Then, in the 1980s, the field changed again with the discovery of unconventional, or high-temperature, superconductivity. “High temperature” is still very cold: the highest temperature for superconductivity achieved was -70°C for hydrogen sulphide at extremely high pressures. For normal pressures, -140°C is near the upper limit. Unfortunately, high-temperature superconductors—which require relatively cheap liquid nitrogen, rather than liquid helium, to cool—are mostly brittle ceramics, which are expensive to form into wires and have limited application.
Given the limitations of high-temperature superconductors, researchers continue to believe there’s a better option awaiting discovery—an incredible new material that checks boxes like superconductivity approaching room temperature, affordability, and practicality.
Without a detailed theoretical understanding of how this phenomenon occurs—although incremental progress happens all the time—scientists can occasionally feel like they’re taking educated guesses at materials that might be likely candidates. It’s a little like trying to guess a phone number, but with the periodic table of elements instead of digits.
Yet the prospect remains, in the words of one researcher, tantalizing. A Nobel Prize and potentially changing the world of energy and electricity is not bad for a day’s work.
Some research focuses on cuprates, complex crystals that contain layers of copper and oxygen atoms. Doping cuprates with various different elements, such exotic compounds as mercury barium calcium copper oxide, are amongst the best superconductors known today.
Research also continues into some anomalous but unexplained reports that graphite soaked in water can act as a room-temperature superconductor, but there’s no indication that this could be used for technological applications yet.
In early 2017, as part of the ongoing effort to explore the most extreme and exotic forms of matter we can create on Earth, researchers managed to compress hydrogen into a metal.
The pressure required to do this was more than that at the core of the Earth and thousands of times higher than that at the bottom of the ocean. Some researchers in the field, called condensed-matter physics, doubt that metallic hydrogen was produced at all.
It’s considered possible that metallic hydrogen could be a room-temperature superconductor. But getting the samples to stick around long enough for detailed testing has proved tricky, with the diamonds containing the metallic hydrogen suffering a “catastrophic failure” under the pressure.
Superconductivity—or behavior that strongly resembles it—was also observed in yttrium barium copper oxide (YBCO) at room temperature in 2014. The only catch was that this electron transport lasted for a tiny fraction of a second and required the material to be bombarded with pulsed lasers.
Not very practical, you might say, but tantalizing nonetheless.
Other new materials display enticing properties too. The 2016 Nobel Prize in Physics was awarded for the theoretical work that characterizes topological insulators—materials that exhibit similarly strange quantum behaviors. They can be considered perfect insulators for the bulk of the material but extraordinarily good conductors in a thin layer on the surface.
Microsoft is betting on topological insulators as the key component in their attempt at a quantum computer. They’ve also been considered potentially important components in miniaturized circuitry.
A number of remarkable electronic transport properties have also been observed in new, “2D” structures—like graphene, these are materials synthesized to be as thick as a single atom or molecule. And research continues into how we can utilize the superconductors we’ve already discovered; for example, some teams are trying to develop insulating material that prevents superconducting HVDC cable from overheating.
Room-temperature superconductivity remains as elusive and exciting as it has been for over a century. It is unclear whether a room-temperature superconductor can exist, but the discovery of high-temperature superconductors is a promising indicator that unconventional and highly useful quantum effects may be discovered in completely unexpected materials.
Perhaps in the future—through artificial intelligence simulations or the serendipitous discoveries of a 21st century Kamerlingh Onnes—this little piece of magic could move into the realm of reality.
Image Credit: ktsdesign / Shutterstock.com Continue reading
Millions of years of evolution have allowed animals to develop some elegant and highly efficient solutions to problems like locomotion, flight, and dexterity. As Boston Dynamics unveils its latest mechanical animals, here’s a rundown of nine recent robots that borrow from nature and why.
SpotMini – Boston Dynamics
Starting with BigDog in 2005, the US company has built a whole stable of four-legged robots in recent years. Their first product was designed to be a robotic packhorse for soldiers that borrowed the quadrupedal locomotion of animals to travel over terrain too rough for conventional vehicles.
The US Army ultimately rejected the robot for being too noisy, according to the Guardian, but since then the company has scaled down its design, first to the Spot, then a first edition of the SpotMini that came out last year.
The latter came with a robotic arm where its head should be and was touted as a domestic helper, but a sleeker second edition without the arm was released earlier this month. There’s little detail on what the new robot is designed for, but the more polished design suggests a more consumer-focused purpose.
