Welcome to 2018

One sure prediction is that the new year will bring a slew of predictions, some glowingly optimistic and some confidently pessimistic. I’ve sifted through the predictions in the digital world, and here’s my summary, plus a New Year’s gift.

Artificial Intelligence

As the use of big data, algorithms and the digital technology has evolved artificial intelligence has moved from the esoteric into real world.

It turns up in marketing, with a series of caveats. It’s behind an app to identifying snakes, with caveats about what that does for our relationship with nature. It’s contributing to how we brew beer and AI is what makes chatbots smart enough to be helpful.

The Webby Awards Trend report notes that we still trust humans over AI, but I suspect we’re not always aware of where AI impacts our lives. We will see more practical adaptations of AI in 2018.

Virtual Reality

I like the idea of virtual reality, but my experience so far has been that it doesn’t add enough to my experience to compensate for the awfulness of the headset. Frankly I’d rather read a book and imagine the worlds. So the story-telling in VR needs to improve, and the devices need to get better.

So far the biggest use seems to be in gaming but even there users are underwhelmed, the Economist reported in December that VR has failed to live up to it’s hype, and added that there is a “distinct whiff of urgency in the air” as VR struggles with poor equipment and unsatisfactory content.

The devices are starting to get lighter and prettier, however they’re still relatively expensive.


Will 2018 be the year that the devices and the experiences improve?

Blockchain

Blockchain is the technology behind bitcoin and other crypto-currencies, it has other uses in making digital information exchange more trustworthy.

We’ll see these tests scale more widely along with more novel uses, I’m sure there are smart people out there looking at how blockchain could be used more broadly to securing our online identity.

Bots

Bots get a lot of bad press, they were exploited in the 2016 election and throughout 2017 to deliver false information to a screen near you, eroding reasonable debate and internet freedom according to Freedom House reports.

However due to advances in AI bots are starting to get better at customer service than humans. Will 2018 be the year we pass the Turing Test on a help-desk call?

Cybersecurity

This remained a big issue for business last year with major breaches in a range of industries from food retail, email, healthcare and governments.

Companies spend increasing proportions of their IT budget on cybersecurity and introduce restrictive measure to protect their data (USB sticks are frequently banned for example), 2018 will be the year of innovation in cybersecurity as companies struggle to reassure customers that their data is safe.

Social Media

Social media will become even more commercialised, expect more of those ads on Instagram, and more promoted posts – and more ways to promote content – on all platforms as the pressure increases for the platforms to be profitable and for company use of social media to demonstrate a return on investment. This won’t be pretty.

On the plus side we’ll see more tweaks on the platforms to encourage engagement; expect more platforms to adapt the Facebook emoticon model, and more uses of video and live-streaming.

My New Year’s Gift

In an attempt to be more consistent with my blog posting I developed a content calendar, I’ve added the various “International Day Of…” dates that might be useful along with a few significant birthdays and events. I’ve added a few content ideas, and I’m sharing the framework so far in case anyone else finds it useful.

2017

As we say farewell to 2017, here’s a reminder of what the world thought was worth searching for – it’s a two minute film from Google based on search data. It’s like a time capsule of the year.

 

Image: New Year’s Day  |  geralt on Pixabay  |  CC0 1.0

Book of the Month: Throwing Rocks at the Google Bus

Throwing Rocks at the Google Bus

Douglas Rushkoff

Like many people I tend to use the products of the digital revolution more easily than I think about the economics of it. I see the astonishing figures of acquisition value for companies that have yet to make a profit and something seems odd – but I’ve never sat down and examined what. I suspect I’m not alone in this. Rushkoff’s book examines the financial industry, particularly around digital startups to show us just what is wrong with our economy, and offers the beginnings of some solutions.

The main  argument are that our existing economy is set up to serve constant growth, and the wealth generated in that economy accrues to a minority at the top, leaving the majority worse off.

BOTM Googlebus quote1

The book begins with a discussion of an unusual protest; local residences of San Francisco’s Mission District lay down on the street in front of some of the Google buses that were used to ferry employees from their homes to the Google campus. This is a symptom of the dysfunctional economy.

Growth

We have all bought into the growth myth; we need and deserve more – in financial reward for our work, the size of our homes, the shininess of our possessions or the pool of money for our pension. But in nature things grow to maturity and then stop growing, they reach a size that’s appropriate for their physical limits and their ecosystem. An oak tree doesn’t keep growing, it maintains itself over time, growing new leaves each year, but the size remains more or less constant.

Companies have a growth imperative, the market expects growth in their market capitalisation to give investors a return. Which is why the market gets excited about huge audiences on Pokemon Go, and gets jittery when Apple iPhone sales stagnate.

In the theories of business that I learnt in business school a company had to manage multiple stakeholders and keep them all happy to ensure long term success. Put simply a company must keep employees well-trained and motivated to make customers happy, ensuring income for the company to return to investors over a longer term. Stakeholder theory says that the needs of all three must be kept in balance and that neglecting the needs of one will affect the other two.

Rushkoff explains that in today’s market there are relatively few investors in the sense of people wanting to own a piece of a company and be vested in its success. Instead the market is full of traders, those who trade shares amongst themselves and might never know what the company makes or what is on its balance sheet. The most advanced of these is using sophisticated technology and complex algorithms and trading on minute shifts in share price. This trading is done digitally, using microseconds of difference in share price enabled by digital, and the activity is so removed from actual business activity according Rushkoff, that it is creating a distorted market.

