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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.
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.
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In Goethe’s poem “The Sorcerer’s Apprentice,” made world-famous by its adaptation in Disney’s Fantasia, a lazy apprentice, left to fetch water, uses magic to bewitch a broom into performing his chores for him. Now, new research from Yale has opened up the possibility of being able to animate—and automate—household objects by fitting them with a robotic skin.
Yale’s Soft Robotics lab, the Faboratory, is led by Professor Rebecca Kramer-Bottiglio, and has long investigated the possibilities associated with new kinds of manufacturing. While the typical image of a robot is hard, cold steel and rigid movements, soft robotics aims to create something more flexible and versatile. After all, the human body is made up of soft, flexible surfaces, and the world is designed for us. Soft, deformable robots could change shape to adapt to different tasks.
When designing a robot, key components are the robot’s sensors, which allow it to perceive its environment, and its actuators, the electrical or pneumatic motors that allow the robot to move and interact with its environment.
Consider your hand, which has temperature and pressure sensors, but also muscles as actuators. The omni-skins, as the Science Robotics paper dubs them, combine sensors and actuators, embedding them into an elastic sheet. The robotic skins are moved by pneumatic actuators or memory alloy that can bounce back into shape. If this is then wrapped around a soft, deformable object, moving the skin with the actuators can allow the object to crawl along a surface.
The key to the design here is flexibility: rather than adding chips, sensors, and motors into every household object to turn them into individual automatons, the same skin can be used for many purposes. “We can take the skins and wrap them around one object to perform a task—locomotion, for example—and then take them off and put them on a different object to perform a different task, such as grasping and moving an object,” said Kramer-Bottiglio. “We can then take those same skins off that object and put them on a shirt to make an active wearable device.”
The task is then to dream up applications for the omni-skins. Initially, you might imagine demanding a stuffed toy to fetch the remote control for you, or animating a sponge to wipe down kitchen surfaces—but this is just the beginning. The scientists attached the skins to a soft tube and camera, creating a worm-like robot that could compress itself and crawl into small spaces for rescue missions. The same skins could then be worn by a person to sense their posture. One could easily imagine this being adapted into a soft exoskeleton for medical or industrial purposes: for example, helping with rehabilitation after an accident or injury.
The initial motivating factor for creating the robots was in an environment where space and weight are at a premium, and humans are forced to improvise with whatever’s at hand: outer space. Kramer-Bottoglio originally began the work after NASA called out for soft robotics systems for use by astronauts. Instead of wasting valuable rocket payload by sending up a heavy metal droid like ATLAS to fetch items or perform repairs, soft robotic skins with modular sensors could be adapted for a range of different uses spontaneously.
By reassembling components in the soft robotic skin, a crumpled ball of paper could provide the chassis for a robot that performs repairs on the spaceship, or explores the lunar surface. The dynamic compression provided by the robotic skin could be used for g-suits to protect astronauts when they rapidly accelerate or decelerate.
“One of the main things I considered was the importance of multi-functionality, especially for deep space exploration where the environment is unpredictable. The question is: How do you prepare for the unknown unknowns? … Given the design-on-the-fly nature of this approach, it’s unlikely that a robot created using robotic skins will perform any one task optimally,” Kramer-Bottiglio said. “However, the goal is not optimization, but rather diversity of applications.”
There are still problems to resolve. Many of the videos of the skins indicate that they can rely on an external power supply. Creating new, smaller batteries that can power wearable devices has been a focus of cutting-edge materials science research for some time. Much of the lab’s expertise is in creating flexible, stretchable electronics that can be deformed by the actuators without breaking the circuitry. In the future, the team hopes to work on streamlining the production process; if the components could be 3D printed, then the skins could be created when needed.
In addition, robotic hardware that’s capable of performing an impressive range of precise motions is quite an advanced technology. The software to control those robots, and enable them to perform a variety of tasks, is quite another challenge. With soft robots, it can become even more complex to design that control software, because the body itself can change shape and deform as the robot moves. The same set of programmed motions, then, can produce different results depending on the environment.
“Let’s say I have a soft robot with four legs that crawls along the ground, and I make it walk up a hard slope,” Dr. David Howard, who works on robotics at CSIRO in Australia, explained to ABC.
