The Ingenesist Project

The Next Economic Paradigm

Tag: cryptocurrency

Bitcoin Protocol Future Currency Impact On The Engineering Profession

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On August 6, 2015

In General Information

Beginning with the failure of the NAFTA Mutual Recognition of Professional Engineers followed by an introduction to modern cryptocurrencies, this seminal presentation specifies a future where engineering knowledge represented by a virtual asset may store true intrinsic value.

This presentation was filmed at the 2015 National Society of Professional Engineers Annual Conference, Advanced Leadership Track, July 16, 2015 in Seattle Washington. Daniel Robles, PE, MIB is the founder of Coengineers, PLLC and The Ingenesist Project

Abstract

The Bitcoin Protocol And The Future Currency Impact On The Engineering Profession

In a Wall Street Journal essay, two authors wrote, “The digital currency known as bitcoin is only six years old, and many of its critics are already declaring it dead. But such dire predictions miss a far more important point: Whether bitcoin survives or not, the technology underlying it is here to stay.” This session will cover what digital currency means for the engineering profession.

“Decentralization” is a term being applied to platforms that use the Blockchain Protocol pioneered by Satoshi Nakamoto, the inventor of Bitcoin.  As a cryptographic currency, Bitcoin remains problematic.  However, as an algorithmic protocol, blockchain technology will enable society to cheaply perform common business processes that are now controlled by institutions such as banks, insurance companies, corporations, government, etc.  Today, rapidly emerging platforms are under development to bring “smart contracts” (algorithms based on blockchain technology) into the mainstream.  

An important and essential variant of smart contracts is called an “Adjudicated Smart Contract” that requires an independent 3rd party adjudicator that would “flip the switch” on algorithmic agreements in finance, insurance, and decisions of governance.  There is a staggering opportunity ahead for the engineering profession to position itself for the role of the adjudicator in a wide variety of important and high value transactions.  The caveat is that we too must change the way that we organize ourselves.   

This presentation, Decentralizing the Engineering Profession, begins with the failure of the NAFTA MRD followed by an introduction to blockchain technologies, and ending with specifications on how our profession can jump to the top of the value chain in the era of Social Capitalism – if, and only if, [the engineering profession] can choose to change. 

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The Best Digital Currency

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On March 26, 2015

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Nothing Economic happens until two or more people get together to make something useful.  This could be a house, a meal, a friendship, or an education. This has been true since the dawn of civilization and it is true more than ever today. Therefore, the best digital currency must facilitate and “account” for precisely this uniquely human activity – bringing people together in a useful way – not driving them apart. Everything else is a derivative.

The Best Digital Currency

Curiosumé is an analog to digital converter for knowledge assets. Curiosumé will rapidly scale and accelerate the matching and accounting for the best digital currency.  Everything else that would be needed already exists.  The working title of this currency is called Gen.  The asset that underwrites Gen is human productivity.

The difference between Gen and the dollar is that the dollar no longer represents human productivity.  Instead, it represents interest on debt, financial exotica, endless war, political influence, unsustainable consumption, etc.  These things are no longer useful to the majority of people.  As a result a lot of “economics” that should be happening, cannot happen. No current digital currency resolves that problem because they are all still derivatives of the dollar.

Gen is the digital currency of TIP (The Ingenesist Project).  Initially, Gen will act as the unit of account between technologists as they  trade Gen among themselves while collaborating on useful projects. For example, a mechanical designer would exchange Gen with a website developer to render a product to a community. Curiosumé resolves the dual coincidence restraint on traditional barter encounters.

As transactions become more complex, the Gen will begin to represent the generalized technological knowledge stored in infrastructure such as buildings, clean water, schools, and farms. Since these things are useful to a lot of people, those people would gladly accept Gen in exchange for their own useful non-technological services that they provide in a community.  In this way, everyone gets what they need using a currency that represents the utility of what they can produce together.

Economic incentives will be altered:

1. To produce useful things that people need.

2. To build high quality things that last a long time.

3. To preserve useful things for as long as possible,

4. To discard things and ideas that are not useful.

5. There is no incentive to cheat.

Don’t be fooled by crypto-hype, the best digital currency is between your ears and only you can hold the keys to that vault.

Curiosumé is an analog to digital converter for knowledge assets. The rest of the components can be found in technologies that already exist.  Let us know if you think that Curiosumé would be useful and we’ll build it together.

