Current States - Tech Dec 18

I want to start a series on this blog. Where I just spend time thinking about issues and writing about them with references. This came about as I tried to do a longform post on climate change and what it could mean for financial portfolios, but was struggling for what I felt was truly original content. I will go back to that topic hopefully on the next post but today I was emailing a couple of people with a follow up on a conversation on technology and this format made sense to me as something I could replicate a lot more.

We had been discussing the Wesfarmers demerger of Coles, Data and the future of computing. So here it is:

William here, I was considering some of the points of we touched upon on Sunday and wanted to further expand on them as we left a lot unsaid. I will break it up into two main bits and reference it as much as possible so we can all have a bit more understanding of what was being said as it is very complicated.

Data and Flybuys:

As we discussed Wesfarmers did make sure to keep a 50% stake of Flybuys. The reason being is that the data they have collected since 1994 is includes nearly 50% of the population and 5.5m households (according to Wikipedia).

Recently the new Macbook Air came out which I was thinking of getting for university, and in less than a fortnight of it being out I got a targeted ad saying that for me it's 10% off if I buy now, semi scary until I realised I had looked at the price on the Apple store and compared it to the similar specced Surface Go. The more data that advertisers and store managers can get the more likely customers will remain interested, by the time I had got the advert I had forgot about buying the laptop as it was out of my price range, or really my need - it reminded me.

A good look at how we can use data to 'nudge' people can be seen in the Orwellian game-style Chinese point system to control the masses - points for being a citizen. The Chinese are merely taking a play out of what computer games have been designed to do. They keep us interested, we are addicted to the dopamine release when we play games or look at marketing (exhibit A & exhibit B), China won't just be using dopamine to create their in-game carrots. They have real life consequences to not being a good citizen.

Yuval Harari has stated that humans are an algorithm (we implement steps to go to a goal), and that we can be gamed by machine algorithms. Certainly a scary proposition but it looks to be true. Marketing is defined as the act of selling and promoting a product/service and what we are seeing is that marketing is now all done by data scientists. We are gaming humans into making decisions. That is why it is so important for Wesfarmers to keep Flybuys. If you're still not convinced: Qantas today has a market cap of $9.87bn, Credit Suisse says their Frequent Flyers Program is worth about $4bn.

AI & Quantum Computing

Computers at the moment are made up of bits, which are positioned as either on or off. That means with 20 bits you have 1,048,576 different positions (2^20). WIth a quantum computer the number of positions one may have are innumerable. The bits are now called qubits, although usually in practise at the moment they have either 2 or 4 positions (up down, spin up, spin down). These computers will be vastly more powerful what we do today. With 10 qubits we can have the same amount of positions as the 20 bits (4^10). The thing is these quantum computers are amongst us today and are not science-fiction. Finding primes will be much easier with quantum computing which is good for encryption. But also means that in the wrong hands hacking into systems would be much easier. Write a program to find all the bugs in a legacy computer. The first entities to own them will have a massive jump start on their potential.

Artificial Intelligence is having a renaissance at the moment too. Deep Learning using Neural Networks (20 minute video) that mimics our brain structure will be used in most applications. It has become prevalent and easy to use. One can download packages called Keras or SciKit and add it to your new app idea or any idea really. Whilst the commercial opportunities are boundless, they bring with them a host of issues. Humanism, or the idea that humans are the front and centre of the world is the dominant philosophy in the world. We can see that data is pervasive, and the AI to use it also, humans look to become obsolete soon; what will happen to humans? With commercial interests above the interests of society as a whole can we make sure we are making the right steps with this technology, or even, if we should. We could easily grant consciousness to a silicon wafer; if you believe a rock can be conscious.

Deep fakes and the rise in fake news will become even harder to spot and stop with AI and quantum computing. I heard a conspiracy theory that the governments and universities deliberately allowed the software to go on Github (where all open source software resides) so that when shit hits the fans and things go wrong, they can have plausible deniability with video evidence. Who knows.

On more positive notes, the technology is promising for the medical tech world, and performs better than most doctors in prognosis. Humans not driving and leaving it to AI should lead to a reduction in CO2 and deaths. And that is just scratching the surface.

Anyways, Hope you enjoyed this kind of content.

WJD