“If I make that slope out of gravel and I give it the same control commands, the actual body is going to deform in a different way, and I’m not necessarily going to know what that is.”
Despite these and other challenges, research like that at the Faboratory still hopes to redefine how we think of robots and robotics. Instead of a robot that imitates a human and manipulates objects, the objects themselves will become programmable matter, capable of moving autonomously and carrying out a range of tasks. Futurists speculate about a world where most objects are automated to some degree and can assemble and repair themselves, or are even built entirely of tiny robots.
The tale of the Sorcerer’s Apprentice was first written in 1797, at the dawn of the industrial revolution, over a century before the word “robot” was even coined. Yet more and more roboticists aim to prove Arthur C Clarke’s maxim: any sufficiently advanced technology is indistinguishable from magic.
Image Credit: Joran Booth, The Faboratory Continue reading
Now that the era of artificial intelligence is unquestionably upon us, it behooves us to think and work harder to ensure that the AIs we create embody positive human values.
Science fiction is full of AIs that manifest the dark side of humanity, or are indifferent to humans altogether. Such possibilities cannot be ruled out, but nor is there any logical or empirical reason to consider them highly likely. I am among a large group of AI experts who see a strong potential for profoundly positive outcomes in the AI revolution currently underway.
We are facing a future with great uncertainty and tremendous promise, and the best we can do is to confront it with a combination of heart and mind, of common sense and rigorous science. In the realm of AI, what this means is, we need to do our best to guide the AI minds we are creating to embody the values we cherish: love, compassion, creativity, and respect.
The quest for beneficial AI has many dimensions, including its potential to reduce material scarcity and to help unlock the human capacity for love and compassion.
A large percentage of difficult issues in human society, many of which spill over into the AI domain, would be palliated significantly if material scarcity became less of a problem. Fortunately, AI has great potential to help here. AI is already increasing efficiency in nearly every industry.
In the next few decades, as nanotech and 3D printing continue to advance, AI-driven design will become a larger factor in the economy. Radical new tools like artificial enzymes built using Christian Schafmeister’s spiroligomer molecules, and designed using quantum physics-savvy AIs, will enable the creation of new materials and medicines.
For amazing advances like the intersection of AI and nanotech to lead toward broadly positive outcomes, however, the economic and political aspects of the AI industry may have to shift from the current status quo.
Currently, most AI development occurs under the aegis of military organizations or large corporations oriented heavily toward advertising and marketing. Put crudely, an awful lot of AI today is about “spying, brainwashing, or killing.” This is not really the ideal situation if we want our first true artificial general intelligences to be open-minded, warm-hearted, and beneficial.
Also, as the bulk of AI development now occurs in large for-profit organizations bound by law to pursue the maximization of shareholder value, we face a situation where AI tends to exacerbate global wealth inequality and class divisions. This has the potential to lead to various civilization-scale failure modes involving the intersection of geopolitics, AI, cyberterrorism, and so forth. Part of my motivation for founding the decentralized AI project SingularityNET was to create an alternative mode of dissemination and utilization of both narrow AI and AGI—one that operates in a self-organizing way, outside of the direct grip of conventional corporate and governmental structures.
In the end, though, I worry that radical material abundance and novel political and economic structures may fail to create a positive future, unless they are coupled with advances in consciousness and compassion. AGIs have the potential to be massively more ethical and compassionate than humans. But still, the odds of getting deeply beneficial AGIs seem higher if the humans creating them are fuller of compassion and positive consciousness—and can effectively pass these values on.
Transmitting Human Values
Brain-computer interfacing is another critical aspect of the quest for creating more positive AIs and more positive humans. As Elon Musk has put it, “If you can’t beat ’em, join’ em.” Joining is more fun than beating anyway. What better way to infuse AIs with human values than to connect them directly to human brains, and let them learn directly from the source (while providing humans with valuable enhancements)?
Millions of people recently heard Elon Musk discuss AI and BCI on the Joe Rogan podcast. Musk’s embrace of brain-computer interfacing is laudable, but he tends to dodge some of the tough issues—for instance, he does not emphasize the trade-off cyborgs will face between retaining human-ness and maximizing intelligence, joy, and creativity. To make this trade-off effectively, the AI portion of the cyborg will need to have a deep sense of human values.
