Saturday, July 20, 2019

Fed should embrace crypto... and extend

I have a mobile passport in my wallet. It is the digital version of my physical passport. I also have physical dollars in my wallet, but I don't have digital version of the same. One would wonder if the credit cards are digital versions of the physical dollars in my wallet. They are not. They are just extensions of my personal balance sheet. Their use creates a entry on the wrong side of my balance sheet - a hole from where I have to dig my way out. They are also not digital versions because if I lose my wallet I lose nothing. The physical dollars in my wallet are lost but not the credit represented by the cards.

What if I had digital version of the dollars that I have? Besides the benefits of limiting damaging effects of climate change by not killing more trees, it could actually have a paradigm shifting affect on world of finance. The interest on my deposits in a bank could vary depending upon the balance, my personal situation and any intent that I have declared on that digital currency. This simple sounding functionality could give the Fed (federal reserve) tools to control money at atomic level. Instead of medieval style messing around with funds rate, they could punish accumulation of the dollars where they don't want and reward flows which they want. I could declare intent on my digital dollar and have smart contract enforce that. (read estate disruption). IRS could tag dollars at source as tax revenue (read disruption of USTR). Employers can tag dollars as retirement dollars which even if they exist in my digital wallet will earn as if in a 401k account. The possibilities are endless. Finally, silicon valley can imagine again instead of the wide spread re-imagination that is rampant right now. Really, I am surprised books aren't written on this by science fiction writers.

If we had a digital dollar, what would it be based on? Today we have fiat currency (Fed In Agreement with Treasury  i.e. FIAT). The answer is crypto. The fed can own the crypto methods under USD. If other central banks agree, the currency crosses will be calculated every time they are used (read FX disruption). Blockchain is the bottom of this technology stack. The rest of the stack is not even funded yet. The core of all innovation is embrace and extend, I think the Fed should do exactly that. Embrace this technology and extend for the benefit of the world of finance.

Friday, May 10, 2019

Data is the new Narcotic

About six months ago, I tweeted saying Data is not the new oil, but it is the new narcotic.  A key property of any narcotic is that you need it periodically and with time more of it to achieve onset. Data has the same effect on any cloud based digital platform. Let me explain.

Let's say you are like me - frugual - and shop in big lots. A data at a point in time would be the receipt issued to you that has item's SKU, your loyalty number (for identification) and (most importantly) location/time of the purchase. If the store shared this data with a digital platform, that data would be the first attempt at a drug for that platform. The platform would need this data periodically i.e. your receipt at your next purchase. Why? Because the analytics is done on a time series and insights like time between purchases and second order insights like cough syrup in June means spread of some respiratory infection in that zipcode or if that fails then cross that data with doctor's office visits to arrive at a probability of upper respiratory chronic disease or just smoking. All of these common sense analytics can be done by a computer in seconds, but it needs data to start and it needs to be fed periodically to increase its accuracy. And to arrive at second order insights, it needs more of that data about you. In fact, if all your activities from body functions, to daily habits are digitized and fed to this platform, the smarter it will get on predicting your intentions. To a point that it will predict (serve you an advert) before you have felt the need for it. Like when you wonder how did it know that I need a cough syrup.

They are calling this type of learning where repeated encounters with a data point increases the weight of that happening again (probability) on an underlying learning network:  "AI". And the data is the narcotic that this system needs regularly and in increasing quantities.

Sunday, March 31, 2019

Who killed Blockchain?

We have all been to a notary to complete a transaction or an application for important events in our lives. The general procedure involves one signing/dating the document followed by a signature/stamp from the notary. The notary also makes a entry into his/her ledger. The purpose of the ledger to some time in the future validate the notarization. Now what if we had a technology that automagically places all the millions of entries across hundreds of thousands of notaries into a access controlled ledger on the internet? That would enable notarization by any citizen, entity not in the bad books of society. It would enable cross border notarization (read trade). Extend this use case further and you could apply this technology to validate your credentials, your deeds on your assets, your birth/death/marriage records. This technology would fundamentally change the way humans are organized today.Everybody agrees it would be great to have this technology flourish, but alas I read it obituary everyday.

To understand why, I would invite you to watch the movie who killed the electric car? There is something in the movie for both bulls and bears of blockchain. The bulls will say but wait.. EVs are not dead and so there is hope for blockchain. Bears will say, but those tactics (like filing patents and locking up competitive innovation) worked as it delayed the  EV for several decades. (My own first experience with EV was Sun's Java car in 1999). I think blockchain is going through one of those moments where the ones whose empires will fall ("trusted intermediaries") first joined the party and then played party pooper.

Fed should embrace crypto... and extend

I have a mobile passport in my wallet. It is the digital version of my physical passport. I also have physical dollars in my wallet, but I d...