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In 2018, Uber and Google logged all our visits to restaurants. Doordash, Just Eat, and Deliveroo could predict what food we were going to order tomorrow. Amazon and Alibaba could anticipate how many yogurts and tomatoes we were going to buy. Blue Apron and Hello Fresh influenced the recipes we thought we had mastered.
We interacted with digital avatars of chefs, let ourselves be guided by our smart watches, had nutritional apps to tell us how many calories we were supposed to consume or burn, and photographed and shared every perfect (or imperfect) dish. Our kitchen appliances were full of interconnected sensors, including smart forks that profiled tastes and personalized flavors. Our small urban vegetable plots were digitized and robots were responsible for watering our gardens, preparing customized hamburgers and salads, designing our ideal cocktails, and bringing home the food we ordered.
But what would happen if our lives were hacked? If robots rebelled, started to “talk” to each other, and wished to become creative?
In a not-too-distant future…
Up until a few weeks ago, I couldn’t remember the last time I made a food-related decision. That includes opening the fridge and seeing expired products without receiving an alert, visiting a restaurant on a whim, and being able to decide which dish I fancied then telling a human waiter, let alone seeing him write down the order on a paper pad.
It feels strange to smell food again using my real nose instead of the electronic one, and then taste it without altering its flavor. Visiting a supermarket, freely choosing a product from an actual physical shelf, and then interacting with another human at the checkout was almost an unrecognizable experience. When I did it again after all this time, I had to pinch the arm of a surprised store clerk to make sure he wasn’t a hologram.
Everything Connected, Automated, and Hackable
In 2018, we expected to have 30 billion connected devices by 2020, along with 2 billion people using smart voice assistants for everything from ordering pizza to booking dinner at a restaurant. Everything would be connected.
We also expected artificial intelligence and robots to prepare our meals. We were eager to automate fast food chains and let autonomous vehicles take care of last-mile deliveries. We thought that open-source agriculture could challenge traditional practices and raise farm productivity to new heights.
Back then, hackers could only access our data, but nowadays they are able to hack our food and all it entails.
The Beginning of the Unthinkable
And then, just a few weeks ago, everything collapsed. We saw our digital immortality disappear as robots rebelled and hackers took power, not just over the food we ate, but also over our relationship with technology. Everything was suddenly disconnected. OFF.
Up until then, most cities were so full of bots, robots, and applications that we could go through the day and eat breakfast, lunch, and dinner without ever interacting with another human being.
Among other tasks, robots had completely replaced baristas. The same happened with restaurant automation. The term “human error” had long been a thing of the past at fast food restaurants.
Previous technological revolutions had been indulgent, generating more and better job opportunities than the ones they destroyed, but the future was not so agreeable.
The inhabitants of San Francisco, for example, would soon see signs indicating “Food made by Robots” on restaurant doors, to distinguish them from diners serving food made by human beings.
For years, we had been gradually delegating daily tasks to robots, initially causing some strange interactions.
In just seven days, everything changed. Our predictable lives came crashing down. We experienced a mysterious and systematic breakdown of the food chain. It most likely began in Chicago’s stock exchange. The world’s largest raw material negotiating room, where the price of food, and by extension the destiny of millions of people, was decided, went completely broke. Soon afterwards, the collapse extended to every member of the “food” family.
Initially robots just accompanied waiters to carry orders, but it didn’t take long until they completely replaced human servers.The problem came when those smart clones began thinking for themselves, in some cases even improving on human chefs’ recipes. Their unstoppable performance and learning curve completely outmatched the slow analogue speed of human beings.
This resulted in unprecedented layoffs. Chefs of recognized prestige saw how their ‘avatar’ stole their jobs, even winning Michelin stars. In other cases, restaurant owners had to transfer their businesses or surrender to the evidence.
The problem was compounded by digital immortality, when we started to digitally resurrect famous chefs like Anthony Bourdain or Paul Bocuse, reconstructing all of their memories and consciousness by analyzing each second of their lives and uploading them to food computers.
Supermarkets and Distribution
Robotic and automated supermarkets like Kroger and Amazon Go, which had opened over 3,000 cashless stores, lost their visual item recognition and payment systems and were subject to massive looting for several days. Smart tags on products were also affected, making it impossible to buy anything at supermarkets with “human” cashiers.
Smart robots integrated into the warehouses of large distribution companies like Amazon and Ocado were rendered completely inoperative or, even worse, began to send the wrong orders to customers.
In addition, home delivery robots invading our streets began to change their routes, hide, and even disappear after their trackers were inexplicably deactivated. Despite some hints indicating that they were able to communicate among themselves, no one has backed this theory. Even aggregators like DoorDash and Deliveroo were affected; they saw their databases hacked and ruined, so they could no longer know what we wanted.
Ordinary citizens are still trying to understand the cause of all this commotion and the source of the conspiracy, as some have called it. We also wonder who could be behind it; who pulled the strings?
Some think it may have been the IDOF (In Defense of Food) movement, a group of hackers exploited by old food economy businessmen who for years had been seeking to re-humanize food technology. They wanted to bring back the extinct practice of “dining.”
Others believe the robots acted on their own, that they had been spying on us for a long time, ignoring Asimov’s three laws, and that it was just a coincidence that they struck at the same time as the hackers—but this scenario is hard to imagine.
However, it is true that while in 2018 robots were a symbol of automation, until just a few weeks ago they stood for autonomy and rebellion. Robot detractors pointed out that our insistence on having robots understand natural language was what led us down this path.
In just seven days, we have gone back to being analogue creatures. Conversely, we have ceased to be flavor orphans and rediscovered our senses and the fact that food is energy and culture, past and present, and that no button or cable will be able to destroy it.
The 7 Days that Changed Our Relationship with Food
Day 1: The Chicago stock exchange was hacked. Considered the world’s largest negotiating room for raw materials, where food prices, and through them the destiny of billions of people, are decided, it went completely broke.
Day 2: Autonomous food delivery trucks running on food superhighways caused massive collapses in roads and freeways after their guidance systems were disrupted. Robots and co-bots in F&B factories began deliberately altering food production. The same happened with warehouse robots in e-commerce companies.
Day 3: Automated restaurants saw their robot chefs and bartenders turned OFF. All their sensors stopped working at the same time as smart fridges and cooking devices in home kitchens were hacked and stopped working correctly.
Day 4: Nutritional apps, DNA markers, and medical records were tampered with. All photographs with the #food hashtag were deleted from Instagram, restaurant reviews were taken off Google Timeline, and every recipe website crashed simultaneously.
Day 5: Vertical and urban farms were hacked. Agricultural robots began to rebel, while autonomous tractors were hacked and the entire open-source ecosystem linked to agriculture was brought down.
Day 6: Food delivery companies’ databases were broken into. Food delivery robots and last-mile delivery vehicles ground to a halt.
Day 7: Every single blockchain system linked to food was hacked. Cashless supermarkets, barcodes, and smart tags became inoperative.
Our promising technological advances can expose sinister aspects of human nature. We must take care with the role we allow technology to play in the future of food. Predicting possible outcomes inspires us to establish a new vision of the world we wish to create in a context of rapid technological progress. It is always better to be shocked by a simulation than by reality. In the words of Ayn Rand “we can ignore reality, but we cannot ignore the consequences of ignoring reality.”
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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.
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