21

Mar

The Dawn of a New Society – Blockchain & Artificial Intelligence


Author:
Ferdouse Khaleque PhD. (London, UK)

 

First Published:
March 21st, 2018

 

Blockchain is a fairly new phenomenon that has taken the world by storm, in particular due to its popularity arising from Bitcoin.

 

Bitcoin’s popularity from a mere concept in 2008 to today’s phenomenal growth has all the major technology houses clambering to utilize this decentralized technology. Major technology firms such as Microsoft, IBM and Oracle have some platform that offers the Fortune 100 companies to do POC (proof of concept) work around the blockchain. Namely Etherium by Microsoft and Hyperledger by IBM and Oracle.

 

Blockchain can be thought of as one form of technology that utilizes peer to peer networks that allows consensus to be reached via proof of work using mining. The bitcoin blockchain falls under the broad umbrella of DLT (digital ledger technology) and is one of few protocols for offering an immutable distributed ledger.

 

The DLT field which has captured much of the recent surge of interest here in the US has been predicted to grow to billions of dollars in the next coming years. Numerous applications that previously consisted of closed ‘centralized’ system are ideal for DLT applications. In particular, disparate systems that do not have any centralized control element for its full operations. One example, is the tracking of international goods and shipment. Microsoft has demonstrated such POC and have shown how disparate systems can come together in a distributed ledger environment that reduces significant overheads and is accessible to all the parties concerned. These include shipping ports, customs duties, customs approvals, finance, checks by third parties etc.

 

In essence, blockchain with its distributed environment and no requirement for a controlling centralized body will have wider impact to the government and social system of the country. Never before has the playing field been levelled to such an extent that any nation, no matter a super-power or a third world country can now take full advantage of this technology to reduce inefficiencies in economic output and bring about vast improvements to society as a whole.

 

The governments of progressive nations can now look towards blockchain technologies to improve their vast operational costs of maintaining records using this technology. The seamless integration of all governing bodies to pertinent data held in immutable blockchain ledgers will pave the way for greater cooperation of inter government departments and most importantly trust within the people it governs. This will have a huge social impact in that creativity and progress will be at an all time high resulting only in further progress. Eventually, a society that implements these technologies will reach new heights that can become the envy of all other nations.

 

Although, not obvious to many observers of blockchain since the underlying technology is somewhat hard to assimilate, it nevertheless can show to have significant long-term benefits to society. Whomever can grasp its true potential can advocate this new technology to the people who can bring about sweeping changes and do away with inefficient methods of conducting business and bring back the harmony of trust and cooperation.

 

Blockchain is a technology that has sprung to the world scene from its core technology and questions the very ethics of controlled centralized architectures we have today. In blockchain there is no controller of the system, if one wanted to shut down Bitcoin, we would need to get sufficient brute force by a joint effort to bring half the millions of distributed computers around the world crashing down. A very unlikely proposition.

 

Some examples of applications using DLT (distributed ledger technology)
To give an example of the potential for DLT applications, one can obtain a better understanding by looking at applications and in particular the applications that are core to governmental operations. In many government operations, and understandably so, there is always a distrust between the general public and the government. This is entirely due to the centralized structure of the government who ultimately holds the decision power despite erroneous information being held in the records. This information of records are kept and governed by the public servant and any disputes arising between the parties give no measurable confidence to the person on the street. And so this distrust is propagated through time and as the philosopher Karl Marx put it, will result in catastrophic failure and disruption to civilian life until something is done. We have seen this happen throughout history, for example, the civil movements in US of the 60s, World Wars, imperial colonization in the last century and many other examples. In almost all cases, new regulations and laws are enforced only to bring about more discontent and distrust down the line.

 

The rules and regulations only help to temporarily solve the problem, but we are still left with a social divide that has not truly addressed the core of the movements in the first place. Thankfully, the new technologies that are here today, will help us to move in that unprecedented direction like we could have never imagined. You just have to look back on the movements and social changes in the past to understand that we are always trying to correct ourselves but at the expense of a controlling and centralized government autocracy.