The startup economy takes all this to the next level, it effectively gamifies investment.

Startup Economy

In the start up economy it’s venture capitalists doing the investing, and they are not interested in the long term profitability of your company, they’re looking for a maximum return “on exit”, which is either your company being acquired by a larger company or an IPO. Here’s a simple breakdown of how the funding works and the share of return at the IPO stage. Venture Capitalists invest significant amounts in multiple startups and expect some to fail. Conversely the ones that succeed need to do very, very well.

The drive for high valuations of startups is less about the net present value of the company, and more about the expectations of the venture capitalists. The VCs expect a return on their investment not of percentage points, like a traditional investor, but in multiples.

History of Money

Rushkoff points out that it wasn’t always this way. In simpler times we bartered our goods directly, and then as trading grew in the bazaar towns developed a form of script allowing more exchanges. Quality was ensured by a set of guilds who could control a trade. As the bazaar emerged Europe enjoyed rapid economic expansion. However, he suggests, the nobility feared losing their system of value creation, as feudalism broke down, and instituted measures to limit or eliminate local currencies.

The discussion of the changes in how money functioned in the past points to ways that it could function in the future.

Potential Solutions

Money has two functions, measuring accumulated assets and transactional, the system we have now works far better for the former function and not that well for the second. Solutions revolve around changing the currency system in various ways.

  1. Local currency; eg the Massachusetts Berkshares
  2. Free money; eg; the Worgl currency
  3. Cooperative currencies; eg; Fureai Kippu
  4. Local bank; reforming banking to enable local investment
  5. Crypto currency; eg Bitcoin, which frees up money for transactions.

Rushkoff also points to some different models of business building, where businesses are established specifically not to grow – or at least not to grow beyond their chartered purpose. He asks that new entrepreneurs think of more in the stakeholder model that delivers long term sustainable growth.

You can see a discussion of the book at the Commonwealth Club;

The book explains all the history and the theory very clearly, I think it’s a must read for digital professionals, economists and those with an interest in sustainability or social justice. There are plenty of examples throughout the book – most real and a few hypothetical. The book answered a lot of my “how does that work?” economic questions, but also made me curious at how do we solve this for ourselves and for future generations.

I look at the overwhelming wall of opposition, the “vested interests” and the conflicted interests – after all even as I see the sense of this revolution I am relying on the growth of investments to pay for my future, and the solutions offered seem too small and too vulnerable. For real change it will take government regulation to change, in the meantime I’ll look for alternative models that I can employ today.

Blockchain

CM2016_07_blockchain.png

Blockchain is the technology behind cyrptocurrencies such as Bitcoin, Namecoin and Titcoin. These currencies work as any other currency in terms of spending them, but their creation is a little differently and relies on cryptography,

When I first heard about bitcoin I was working for a financial services company, and the person telling me was gleefully announcing it would be the end of banks. Lots of things have been touted as the end to banks over the years, this was just the latest. I admit I had a bit of a mental block about it, I couldn’t see how value was encapsulated in the bitcoins – which is probably exactly how people felt when paper money started to be issued by national banks.

It’s a little complicated so here’s the best explanation I’ve been able to find on the internet so far.

(Want to know more? Here’s an even more detailed version from the same expert.)

Blockchain is a distributed decentralised ledger recording transactions. At its heart it provides a mechanism to encode the trust on each side of a transaction.

It’s that documenting of trust that has led to further consideration of the blockchain technology starting with central banks themselves. Blockchain solves two problems for established banks and central banks (1) transactions become faster (2) transactions become more secure. Because the transaction is recorded in a distributed manner, and because the transactions form a sequence, it’s extremely difficult to create a fraudulent transaction.

There are other areas where documenting trust is important, The Economist reports on changes coming to the land register in Honduras that will use a form of blockchain. By distributing the land register in a blockchain system the country will finally have a single land register.  IBM is part of a consortium working on a “hyperledger” that will allow private use of an open distributed ledger to track a variety of transaction. They note that a transaction dispute can take 40 days to resolve, but with an open ledger that time should be reduced.

Using Blockchain to verify contracts, sometimes called “smart contracts” could have uses in multiple industries. In this podcast from the BBC’s “Click” programme they explored the idea of using blockchain in the music industry to codify ownership of music, and enable simple payment.

MIT (who else?) have been looking at using blockchain as a certification mechanism on qualifications and memberships. They’ve written on the background and purpose of this project. If you’re a nice honest person who never lies on their LinkedIn profile you might struggle to see why this is important, however there are lots of CV ‘exaggerations’ out there and it is important to be clear about what qualifications, experience and memberships a person holds when they apply for further education, a job, or enter public office.  In the future our CV may come with blockchain codes to verify our statements.

Lastly governments are examining the potential of blockchain. The UK Government released a report on blockchain technology this year in which they state the potential power it has in government business;

Distributed ledger technologies have the potential to help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services.

In fact Estonia is there already, their digitally-savvy president, Toomas Hendrik, has overseen significant use of blockchain technologies in securing identity and health records within his country and he’s working for a closer integration with outer countries across Europe.  There’s a broad vision Estonia’s digital programme, and the implementation has simplified a great many processes for its citizens.

In the future some form of blockchain technology will be behind how you access government and financial services. It will be more secure, more able to protect your privacy, and less likely to disruption or loss of data.

Image: Chained  |  Danna § curious tangles  |   CC BY-NC-ND 2.0