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Decentralized CRM With Curiosumé

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On March 6, 2015

In General Information

(Photo: New York Times)

Modern CRM (Customer Relationship Management) emerged from the boiler rooms of corporate sales departments. They needed a way to keep track of contacts, leads, calls, and ping schedules.  Soon they added client information like DOB, Spouses name, neighborhood news, etc.  The customer responded remarkably well, in fact, perhaps too well – they started asking for things like better service, warranty claims, and “can I get that in purple”.

Salespersons, being so closely tied to the revenue, began telling the service department that they are choking revenue,  and telling the warranty department when customers are defecting, and telling engineering to introduce new features.  They got away with it because they had management support as a revenue driver.  Pretty soon CRM systems began migrating across the enterprise evolving along the way. Ironically, CRM now finds itself losing touch with the customer despite the ever increasing amount of data that now populates the hit sheets.

Recently, we were asked to consider scenarios for Curiosumé applications in a CRM role in the financial industry. There are several important features of Curiosumé that can reconnect the customer to the enterprise.

Top level ontology in the commons
Instead of controlling people’s information, set it free and watch where the client leads you.  When all market channels pull their information from the same network of nodes and branches, they can always be current and synchronized. When the client adds information to the commons, this becomes available to the vendor outside of a firewall eliminating many security issues.  You don’t necessarily need (or want) to know the ID of the client in order to serve them better.

Anonymity layer / autonomous matching:
AUPOT (Anonymous Until Point of Transaction) allows clients to deploy anonymous personas so that they will be more willing to;

  • reveal true intentions to the commons,
  • perform their own pre-analysis in the commons
  • increase their insights and contribute that to the commons.

Customer Controls Their Data:
Help the client own and control their own engagement data.  Give them the same tools and opportunities to experiment as researchers as the Big Data wonks have.  Allow them to delete, save, edit or have as many different personas as they want. Let them deploy and retract personas as a way of finding you.  A better and more efficient relationship will emerge between both sides of a transaction.

User interface layer:
Instead of leading your client like cattle through an arbitrary ontology tree, show them photographs that corresponds to nodes in the common ontology.  These can then be matched algorithmically to advisors, products, or different departments in the firm, in real time.   In essence, you can create a multi-agent algorithmic game in a user interface that could be fun, engaging, and sticky as heck.

Advisor interface:
When a client chooses to engage the advisor or a product or a transaction,  they can submit their persona into the algorithm to select specialized advisors or a team of advisors. Only at the point of mutual acceptance, both players cross the firewall and engage in honest, trusting commerce. Layers and layers of bureaucracy, vetting, and security breaches can be eliminated until the actual exchange is made.

(Photo: The Philadelphia Orchestra)

Powerful Feature:
One of the most powerful and least recognized features of Curiosumé is the ability to constrain a “score” to a number or a range. One reason for this is to create imbalance around the mean – when the system is not balanced, it can never be static and will always have some movement (regression toward the mean).  It will become largely self-managing, self centering, and even a little joyous.

For example: if we constrain the client to having a Curiosumé score of zero; that means that for the total of all (+) sigmas, they must also accumulate an equal and opposite total of  (-) sigmas such that their net total is zero, in order to pass “go”. When we lay this back on to the top level ontology (Wikipedia), we can find a series of paths that unite the (+) sigmas to the (-) sigmas.  This path tells us a GREAT deal about where the client wants to go.  Likewise an older client may prefer a net (+) portfolio where a younger client may prefer a net (-) portfolio.  Decentralized CRM with Curiosumé can also be applied to risk pooling in the same manner. The deviation s from the mean and resulting movements are precisely how we would price the derivatives of intangibles, i.e. tangibles.

Outcome:
Decentralized CRM with Curiosumé is readily ready to happen. We know that people, advisors, and products can be brought together in personal and emotional engagement when they intersect paths of common interest. This is the weakness of both the barter system AND modern technological Capitalism  If we can envision interests flowing dynamically along vectors, we will have the ability to align human incentives and the markets that depend on them.

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Means and Methods of the Curiosumé DApp

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On January 23, 2015

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The Mechanics of the Curiosumé DApp are extremely simple. In fact, perhaps the greatest challenge of building the application will be to truncate the features of Curiosumé to the simplest functional form.

Means and Methods of the Curiosumé DApp

The only thing that Curiosumé is really supposed to accomplish is convert a résumé, CV, or project description from an analog form to a digital form so that the accounting, production, storage, and exchange of intangible assets can be machine enabled in a meaningful and valuable way. Centralized applications such as Facebook and Google perform this job quite effectively within their fortress for sale to 3rd parties, Curiosumé will do the same for decentralized applications between two parties only where value is retained by the creators and owners of the data.

An analog to digital converter for knowledge assets.