 

Although, we may consider that US as a socially democratic nation that has the interests of the people but many can see that this is not often the case. The House in Washington can wage war without the people’s consent, raise taxes and interest without the consent of the people. We are at a point where the centralizing power held by governments are at unprecedented levels and is designed to dissuade uprising and keep everyone in check. The movements away from the gold standard to representative currency shows the might of this concentrated power.
The famous philosopher of our time, Naom Chomksy has constantly levelled criticism of the concentrated governmental forces that continues to grow day by day at the expense of the people that it claims to democratically lead. However, he may not be aware that there is a solution at hand and mankind can once again embrace true democracy.

 

The importance of blockchain cannot be over emphasized since this is a technology that can marry the indifferences between governmental organizations and the very people it governs. In essence, creating more trust and hence a decentralized evolution of governing that is much more efficient than the present day today. Much of the centralized controlling nature of governing requires massive amounts of wasted resources and time, leads to distrust and enforcements of unwanted penalties, rules and regulations.

 

The marriage of Blockchain & AI, the future is here..
We stand at the pinnacle of a technological revolution that can shape mankind’s society in the coming years. These two technologies are here and maturing by the minute and they are DLT (blockchain) and AI (machine language). Already machine language or neural networks are being used by big companies such as Google, Facebook, Baidu to a level where predictions made at the human level is unparalleled. It may not seem that obvious to you when you use Google, but try to do a search for anything and watch how Google predicts the ‘ideas’ or ‘sources’ for you without you even thinking too hard. This is AI at the fundamental level and considering that there are a few billion searches going on simultaneously!

 

In the same way that AI has helped with big data in the search world, the marriage of AI with blockchain will be significant. These two technologies alone will change the way enterprise solutions are now setup for companies and coupled with cloud will pave the way for a more efficient and robust systems of the future. The consequences of this would be to drastically reduce costs, increase efficiency and ultimately benefiting the end user. Can you think of the possibility of solutions saving millions or billions of dollars to the company or governments. One may think that this will only help the bigger companies to monopolize their market position but this also can be addressed in blockchain as will be explained later.

 

Many big companies today are cornering their respective markets and it will take an enormous effort by any other company to compete in the same market space. This will require a huge investment of human capital and resource and one cannot even guarantee its success. So the perpetual propagation of a handful of companies controlling a vast market space with little competition actually defeats the whole purpose of free capital. This is at odds with the capitalistic system that many societies have struggled to maintain to the present day. We are seeing a wider discrepancy in the rich and poor as noted by many notable experts of today. Ultimately, something has to give, if it is not a revolution as Karl Marx puts it, but some kind of a significant change that brings it back to a fair market position. This is now possible through the technologies mentioned above. The example below will show how this is possible.

 

Let’s take one of the big companies such as facebook which pretty much gobbles up all other social platforms out of existence and no sane person would ever want to compete with FB (facebook) head to head, no matter how large the pool of money. The adage that you cannot fight em, so join em has worked very well for FB. For example, all supporting platforms that is not in direct competition to FB such as Whatsapp, Instagram have had unique platforms that were not in direct competition to FB but ultimately absorbed by FB. This begs the question…where is the fair market competitiveness of this free enterprise market that we crave for in our society today? The problem stems from the huge monetary capital that the companies have amassed acquiring the users. You only have to see the cash pool that Apple dominates in their war chest and they can pretty much dictate the course of people’s needs. Luckily, another alternate platform exists to bear competition to Apple ie. Android. Should this be enough? We already know that a handful of companies can easily monopolize and create a cartel as the world had witnessed during the US oil crisis of the 70s.

 

It is understood that in the ideal society, we do not want massive power and wealth to be in the hands of a few companies or individuals. But it is all too evident in the society that we live in today.

