Financial Tremors?

September 12, 2018

The folks with crypto currency may be having a bit of a thrill. The volatility suggests that bits and bytes may not be as stable as owning a chunk of real estate in Tokyo.

We have also noted rumblings elsewhere. Smart software, for example. Many hopes, of course, but there may be some downstream consequences. Salmon finding life difficult may be one metaphor.

It has become a weekly, maybe even daily, routine: some alarmist talks about the dangers of AI on a particular industry, we get scared, the news cycle moves on, and everyone forgets. However, a warning is lurking that has the potential to have some staying power. We learned more from a recent Technology Review story, “The World Economic Forum Warns That AI Might Destabilize The Financial System.”

We learned:

[A]rtificial intelligence will disrupt the industry by allowing early adopters to outmaneuver competitors. It also suggests that the technology will create more convenient products for consumers, such as sophisticated tools for managing personal finances and investments.

We also noted:

But most notably, the report points to the potential for big financial institutions to build machine-learning-based services that live in the cloud and are accessed by other institutions.

This is a very volatile situation, especially as so much finance is starting to hinge on machine learning. For example, many retirement plans are shifting funds around based on AI insights. But take hope for what it is. Quantum computing may be just around the corner.

Patrick Roland, September 13, 2018

IBM Embraces Blockchain for Banking: Is Amazon in the Game Too?

September 9, 2018

IBM recently announced the creation of LedgerConnect, a Blockchain powered banking service. This is an interesting move for a company that previously seemed to waver on whether it wanted to associate with this technology most famous for its links to cryptocurrency. However, the pairing actually makes sense, as we discovered in a recent IT Pro Portal story, “IBM Reveals Support Blockchain App Store.”

According to an IBM official:

“On LedgerConnect financial institutions will be able to access services in areas such as, but not limited to, know your customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data. By hosting these services on a single, enterprise-grade network, organizations can focus on business objectives rather than application development, enabling them to realize operational efficiencies and cost savings across asset classes.”

This, in addition, to recent news that some of the biggest banks on the planet are already using Blockchain for a variety of needs. This includes the story that the Agricultural Bank of China has started issuing large loans using the technology. In fact, out of the 26 publicly owned banks in China, nearly half are using Blockchain. IBM looks pretty conservative when you think of it like that, which is just where IBM likes to be.

Amazon supporst Ethereum, HyperLedger, and a host of other financial functions. For how long? Years.

Patrick Roland, September 9, 2018

Wake Up Time: IBM Watson and Real Journalists

August 11, 2018

I read “IBM Has a Watson Dilemma.” I am not sure the word “dilemma” embraces the mindless hyperbole about Vivisimo, home brew code, and open source search technology. The WSJ ran the Watson ads which presented this Lego collection of code parts one with a happy face. You can check out the Watson Dilemma in your dead tree edition of the WSJ on page B1 or pay for online access to the story at www.wsj.com.

The needle point of the story is that IBM Watson’s push to cure cancer ran into the mushy wall composed of cancerous cells. In short, the system did not deliver. In fact, the system created some exciting moments for those trying to handcraft rules to make Dr. Watson work like the TV show and its post production procedures. Why not put patients in jeopardy? That sounds like a great idea. Put experts in a room, write rules, gather training data, and keep it update. No problem, or so the received wisdom chants.

The WSJ reports in a “real” news way:

…Watson’s recommendations can be wrong.

Yep, hitting 85 percent accuracy may be wide of the mark for some cognitive applications.

From a practical standpoint, numerical recipes can perform some tasks to spin money. Google ads work this magic without too much human fiddling. (No, I won’t say how much is “too much.”)

But IBM believed librarians, uninformed consultants who get their expertise via a Gerson Lehrman phone session, and from search engine optimization wizards. IBM management did not look at what search centric systems can deliver in terms of revenue.

Over the last 10 years, I have pointed out case examples of spectacular search flops. Yet somehow IBM was going to be different.

Sorry, search is more difficult to convert to sustainable revenues than many people believe. I wonder if those firms which have pumped significant dollars into the next best things in information access look at the Watson case and ask themselves, “Do you think we will get our money back?”

My hunch is that the answer is, “No.”

For me, I will stick to humanoid doctors. Asking Watson for advice is not something I want to do.

But if you have cancer, why not give IBM Watson a whirl. Let me know how that works out.