Curiosumé is a “writer” that is given away free to the Commons, open sourced, and decentralized. Ideally, an independent instance of the totality of Curiosumé could reside on every device. Applications that import Curiosumé data are called “readers”. Readers will be developed by entrepreneurs to accelerate any number of business models that are otherwise unviable in the current economic paradigm or simply under-performing due to the friction of the current economic model. Reader application may be for-profit giving the network an incentive to maintain Curiosumé. How an entrepreneur uses Curiosumé could be a trade secret rendering many patents obsolete.   These Reader Applications may include Decentralization schemes (DApps), P2P exchanges, and community cooperatives.

As such, the preferred interface between the reader and the writer will be likely be more suited to the MaidSafe protocol of secure P2P exchange of data. This would be similar to other intangible assets such as music, art, and literary works. It is easy to imagine a persona of one’s life story to be a real-time literary work – if not, then it should be.

Converting knowledge assets from analog to digital form:

Step one: User tags themselves with URL’s from Wikipedia articles that best represent intentions to interact with their community.

Step two: User self-selects their placement on a spectrum comprised of endpoints: student of that content, and teacher of that content (Note; midway across the spectrum corresponds to degrees of collaboration).

Step three: Curiosumé creates a digital persona in a specific form

Step four: Export persona to “reader” applications for analysis and processing.

This is the extent of the functional requirements of Curiosumé.

Operational Requirements:

The operational requirements of the application are somewhat more complex. The following six conditions must me secured by the Curiosumé application. If any of these 6 tenets are compromised, the mathematics behind the applications will fail and the intended outcomes will be suboptimal.

1. All public and private Wikis should reconcile upward to a top level Wikipedia entry

2, Rankings must span a non-competitive “student-collaborator-teacher” spectrum

3. Users must be allowed to self-select their placement on the spectrum.

4. The data format must be uniform as;

5. Persona must be indelible to anyone except the owner.

6. Interactions must be anonymous until the point of transaction

These 6 Tenets are unpacked a bit more below:

The Calculus of Curiosumé 

In this form, clean data may be easily normalized for statistical inference while remaining anonymous until an actual transaction of personal data may be negotiated on a P2P basis.  In essence, the criteria described here will produce extraordinarily useful data.

Rule 1: This rule secures a commons based knowledge inventory.  Much like air, water, and Earth, the knowledge assets in the commons are visible components from which useful things will be produced as regulated by supply and demand for the same components.

Rule 2: Students and teachers do not normally compete, rather, in the case of Curiosumé DApp, they represent “supply” and “demand” in a proto-economy. Collaborators represent factors of production in an economy where complementary knowledge can replicate a iterate – these are the engines that create value – this is the mining function.  These data will form a bell curve providing statistical inference to the commons where social value is mined in aggregate.

Rule 3:  The process of self-selection will be deeply personal to all participants and represents the individual mining of value for deposit in the new bank of intangible assets.  All this “mining” can be measured to form the basis of generalized reciprocity of social crypto-currencies.

Rule 4: The common format of of the Curiosumé output function will assure the ability to mix, match, exchange, discover, or test any scenario of social production imaginable.

Rule 5: Gives each person ownership of their data.

Rule 6: Not unlike Craigslist, anonymity until point of transaction is important for allowing people to view the public dataset and test their own participation to find opportunities for productive interaction.

Reader DApps:

When a match is made, a transaction can be negotiated.  However, this functionality is beyond the scope of the Curiosumé writer.  Instead, an innumerable amount of Readers will be developed by entrepreneurs to collect, form, and test scenarios negotiating the decentralized production of all useful things.

Innumerable use cases will create moderate generalized disruption across the current economic paradigm until a tipping point is reached where factors of production will flip from finite tangible to infinite intangible basis of account. Social priorities regarding what is invented and produced will be altered in favor of shared asset preservation rather than private asset consumption. Income equality, by design, will be normalized.  Collaboration will replace competition eliminating the need for over reaching controls and associated force.

 

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Fueling The Decentralization Movement

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On December 5, 2014

In General Information

I recently moderated a panel at The Future of Money and Technology Summit in San Francisco on December 2, 2014.  When I put this panel together, my intention was to make the distinction more intuitive between an economy based in tangible assets and an economy based in intangible assets.   Whether they realized it or not, this particular group of panelists provided early  characteristics of a “full stack” new economic architecture as we described in this early 2009 series: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7

Here is the video of the conference panel.  Below that, are the questions that I had prepared for the group – most of which I did not need to ask.  This panel, in my opinion not only represents some of the most forward thinking people in the crypto-space but also the extremely important integration of applications that are arising in crypto-space.  That is the landmark condition that I am looking for, where applications integrate with each other.

