Wednesday, February 22, 2017

Blockchain based economy and society

Note: These are my personal views and not those of my employers, Tata Consultancy Services
Over the last 1.5+ years, I have been thinking about how blockchains will affect insurance and the wider economy. My latest independent thinking is in this article. I am sure the ideas there are influenced by reading material from others, but I am unable to recall any specific one (other than those linked to therein). I recently had two great discussions with Venky from Cognizant and Prakash Sunkara, a batchmate from IITB, CFO at Elavon. Venky and I spoke about how blockchain offers an alternate way of organising affairs among a group of competing/collaborating humans/firms. Prakash and I spoke about how once some core identity infrastructure is available, digital transfer of value and risks can be enabled.
Thinking of relationships between parents and children, there is an implicit social contract supported by social norms/sanctions which could potentially be implemented by smart contracts. Similarly social organisation is created and sustained by social contracts. Could these be captured through more expressive smart contracts, so as to enforce the social organisation through some means?
Similarly, I recalled discussions with my wife, Prerna Tambay about industrial relations wherein the attempt is to study the fundamental conflict/cooperation between the capitalist and the worker. The capitalist brings capital, the worker brings his labour and they together generate economic surplus and the challenge is to divide it equitably. Many relationships in human/firms are of this conflict/cooperation nature. Blockchains offer a way of organising firms so that capitalists and worker can work together without one exploiting other. One needs to work out the smart contracts for this.
Extending this thinking further, Adam Smith's invisible hand could very well be a smart contract based way of organising the economic affairs of humanity balancing the wastage of capitalism with the dissatisfaction of communism.
Constitutions and law need not be paper based. Factoring in IoT based data about the actions of humans/firms, it should be possible to monitor the compliance to laws and/or enforce the same.
I know this is exotic thinking, but I know that capturing these thoughts for posterity is my duty. I may not live to see this come true in part or full, but I feel in my bones that this is the direction for the future. The nature of evolution of the human technosphere till now has been that it is far too fragmented and the fragmented pieces do not coordinated well with each other on their own in a trustless (in a blockchain sense). This makes it difficult to build complicated structures on top of this brittle base, since human elements are needed for the end-to-end coordination and trust in humans is not as reliable a means for organising affairs as the trustless coordination offered by blockchains. If we find a way of building a layer on top of the brittle base, which is complete and reliable, we might be able to build complex coordination structures on top of it, like some of the one's alluded to above.

Sunday, February 12, 2017

Blockchain based end-to-end digital economy

Note: These are my personal views and not those of my employers, Tata Consultancy Services
I wrote this article long ago about how to avoid monopolies in the digital economy and at its end promised myself that I would write about my view about how an end-to-end blockchain based digital economy could function, solving some of the problems of our generation.
As per Wikipedia, digital economy means
  • e-business infrastructure (hardware, software, telecoms, networks, human capital, etc.)
  • e-business (how business is conducted, any process that an organization conducts over computer-mediated networks)
  • e-commerce (transfer of goods, for example when a book is sold online).
The common element of all the three is data. As well all know data is the new oil. There are so many cowboy individuals and firms exploiting data to derive differential advantages over competition in their respective pursuit of wealth. I contend that the current digital economy is not currently fairly organised and while the emerging data protection regulations are a step in the right direction, there is no clear definition of the destination yet.
Individuals/firms in digital economies have common and separate need for products and services. As described in my last article, I expect an interconnected network of public and private OLTP blockchains to emerge to provide these products and services. As described in the article just before that, the "bulk" data will be stored in off-grid servers and only their hashes will be on the blockchains. The off-grid servers will provide information and OLAP services compliant with data protection regulations.
Individuals/firms can view their own data and request OLAP services for the same. Community information/OLAP services can be provided compliant with data protection regulations. Regulatory information/OLAP services can be provided to regulators directly from the off-grid servers.
The free for all "data analysis" party needs to come to an end. Some monopolists like Google gather and control far too much data than is good for the rest of us. It is only be creating the OLTP blockchain infrastructure and parallel OLAP information management infrastructure, that we can regain control over our own data and liberate ourselves from the monopolists. The current situation where there is no way to verify if these guys follow the data protection regulations needs to stop. The right way to do it is to locate the data itself into OLAP information management infrastructure, which provides OLAP services. Technologically we are nearly there in terms of such kind of OLAP information management infrastructure. The means are there. The will and legal support are needed.