 

The answer lies in extending the blockchain technology towards a concept called ‘tokenization’. Here, the spread of concentrated wealth and power is distributed to the people who use the application. FB would be nothing if it were not for the massive user base amounting to more than a few billion people using it throughout the world. Oddly enough, the very people who make what FB is today are further targeted and exploited by the company to derive more money in the form of paid subscriptions plan, localized business marketing etc. In theory, the FB users should be granted certain rights and privileges for using the system, but unfortunately this would construe as being ridiculous. Granted folks are offered the ultimate social connection platform to connect with their many loved ones or friends, but aside from this there is an underlying engine that is collecting and mining data to further the ambitions of only the FB stakeholders.

 

In the tokenization model of doing business, there is a paradigm shift in the manner that businesses are held and managed. This model has the capability to ‘level the playing field’ even further and thus foster a more innovative and progressive society without the lopsided top-heavy market that exists today. The growing interest in ICO (initial coin offering) maybe a reflection of this as you will see later on.

 

Imagine, that you have a new social site called ‘BitBook’. This site will utilize the tokenization concept and create a rapid user base for its intended founder(s) and audience in several ways. Suppose, during launch of the BitBook, the founder(s) decides to integrate the tokenization technology behind it. This is done by allowing the members or anyone who registers on the site to own ‘tokens’ of the site. Effectively, the members now become inherent owners of the site with maybe a small portion legitimately going to its founders. The success of the site will now largely depend on the growth of the membership which is easily done through word of mouth and the appreciation of the token value in the open marketplace. There are numerous ramifications to this working application concept. Founders do not need to raise huge capital, the success of the application will fuel further growth and purchase of more tokens by other members adding to more cash-flow for the next phase of development and marketing. At this stage, any company with ‘low’ seed funding can also enter the market and capitalize on this and depending only on the merits of their application, will either succeed or fail. This is far removed from a company obtaining a large pool of VC funding which dismisses any normal and fair competition in the space. Another aspect of this business model, is that at anytime that the founder takes their eyes off the ball for its ‘members’, it can quickly spiral down to nothing with the ‘tokens’ losing much if not all of its value. This in all fairness would be considered a fair market opportunity where businesses can thrive and driven naturally by the people and users of the application. This in turn will lead to an agile progression at a scale never witnessed before and not stymied by hard to enter markets and barriers due to just money alone.

 

To see how this would work, let’s examine a dating application that can be ‘tokenized’.

 

Jumpdates.com was one of the early adopters of online dating and was launched back in 2001 when match.com was at its infancy. This would be a prime example of how one online dating website such as match.com to this day has roughly 80% of today’s market share whereas a relatively unknown site such as jumpdates.com that has always offered free dating to everyone has fallen on the wayside. The market for match.com in total amounts to about 800 million dollars in revenue.

 

At first sight you may think that the reason for one falling short is due to a lack of features or did not possess the marketing reach of the other. Both maybe true but the latter is more appropriate in this example, since only with an initial large funding did match.com achieve it’s eminent position that it enjoys today. Those who are well versed in online businesses know that a large chunk of the money always goes towards marketing which requires huge capital investment. The main reason, one dominated over the other was largely having a substantial pool of money and leveraging this to capture market share. Effectively quashing all competition to just a handful and in the process dictating the terms of the membership prices to it’s site. This has a knock on effect that the large revenue stream earned from the site only fuels it’s growth and eventually monopolizes the market. We thus end up with the goliaths of online businesses ie. Amazon, Google, Facebook etc.

 

A major disadvantage of doing business in this manner is that a price cartel can be created which in turn hurts the end user. This could explain the large divide and discrepancies between the rich and poor which seems to be widening each day. This is further exacerbated by the government who enjoys the large income tax bracket coming from these cash-rich companies. This is in contradiction to the democratic policies of the government such as anti-trust, monopoly laws, cartels etc. Unfortunately, this will only propel the bigger companies to maintain their dominant position in the market (with the knod of the government) and in turn reduce competition and stifle innovation.