Fueling The Decentralization Movement

 

Below is my prep sheet for the panel;

 

Dan: Welcome to Fueling The Decentralization Movement

 

How many people know what bitcoin is?

Are you familiar with decentralized applications beyond currency?

Would you know how to issue your own currency?

How many people are familiar with Ethereum?

Open: 1-2 minute introduction from each panelist

Q1; Sam. Please define Decentralized Applications (ref: whitepaper) and what you look for in an “investment grade” DApp.

Q2; Paige: Please expand definition of DApp to include non-block chain applications and discuss the off-BCP ways of accomplishing similar results.

Q3: Chris: Where does Ethereum fit in the DApps movement (now and in the next revision) that would facilitate DApp formation and integration.

Q4: Joel: Traditional VC are looking for 1000% on money. Banks lend at 10%, so obviously, there must be a whole lot happening between 10-1000%. What does that look like to you? How could we all release this potential.

Open: Suppose there is a spectrum where on one side, traditional bankers are the ledger holders and adjudicators conjure new money into existence. And on the other side, Bitcoin is a fully decentralized ledger and algorithm that brings new coins into existence. At some point, aren’t we trading one master for another or isn’t their some hybrid model that solves the problems of each? The goal it seems is to be judged as somewhat better than the banking system rather than somewhat less perfect than bitcoin. Do we have priorities s traight?

Open: What are people talking about in the Bitcoin Meetups and the Ethereum Meetups? What is the range of discussion and how viable are the ideas that people are bringing forward? What is the size and demographic of the meet up communities? What do they want to achieve? What are the resentments and where is the optimism?

Open; Nothing economic happens until two or more people get together to build something useful. Virtual goods are cool but something eventually has to touch the earth – to make something real. What can DApps do to bridge the virtual and the real? Stated in another way; when can I buy groceries with my altcoin?

Open: Bitcoin cryptographic “proof of work” creates a new coin and establishes order. The Fiat Banker’s “Proof of future productivity (debt)” also creates a new coin and established ownership. Assuming this to be a trust spectrum; how would “mining” be defined along this spectrum? Can adjudicated smart contracts serve as proof of work to mine coin into existence?

Open: Please describe differences between proof of work, proof of stake, proof of incentive, proof of resource, proof of performance and any number of proofs types. How interchangeable are they, what individual purposes do they serve? Can they combine to serve additional purposes?

Open: Do you believe that decentralization can reach a point where people become their own coin mined by themselves as they accumulate knowledge asset, collaboration, innovation capacity, i.e., representing their own productivity?

Open: What happens when the output of one DApp becomes the input to another forming a fault tolerant network or DApps? Ultimately this has to do with the convertibility of each other’s coins and ultimately convertibility with Fiat currency. What will these exchanges look like?

Open; I like to draw the distinction between classical economics and the New Value Movement. Classical economics posits merchant class allocation of land, labor, and capital for the ideal production of the things that society needs. The New Value movement is describing a decentralized allocation of social capital, creative capital, and intellectual capital for the ideal production of the things that society needs. Where are we on that spectrum and when do you believe that a big flip will happen between the two (if any)? Will it be gradual or sudden? What externalities are involved? Does one hedge the other? What are the possible worldwide implications of this?

 

 

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Future Of Money – Not What You Think

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On November 23, 2014

In General Information

Never underestimate the ability of the human species to adapt to changes in its environment.

All humans are engineers. If there is too much friction in a system, they will fix it, or they will replace it. When banks add overdraft penalties, incur service fees, constrain capital, restrict mobility or compromise the public trust in any way, all those engineers will make a “correction.” Money, after all, is a social agreement.

Today, young people are encountering a financial game that they cannot win playing by the rules that are presented to them. The result should surprise no one – they will either not play the game, or they will change the rules. In fact, innovation in banking is happening at an astonishing rate; unfortunately, bankers are not necessarily doing it.

Because banking touches every part of our lives, so, too, will any innovation that occurs in the domain of banking.

Look at Bitcoin. It is more than just a cute new social app like Facebook or Twitter – it is a new idea called decentralization. If it is possible to decentralize banking, it would also be possible to decentralize everything; insurance, engineering, education, production (i.e., corporations), education, legislation and even governance. Nothing is immune from the next wave of Internet innovation that is bearing down — and right now, not tomorrow.