Saturday, February 11, 2017

Solutions for a post-truth world

Note: These are my personal views and not those of my employers, Tata Consultancy Services
A recent BBC program described how our world has become post-truth giving examples of US and UK politics. In both these elections, different partitions of citizens got drawn into webs of public and social media, which created and sustained totally different viewpoints influencing the outcome of the elections. This is itself not unique. What was unique was that the content which influenced on both sides was "post-truth" in the sense that it was not necessarily factually and totally true. Data when tortured long enough can confess anything. And after the moment of consuming a nugget viewpoint, attention span shifts to the next, without always validating the nugget and as time passes, the interest in validating past nugget is lost but the impact of the past nugget on the person remains. So with a stream of such nuggets, it is possible to shape viewpoints of partitions of citizens over time. It is due to this that public and social media strategy has become more important in electoral strategy.
Rajesh Shewale, a childhood friend, in a personal discussion today suggested a way of deploying technology to solve this problem. I really like the idea and think it should be mandated by regulation and enabled through the correct technology solution.
Essentially, real-time audio/video/text streams should be processed to validate the facts (to whatever extent is possible) and the results should be displayed in parallel with the display of the audio/video/text stream. Even if this is done for all public media and provided as an option for social media, this will suddenly change the way information is consumed by humans. The effort to validate facts is high and so people find it difficult to validate them and hence become vulnerable. The capability to support such a service should be a government provided service and its usage should be audited.
The technology to create this kind of solution exists. We merely need the will and legal support to enable this.

Monday, August 15, 2016

Development as selective genocide

A large number of Dalits are not free yet as indicated by the Una incident and similar incidents. Trickle down development is a tool for genocide when development does not trickle down, traditional demeaning jobs/professions are inadequate for survival and fragmented voting power prevents powers-that-be from allocating and/or spending allocated funds fully to transform the destinies of Dalits.

Sunday, March 13, 2016

Need to manage technology is more urgent than ever

Note: These are my personal views and not those of my employers, Tata Consultancy Services
I just read this article by HfS regarding TCS Ignio. I had written this article long ago regarding Ignio. HfS mention that over next few months "We’ll also shine a light on how the lessons of incident management can be ported to business process delivery to make it more intelligent". As I keenly await their view on this, I am sharing my view on this, since I think we are at the cusp of something radical. And I will take the example of insurance.
As mentioned in this article and this article, the competitive advantage for commercial insurers lies in their ability to capture and manage the knowledge of the individual and aggregate causal matrices of losses and translating this knowledge into tools for risk survey, risk selection, risk pricing, exposure management, capital allocation, claims adjudication and reserving decisions. Risk survey and loss adjustment data are static secondary sources of potential and actual loss data respectively, while IoT data can be the primary source of potential and actual loss data. Just imagine, if it were to be possible to apply a technology first approach to gather the knowledge needed to support the above types of tool, where will that take insurance to? Just like automated underwriting and claims processing has change the scenario in general insurance, will the same happen in commercial insurance too. Training new underwriters and claims adjusters used to be simpler before, but is no longer so.
If AI "tools" do more and more of the "use-cases", what will the role of humans in business processes be? Clearly it will be to handle the most complex, never-seen-before "use-cases". But how do we train humans to do this. And how do we "test" and "control" the AI over time, whether it remains correct and/or accurate. As humans lose knowledge and AI contains more and more of it, will we lose the ability within humans to make good quality decisions without AI? As we become more and more dependent on AI, will we lose the ability to survive without AI? I speculated on a lot of these fearful scenarios in 2013 in my blogs on blogger. Never felt that I would start thinking of those scenarios coming real so soon.
It is important to think long and hard about how we manage technology going forward to make sure that we survive and remain in charge over our destinies.