 

The principles of decentralization through tokenization open up exciting paths for even the lowly entrepreneur who is cash-strapped and wants to get something off the ground. Doing so avoids many of the pitfalls of today ie. barrier to entry, attaining a rapid market share, eliminating red-tape costs and serving the needs of the people, the founders and even the government. The many advantages of this business model means that wealth is better distributed, everyone can participate and effectively lower end costs and fuel innovation and creativity. The success of ICOs (initial coin offering) is an example of where ‘everyone’ can participate in the early stages of a new company and effectively become an immediate stakeholder of the company. Naturally, the success of these companies will still still be accountable to the same forces ie. the strength of the team behind the new company, competition from other companies etc but the same level playing field has now been truly restored. You need not be an institutional investor to invest in an ICO unlike an IPO, anyone can participate in the ICO. This is reminiscent of the time how some people were selectively chosen to buy Google shares during its IPO.Companies like etrade refused entries for some applicants and as a result could not invest their money which they could have purchased when it was low.

 

With Jumpdates.com, the member will own a ‘token’ from the website and thus effectively have premium membership access to the website. This is in contrast to the paid subscription plans that are available through sites like match.com or eharmony.com. The advantage of the ‘token’ purchase is that, it now has some intrinsic value and may also be transferable. The token can be exchanged or transferred in the same way that bitcoin and altcoins are exchanged in coin-exchanges. A very similar example would be the ICO token exchange platform that has generated much interest of late. In the present dating sites, the money used to purchase subscription plans are not transferable and is no guarantee that you will meet your ultimate date. In actual fact, that money would be lost if you were to cancel your membership.

 

We can see several important traits of this business model over the traditional business model. As mentioned, the member effectively has a ‘vested’ interest in the well-being of the dating company since they are effectively part-owners of the site. There is a chance that the member who actual registers on this site and buys the respective tokens will not lose it’s entire value since tokens can be exchanged on the ICO platforms. If for some reason, the member is not satisfied with the service, he/she can offer to exchange the tokens to their respective fiat currency value. This is in contrast to the present system where once you have paid the subscriptions plan, you will not receive any refunds even if you fail to find a partner. Also, the success of the company with high membership growth, will enable the member to take more interest in the company and see continued growth over time. This decentralized model permits the founder to continually improve on the product with increased funding through tokens and help to elevate the company to higher levels without requiring huge initial capital. If on the other hand the site fails to attract members, then the losses are passed to the members who may have unwittingly bought into this vision and will learn from their mistakes. This dynamic nature of doing business will foster innovation and keep all parties satisfied including founder, people and even the government.

 

An exciting breakthrough from this method of business will result in the government having an open platform on the blockchain to actually collect taxes without evasion. Since the nature of the model is open with the distributed technology using DLTs, the immutable quality of ledger technologies implies that any member participating in the tokenization of companies can be easily measured. For example, the member tokens which is the intrinsic value can be monetized by a ‘smart contract’ whereby a percentage of the tax rate can be levied without further intervention. This is an exceptionally powerful concept that will alleviate many of the overheads that are currently in place by the government to impose and collect taxes.

 

How does AI (artificial intelligence) fit into all this. Incredibly, the two technologies could have never been in a better position in place and time to intersect as it has today. Along with big data collected in DLT, AI is comfortable in assimilating large quantities of data and its purpose with DLT would have a paramount importance to the overall application. In the example of the government utilizing blockchain, we can foresee that there will be large amounts of data that will need to be mined and understood. AI is perfectly poised to handle this volume of data and the combination of DLT and AI will enable decision making at the lowest level. This will only pave the way for increased utilization of government resources focussing on the broader issues at hand and to make more meaningful decisions that will impact all of society.

 

In conclusion, the combined technologies of blockchain and artificial intelligence will bring about a ‘social revolution’ like the world has never seen before. Whilst the large technological companies such as Microsoft and IBM are subservient to the needs of the Fortune 100 companies, the impact of these technologies has a far greater consequence and significance to society as a whole. In time, the harsh approach by governments around the world to regulations in Bitcoin, ICOs etc will fetter down to pave the way for the dawn of a new society.



Leave a Reply