OctopusGripper – Festo
Festo has released a long line of animal-inspired machines over the years, from a mechanical kangaroo to robotic butterflies. Its latest creation isn’t a full animal—instead it’s a gripper based on an octopus tentacle that can be attached to the end of a robotic arm.
The pneumatically-powered device is made of soft silicone and features two rows of suction cups on its inner edge. By applying compressed air the tentacle can wrap around a wide variety of differently shaped objects, just like its natural counterpart, and a vacuum can be applied to the larger suction cups to grip the object securely. Because it’s soft, it holds promise for robots required to operate safely in collaboration with humans.
CRAM – University of California, Berkeley
Cockroaches are renowned for their hardiness and ability to disappear down cracks that seem far too small for them. Researchers at UC Berkeley decided these capabilities could be useful for search and rescue missions and so set about experimenting on the insects to find out their secrets.
They found the bugs can squeeze into gaps a fifth of their normal standing height by splaying their legs out to the side without significantly slowing themselves down. So they built a palm-sized robot with a jointed plastic shell that could do the same to squeeze into crevices half its normal height.
Snake Robot – Carnegie Mellon University
Search and rescue missions are a common theme for animal-inspired robots, but the snake robot built by CMU researchers is one of the first to be tested in a real disaster.
A team of roboticists from the university helped Mexican Red Cross workers search collapsed buildings for survivors after the 7.1-magnitude earthquake that struck Mexico City in September. The snake design provides a small diameter and the ability to move in almost any direction, which makes the robot ideal for accessing tight spaces, though the team was unable to locate any survivors.
The snake currently features a camera on the front, but researchers told IEEE Spectrum that the experience helped them realize they should also add a microphone to listen for people trapped under the rubble.
Bio-Hybrid Stingray – Harvard University
Taking more than just inspiration from the animal kingdom, a group from Harvard built a robotic stingray out of silicone and rat heart muscle cells.
The robot uses the same synchronized undulations along the edge of its fins to propel itself as a ray does. But while a ray has two sets of muscles to pull the fins up and down, the new device has only one that pulls them down, with a springy gold skeleton that pulls them back up again. The cells are also genetically modified to be activated by flashes of light.
The project’s leader eventually hopes to engineer a human heart, and both his stingray and an earlier jellyfish bio-robot are primarily aimed at better understanding how that organ works.
Bat Bot – Caltech
Most recent advances in drone technology have come from quadcopters, but Caltech engineers think rigid devices with rapidly spinning propellers are probably not ideal for use in close quarters with humans.
That’s why they turned to soft-winged bats for inspiration. That’s no easy feat, though, considering bats use more than 40 joints with each flap of their wings, so the team had to optimize down to nine joints to avoid it becoming too bulky. The simplified bat can’t ascend yet, but its onboard computer and sensors let it autonomously carry out glides, turns, and dives.
Salto – UC Berkeley
While even the most advanced robots tend to plod around, tree-dwelling animals have the ability to spring from branch to branch to clear obstacles and climb quickly. This could prove invaluable for search and rescue robots by allowing them to quickly traverse disordered rubble.
UC Berkeley engineers turned to the Senegal bush baby for inspiration after determining it scored highest in “vertical jumping agility”—a combination of how high and how frequently an animal can jump. They recreated its ability to get into a super-low crouch that stores energy in its tendons to create a robot that could carry out parkour-style double jumps off walls to quickly gain height.
Pleurobot – École Polytechnique Fédérale de Lausanne
Normally robots are masters of air, land, or sea, but the robotic salamander built by researchers at EPFL can both walk and swim.
Its designers used X-ray videos to carefully study how the amphibians move before using this to build a true-to-life robotic version using 3D printed bones, motorized joints, and a synthetic nervous system made up of electronic circuitry.
The robot’s low center of mass and segmented legs make it great at navigating rough terrain without losing balance, and the ability to swim gives added versatility. They also hope it will help paleontologists gain a better understanding of the movements of the first tetrapods to transition from water to land, which salamanders are the best living analog of.
Eelume – Eelume
A snakelike body isn’t only useful on land—eels are living proof it’s an efficient way to travel underwater, too. Norwegian robotics company Eelume has borrowed these principles to build a robot capable of sub-sea inspection, maintenance, and repair.
The modular design allows operators to put together their own favored configuration of joints and payloads such as sensors and tools. And while an early version of the robot used the same method of locomotion as an eel, the latest version undergoing sea trials has added a variety of thrusters for greater speeds and more maneuverability.
Image Credit: Boston Dynamics / YouTube Continue reading