Avoiding monopolies in the digital economy

Note: These are my personal views and not those of my employers, Tata Consultancy Services.
Just read a fabulous article making a key point about how digital economy is different from non-digital one. I would like to summarize and crystallize the import of this article by saying that digital unicorns seek to reduce the scope of individual labor in providing the end-to-end services of different kind, by providing the environment which embeds disparate laboring individuals into a "matrix" such that the laborer is lesser and lesser in charge of the end-to-end service and the digital unicorn is in charge of operating this "matrix" to control the provision of the end-to-end service, seeking to derive monopolistic returns limited only by demographics.
Based on my observations about the free software movement and my thinking related to Oasis (particularly this article and this article), I think that humanity needs to figure out how much of the technosphere around it should be public and how much should be private. This is the only way to avoid the monopolies in my view.
Is this really surprising and new? The public and private divide existed in the non-digital world too. It exists because of the nature of the difference of the needs we separately have and the one's we together have. If the "public" sector's services and the "private" sector's services are both provided digitally as part of each end-to-end services with varying degree's of public and private elements in each public service, such that "core" services are public, it would only be a natural extension of our current ways of living and working into the digital realm. It is true that things are not visibly evolving in this direction yet, but I see the seeds of this in Oasis and am sure are visible elsewhere. The reason for this is that this is the natural solution to the nature of interest structures collision problem in a digital world.
I have been thinking about how a blockchain based end-to-end economy could work and might write about it in the future. We certainly have outgrown the analogue ways of living and working, (the iconic example being that fingerprints can easily be fudged from publicly taken high resolution photographs). The new ways of living and working are being experimented with all around us. If we remember and represent our best interests in our economic choices, I am sure we will arrive at the destination I describe sooner or later.

Impact of "legacy" on "ways of living and working"

Note: These are my personal views and not those of my employers, Tata Consultancy Services
I read this excellent article by Robin Merttens and quickly sent an update based on it "Juniors in London market are worried about that the inaction of seniors is jeopardizing their future, because non-London places might implement the required actions and reduce London's share of global market by offering lower financial/solvency risk, better price, more covers and better service. Why reduce just 9 basis points if more can be reduced? Why share operations but not data, despite obvious benefits in reducing financial/solvency risks, improving pricing, increasing covers and improving service esp. if the problems can be avoided?"
Then I saw an update by someone complaining how British broadband speeds are behind broadband speed in some developing countries. And knowing how many Banks and Insurers are struggling with FinTech and InsTech, due to legacy, I quickly realized "Everywhere it is the same story. Legacy prevents bank/insurers/brokers/telco's match the productivity levels that those unburdened by legacy can leapfrog to. And its the older folk guarding the fort jeopardizing the future of the young".
But thinking further, I realized more fundamental points about differences in business cases and the abilities to invest. Some have stronger business cases than others to invest, since the productive capacity that the investments will unleash are higher and so the investment is attractive. Secondly debt-laden folks can scarcely facilitate the investments required to rip out legacy and replace with the new, shiny things.
If the present ways of living and working are "good enough" for the older folk and the business cases of investment are not strong, because the benefits of the new ways of living and working are "abstract, fuzzy and difficult to predict", it is far too easy for the older folk to reject the investment. The burden's of previous borrowings for previous investments prevent flexibility anyway in incremental investments. So the decision becomes even more easy to make.
But someone elsewhere, unburdened by legacy is jumping on the next wave directly and leapfrogging. Their business case will be obvious and if they have the flexibility to borrow and invest in their own future, they will do so as many developing countries are doing.
Those who invest protect the future of their young and those who do not risk the future of their young. But we make investment decisions using net present value techniques and the pain and gain of future generations has less value in our present decisions. 
Is there any way, present generation investment decisions can be made by private, public and government actors in UK so that the future ways of living and working of the future people of UK are not compromised?
I think this theme deserves some deep thought extending Robin's proposal.