Because this is an insurance audience, allow me to mention that, the easiest (technically) and likely the first big innovation that will arise from the decentralization movement will be decentralization of insurance. With the advent of smart contract platforms such as Ethereum and Ripple Labs, people can form their own risk-sharing pools to cover a whole suite of perils now in the domain of insurance. (For the lawyers and politicians out there, it is also nearly trivial to set up voting, escrow, contract enforcement, etc., via the sort of block chain protocol that is the basis for Bitcoin.)

Last year, I published an article called “What if everyone was a BitCoin”? The core idea was that there are several problems with Bitcoin:

  • Concentration of wealth is worse than the dollar.
  • The proof of work that creates coin is trivial except for the fact that it is difficult.
  • The valuation was speculative.

Future Of Money – Not What You Think

Today, there are hundreds of companies forming, and being funded in the millions of dollars, that are investing in innovations that would create thousands, if not millions, of alt-coins with characteristics of Bitcoin, except iterated without the impracticalities of Bitcoin.

For example, MaidSafe was able to introduce a currency called Safecoin that provides a way to take unused computational capacity that members are willing to contribute and build a decentralized server network. This network encrypts data flowing through it, creating a secure and anonymous Internet. What happens to big data when people stop sharing the streams of information available on today’s Internet?

Further, innovations such as Curiosumé (by this author) could have wide-ranging implications on everything from education to corporate HR and factors of production – Curiosumé is an open-source development project designed to replace the resume as a means for describing one’s interests, skills and abilities; the tag line is, “Because the resume must die.”

Swarm.co allows individuals to invest time and money in decentralized innovations without banks, insurance, corporations, etc. A new generation of venture capitalists such as DApps Fund is already funding new startups in crypto-currencies and demonstrating high convertibility and liquidity.

Every month, thousands of people are coming together at Meet-up  (itself an earlier social innovation) to learn, teach and collaborate on open-source platforms such as Ethereum, Bitcoin, Ripple and many others. Every day, with each article warning of the dangers of Bitcoin, there is another article of an ex-CEO banker coming out strongly in favor of the financial innovation in the crypto space. What is certain is that every impression placed on the public regarding these new technologies is bad for the status quo for banking and insurance.

Resistance predictably comes from the public voice of banks and governments, which have the most invested in the way things are. This is not to say that they are bad and wrong, just that they have the greatest infrastructure in place to support the existing system. Changing their minds is like pushing electric cars against the tide of Big Oil; lines have been drawn in concrete.

What we are seeing is not a “revolution” with a central army in a field of battle; there is simply a natural progression happening fueled by rational efficiency and nothing else. But change is inevitable.

As with previous financial innovations, my guess is that some trader may discover that the true risk associated with a particular crypto-asset is less than what the risk-adjusted market valuation indicates it is. Then, a financial instrument will be developed to exploit the risk-arbitrage. Some readers may recall the saga of Michael Milken, who correctly observed that companies with low credit scores were in some cases less likely to fail than their risk valuations indicated. This led to the creation of junk bonds and, ultimately, the idea that risk valuations can be skirted. To Milken’s credit, the assumption held until greed set in (which is not the fault of the asset).

I believe something similar may or must happen in finance to spawn internal innovation. For example: the insurance industry does not necessarily care about risk per se; the industry cares mostly that the risk is priced correctly. Soon, the insurance industry may realize that the risk of assets backed in crypto-currencies is lessened because of increased liquidity, fewer restrictions and regulations and rapid convertibility and because they are underwritten by better fundamental assets than the dollar. The industry will develop financial instruments that exploit this risk arbitrage and profit considerably.

But if the insurance company does not innovate in this future form of value, then people will build their own instruments. These new ideas and the technologies will enables millions of entrepreneurs and billions of engineers to print their own money one social agreement at a time. My advice to the insurance industry is to get in, help out and adapt before your customers leave you behind.

(Editors note: You are invited to join the author at The Future of Money and Technology Summit in San Francisco, Dec. 2, 2014, for his panel: Everything that Can Be Decentralized Will Be Decentralized.

The description is:

Much of our society today is based on centralized organizations that allocate our land, labor and money to create the things that we need. Today, we have an opportunity to specify and design any number of decentralized applications that also can produce all the things that society needs — except with stunning efficiency. This is a conversation about what is not only possible but is becoming increasingly probable. This group of speakers represent innovations that decentralize: data, venture capital, productivity, currency, contracts and knowledge — and that’s just the beginning.

The speakers are:

Paige Peterson – Maidsafe

Sam Onat Yilmaz – DApps Fund

Joel Dietz – Swarm.co

Christian Peel – Ethereum

Moderator: Dan Robles, The Ingenesist Project)

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