Stephen E Arnold, August 11, 2018

Tech Is Not Elite

July 7, 2018

The top one percent is a silly notion. Tech is not elite. Only some technologists are elite. Proof you ask. Navigate to “Mark Zuckerberg Tops Warren Buffett to Become the World’s Third-Richest Person.” The write up points out:

Zuckerberg, who trails only Amazon.com Inc. founder Jeff Bezos and Microsoft Corp. co-founder Bill Gates, eclipsed Buffett Friday as Facebook shares climbed 2.4 percent, according to the Bloomberg Billionaires Index.

Generalizations are not necessarily accurate.

Stephen E Arnold, July 7 2018

Amazon and Google: Two Different Investment Angles

July 1, 2018

I read “Alphabet Joins $300m Funding Round for Electric Scooter Start-Up.” (You may have to pay to read this because the outfit that thought Endeca was the next big thing in search charges for scooter stories.) I thought about Segways, the allegedly revolutionary personal transportation scooter. Lessons may be needed even though there once was a Segway polo league. Practical and no horsey duties after a match.

I assume that Alphabet Google sees smaller scooters as the next big thing. Is this a strategic investment, a tactical play, or just a nifty idea warranting Google bucks?

I thought about Amazon’s investment in PillPack. You can get some of the business information at this link.

Somewhere in Twitterland, an ink stained wretch may come up with the title for a post called “A Tale of Two Investments.” I would flip to the end of the write up to answer the question:

Which company is making a more strategic play?

From my vantage point in Harrod’s Creek, these two deals illustrate a difference between the GOOG and the Bezos buck machine. Younger people dig scooters. Scooters are fun.

Filling prescriptions and then following the orders of a real live doctor is another. Plus, some ageing American is into prescriptions. Boomers are a here and now market. I for one dislike going to the pharmacy, giving codes, showing IDs, and answering questions to get whatever my cardiologist thinks is good for me.

I assume that if a millennial falls off a scooter or is hit by an autonomous vehicle, that click to buy outfit will be ready to respond. Google will let the Lime rider snag another scooter when he or she is once again ready to move from Point A to Point B as long as it is not raining, snowing, too far, requires a jaunt on an expressway, or a short cut through a field.

Stephen E Arnold, July 1, 2018

Real of Fake News: Did the NSA Help Develop Bitcoin?

June 15, 2018

Here in Harrod’s Creek, one can buy corn meal and squirrel meat using the barter method. Put that quart jar of moonshine on the counter and pick up your vittles. No digital currency here.

Therefore, the assertion in “The NSA Helped to Invent Bitcoin, Founder of World’s Second Largest Cryptocurrency Ethereum Claims” puzzles the Beyond Search and DarkCyber research team. The source is impeccable: The UK tabloid Metro.

We learned:

Vitalik Buterin, the Russian-born creator of Ethereum, suggested the National Security Agency (NSA) was involved in the development of the virtual currency.

With Amazon on the Ethereum bandwagon, we think that currency and transaction platform is worth monitoring.

But did a US government agency create Bitcoin? Metro reports:

Earlier this year, it was reported that a boss of the Russian cybersecurity firm Kaspersky made a similar claim. ‘Bitcoin is a project of American intelligence agencies, which was designed to provide quick funding for US, British and Canadian intelligence activities in different countries,’ she said, according to Sputnik News. ‘[The technology] is privatized just like the Internet, GPS and TOR. In fact, it is dollar 2.0. Its rate is controlled by the owners of exchanges.’

We’ll stick to old fashioned currencies and the staple one of our contract workers manufactures in another hollow. White lightning can change one’s perception of reality. A reporter, for example, hot on the trail of Satoshi Nakamoto might have taken a slurp.

Stephen E Arnold, June 15, 2018

Coveo Positions Itself to Fend off Enemies

June 4, 2018

Coveo, one of the numerous players in the race for AI supremacy, took a massive leap forward recently. By securing some substantial investments, the company is poised to make a big splash in the field. However, we are not certain money is the answer to all their concerns, after reading a recent press release on their site, “Coveo Announces $100 Million Investment Led By Evergreen Coast Capital.”

According to the story:

Coveo, a recognized leader in AI-powered insight, recommendations and search engines, has secured a $100 million investment from Elliott Management for a 27% stake in the company. The investment was led by Elliott’s Menlo Park, California-based private equity affiliate, Evergreen Coast Capital.”

Nice work if you can get it, to be sure. However, we will be curious whether or not this money makes much of a dent in the market. For instance, competition like Elastic have been gaining ground and Algolia are actually acquiring other companies in an effort to better position themselves. Keep an eye on this fight, because we suspect the company that comes out on top will begin making a major impact on our daily lives through their AI offerings.