Monday, November 16, 2015

Fear - Uncertainty - Doubt: Threat to Liberty: Role of P2P technologies

As mentioned in my recent article, there is an increase in the number of abnormal events that citizens and their governments are having to deal with. And I believe that due to technology change as well as climate change, this number will rise and the proportion of man-made events will rise further. Governments use such events to cause shift-of-power to them, to take resources from their alternative uses and get them assigned to complex means of preventing/managing such events, setup policy structures. Essentially governments use the fear-uncertainty and doubt caused by such events to raise questions after such events about the ability of citizens to take care of themselves and its ability to provide security based on the then existing distribution of power. They then use these question to crystallise a deal with citizens to exchange liberty for security. Sometimes citizens later during relatively normal events trigger repealing of relevant laws to recover their power. Sometimes supreme court's prevent executive arms of governments from acquiring too much power. Different countries therefore are in different situations, but this dynamic has played out multiple times before. But something has changed.

P2P technologies with unprecedented capabilities are spreading and pose a challenge to the ability of governments to acquire too much power over the rest of us. I am yet to see a cogent recognition of the changed reality in ongoing debates related to this in UK. The noises about making ISP's do this and do that sound silly to me, assuming my understanding of what these new technologies are capable of, is correct. Is the proposed legislation to give governments control over all encryption within the country enforceable? I am not an expert, but I am not sure based on what I read on the Internet about P2P technologies. I would much appreciate pointers to discussion whether such legislation is enforceable technically in face of the growing capabilities of P2P technologies.

Given such technologies could easily be used by the dark forces to plan and carry out abnormal events, how should the good forces (assuming the governments are good) protect us given the growing capabilities of P2P technologies. I just do not understand the inability of powers-that-be to understand that the technology tiger they are riding has already bolted and is running quickly into a deep, dark jungle. Why do they carry on applying yesterday thinking to today's problems? After all 1900 MI-5/6 people, increased funding are hardly enough to solving the technical challenge that needs solving. IMHO we are now in a new dynamic, since non-legislated dark hardware+software leveraging publicly available algorithms may not be too easy to legislate. I hope and pray I am wrong.
Pratap Tambay

Saturday, November 14, 2015

Structures and processes of humanity: Implications for events like Paris and Mumbai

Note: These are my personal views and not those of my employers, Tata Consultancy Services.

The structures of processes of humanity are designed to help humanity to act/react in face of normal and abnormal events. Different multi-human units are designed for different combination of normal and abnormal events. What is abnormal for some human and multi-human units is normal for other humans and multi-human units. Multi-human units organize their structures and processes to handle normal events differently and have pre-planned reorganisations to handle abnormal events.

In the past, the main cause of abnormal events were acts-of-god. But I contend that this is changing. Due to technological evolution, the number of abnormal events due to acts-of-man is increasing.

I have written about this before. But my current thoughts are prompted by the events in Paris, which were quite similar to the events in Mumbai in the past. The pressure on public services to cut costs results in reduction of the capability of public services to handle abnormal events. The preparedness to handle one/few abnormal event at one time may not be enough anymore, as technology enables some people to coordinate better across time and space to disrupt the lives of the rest of us at multiple points of time and space. But this is not visible till the abnormal events happen and it is difficult to comprehend what one does not starkly see. So most humans will remain substantially unaware of this as they continue in their day-to-day reverie.

I am not educated in the dynamics of public choice. But it is my firm conviction that we have a complex problem facing us. If democracies authorise the expenditure to deal with abnormal events, the transparency of what is achieved using these expenditures will be low creating the risk that these might be used by the wrong sort of people in power to build  structures to control the rest of us far too much than we might be ok with. And if democracies do not authorise such expenditures, then the random idiots will continue to create the Mumbai and Paris type of events. Also there is a question of public finance. How much should be spent reasonably on handling abnormal events and how much should spent on normal events? As technology changes the risk landscape, how should this proportion change? So in essence there is a genuine public governance issue. I believe these to be urgent and important issues. Sadly I do not think that as usual, reactions to Paris will not go beyond actions which are constrained by the continuing inability of those that matter and those advising them to see beyond the tip of the nose.


Pratap Tambay