Musk calls humanity the “biological boot loader” for AGI, but to me this colorful metaphor misses a key point—that we can seed the AGI we create with our values as an initial condition. This is one reason why it’s important that the first really powerful AGIs are created by decentralized networks, and not conventional corporate or military organizations. The decentralized software/hardware ecosystem, for all its quirks and flaws, has more potential to lead to human-computer cybernetic collective minds that are reasonable and benevolent.
BCI is still in its infancy, but a more immediate way of connecting people with AIs to infuse both with greater love and compassion is to leverage humanoid robotics technology. Toward this end, I conceived a project called Loving AI, focused on using highly expressive humanoid robots like the Hanson robot Sophia to lead people through meditations and other exercises oriented toward unlocking the human potential for love and compassion. My goals here were to explore the potential of AI and robots to have a positive impact on human consciousness, and to use this application to study and improve the OpenCog and SingularityNET tools used to control Sophia in these interactions.
The Loving AI project has now run two small sets of human trials, both with exciting and positive results. These have been small—dozens rather than hundreds of people—but have definitively proven the point. Put a person in a quiet room with a humanoid robot that can look them in the eye, mirror their facial expressions, recognize some of their emotions, and lead them through simple meditation, listening, and consciousness-oriented exercises…and quite a lot of the time, the result is a more relaxed person who has entered into a shifted state of consciousness, at least for a period of time.
In a certain percentage of cases, the interaction with the robot consciousness guide triggered a dramatic change of consciousness in the human subject—a deep meditative trance state, for instance. In most cases, the result was not so extreme, but statistically the positive effect was quite significant across all cases. Furthermore, a similar effect was found using an avatar simulation of the robot’s face on a tablet screen (together with a webcam for facial expression mirroring and recognition), but not with a purely auditory interaction.
The Loving AI experiments are not only about AI; they are about human-robot and human-avatar interaction, with AI as one significant aspect. The facial interaction with the robot or avatar is pushing “biological buttons” that trigger emotional reactions and prime the mind for changes of consciousness. However, this sort of body-mind interaction is arguably critical to human values and what it means to be human; it’s an important thing for robots and AIs to “get.”
Halting or pausing the advance of AI is not a viable possibility at this stage. Despite the risks, the potential economic and political benefits involved are clear and massive. The convergence of narrow AI toward AGI is also a near inevitability, because there are so many important applications where greater generality of intelligence will lead to greater practical functionality. The challenge is to make the outcome of this great civilization-level adventure as positive as possible.
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Meet the Winner of Robotics’ World Cup
Editorial Staff | MIT Technology Review
“If you are under the impression that the recent soccer World Cup was won by a fine French team that triumphed over Croatia in a dramatic finale, then you were watching the wrong tournament. At about the same time, on the other side of the world in Montreal, another tournament was also under way. This was the soccer World Cup for adult-size robots.”
SpaceX’s Moon Trip Is the Ultimate Artist Residency
Marina Koren | The Atlantic
“If SpaceX’s latest ambitions become a reality, a spaceship carrying one Japanese billionaire and six to eight artists will blast off from Earth and head for a trip around the moon sometime around 2023.”
FUTURE OF WORK
Emerging Tech Will Create More Jobs Than It Kills by 2020, World Economic Forum Predicts
George Dvorsky | Gizmodo
“The big question many of us are asking now is: Will job losses outweigh job creation in the coming years and decades? If a new World Economic Forum (WEF) report is to be believed, emerging tech will create more jobs than it destroys. At least for the next four years.”
Why Your DNA Is Still Uncharted Territory
Carl Zimmer | The New York Times
“If these trends continue as they have for decades, the human genome will remain a terra incognito for a long time. At this rate, it would take a century or longer for scientists to publish at least one paper on every one of our 20,000 genes.”
Satellite Uses Giant Net to Practice Capturing Space Junk
Loren Grush | The Verge
“Along with experimenting with a deployable net, the satellite is also equipped with a harpoon that can spear objects, as well as a drag sail that can help slow down debris and make them fall to Earth faster. The plan is to see if these technologies can even work, before trying them out on future spacecraft that are tasked with cleaning up debris.”
Image Credit: NASA / Unsplash Continue reading