One final thought: Will Coveo and companies like Attivio and LucidWorks be able to generate sufficient revenue to pay off the investors and generate a sustainable revenue stream? From our vantage point 45 minutes from Churchill Downs where gambling is a way of life, we think the odds are long, very long.

Perhaps a larger company will buy one of these three firms, allowing the senior managers to have a big payday and retire. Dassault Systèmes, Hewlett Packard, IBM, and Oracle have expensive search stallions in their stable. We assume there will be other prospects if the revenue race stumbles.

Patrick Roland, June 1, 2018

Alphabet Google Races to a Trillion

May 30, 2018

Short honk: I read “Microsoft Just Surpassed Alphabet’s Market Cap for the First Time in 3 years and the Race to Become the First Trillion Dollar Company Is Heating Up.” The source is one which does quite a few MBA arabesques with nifty “flip it around” spins.

It’s no secret that the egos of the folks who run companies trying to hit the trillion dollar bull’s eye are competitive “aw, shucks” people.

The write up reports, with what I thought was glee:

Microsoft just surpassed Google’s parent company Alphabet in market value, clocking in at the end of Tuesday’s regular trading session with a market cap of $753 billion. Alphabet’s end of day market value was $739 billion.

You don’t catch the glee? Too bad.

For me here in rural Kentucky, pondering the sights and sounds of the local old folks’ home, I noted something different.

In order to pump up the bucks, Alphabet Google may have to turn the dials on its revenue machine. My hypothesis is that Alphabet Google will revisit the “diffusion” of ads in order to deplete advertisers’ accounts in the quest for clicks. My hunch is that some of the sites still getting money from Adsense might note a shift as well. Plus, there are the monetization opportunities subscriptions provide.

If smaller sites dependent on Google for revenue are negatively affected, those sites may go away. That means Alphabet Google spells major accounts. Is this another variation of the have-have nots social pattern?

I think the GOOG can hit a trillion, but there may be some road kill on that fast lane to big bucks. Then there is the problem of the race leaders. I need a bite of an Apple.

Stephen E Arnold, May 30, 2018

Tuesday DIY Cryptocurrency Marks An Industry Change

May 13, 2018

Bitcoin and Blockchain and the world of cryptocurrency that they represent has become an omnipresent part of the financial conversation over the last twelve years. However, there is a huge potential for upheaval via the little known aspect of creating cryptocurrency from scratch. However, it’s not such a secret thanks to a recent LifeHacker story, “How to Create Your Own Cryptocurrency.”

According to the story:

“[Y]ou can fork an existing blockchain by taking the open-source code found on Github—Litecoin, for example—making a few changes, and launching a new blockchain with a new name (like Garlicoin). Again, this requires you to understand the code so you know what to modify and why.’

If average users can suddenly make their own cryptocurrency, the results would be like citizens freely printing dollar bills in their garage. The market would collapse. This, on top of other news that the second largest cryptocurrency, Ethereum, might have been formed on the basis of an illegal securities trade, is a dark sign. The downside of this revolution is that now bad things are happening in the shadows, and there is no way to pump the brakes. We are more than a little skeptical about the cryptocurrency market right now.

Patrick Roland, May 13, 2018

Distasteful Content and Digital Currency: A Love Match

May 10, 2018

Porn Site Leads Way in Cryptocurrency Acceptance

While it sounds like a surprise at first, a partnership between pornography site PornHub and cryptocurrency upstart, Verge, is a perfect pair. Increased privacy, especially when credit card statements are sent home at the end of every month, has an indelible appeal to porn customers. We learned about this interesting development from a recent article in Digital Trends, “Want to Hide Your PornHub Subscription? Pay with Virtual Verge Currency.”

According to the story:

“History has proven that the adult entertainment industry plays a critical role in adoption for innovative technology. We saw that with VHS, Beta Max, credit card payment icons and, most recently, VR goggles. We expect to see widespread adoption of crypto and blockchain in short order.”

This is a really interesting point and one worth thinking on for a moment. However, there’s also a serious risk to being the first person to set a trend. For one, how much do most customers know about Verge? A little digging shows that they had been hacked less than a month before this Pornhub announcement. Security is probably the number one concern of anyone getting into cryptocurrency. While this partnership with Verge and Pornhub makes perfect sense, it’s still a little early in the relationship for us to give it much of a blessing.

Patrick Roland, May 10, 2018

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