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The Case for Bitcoin

If Bitcoin succeeds, future generations will remember it as the greatest investment opportunity in recorded history.

The Forbes list of billionaire dynasties will be completely rewritten, with new names such as the Winklevi clan shifted to the front.  A few lucky individuals will become billionaires simply because they tried out this new bitcoin mining app their comp sci dorm buddy told them about way back in 2010.  Yes, we are talking about a radical and perhaps somewhat random wealth redistribution (although in that aspect at least the pattern is familiar to students of history).

Sounds unlikely?  Perhaps, at least for now.  If we look at the current bitcoin exchanges as a sort of prediction market, we can roughly estimate the net odds traders are currently giving for that scenario.  If the BTC becomes the major world reserve currency, then each bitcoin should be worth vaguely on the order a million 2013 dollars (~20 trillion total $ medium-high power fiat money / 20 million BTC).  So currently the markets are giving about 0.01% odds on that bet.

If you think those odds of the BTC-wins scenario are much higher, such as closer to say 1% or 10%, then you should take that bet and join the Winklevi and fellow TechnoLibertarians in the proud > 1.0 BTC club  (for there can only ever be 20 million people who own more than 1 BTC).

The seductive logic of a bet with such massive upsides partially explains how BTC (or any would be money) bootstraps itself into existence up from probability epsilon (a sort of real Pascal Wager).  Then the network effect kicks in: as the inflow of small bets boosts up the price, this rise in valuation itself becomes some additional evidence for the long term monetization hypothesis (because a good speculative trade is always recursive in terms of other agent’s speculations).  This process can become a virtuous cycle, eventually leading to the Bitcoinmana that has taken the $/BTC up from 0.1, 1, 10, 100 in just a few years.

Exponential rockets such as this tend to attract the attention of professional evangelist-hucksters who can sell rocket ride tickets on Fox Business, promoting Bitcoin to a wider TV-audience of uninformed traders.  Everyday joes may not have the time or inclination to read up on cryptocurrency, but they can fit a simple line to a graph and dream of F.U. quantities of filthy lucre.

But isn’t this just a speculative bubble?  Well yes, but not just.  Or rather it’s a speculation that BTC will become a global money standard – for this is how new forms of money are born into the world: as some sort of mutual game theoretic optimum, a Schelling point in the space of future trade options.

Money arises as the solution to a global optimization problem that maximizes the efficiency of a complex network of spatiotemporal trade paths while minimizing risks and costs.  At any time the markets are continuously exploring many different forms of money/savings instruments with varying tradeoffs: and necessarily creating ‘bubbles’ in the process.  Every once in a long while this ecosystem undergoes rapid evolutionary transitions.

The missing part of this simple ‘Bubble’ explanation for Bitcoinmania or Bitcoin hyper-monetization is why any original traders thought Bitcoin had any value in the getgo, or rather why they even considered, for a moment, that it ever had a chance above epsilon of becoming the new global money standard.  Why would it be better than the dollar, euro, or gold?

The Fundamental Value of Bitcoin

Here then is the argument from fundementals:  Imagine a single benevolent, omniscient tyrant (God, or an AI super-intelligence, etc) could simply simulate the global optimization in it’s mind directly.  This then eliminates all the recursive game-theory elements (bubblemania aspects): the tyrant then effectively evaluates different monetary systems based on their longer term net efficiency, according to its criteria.  The fundamental maximum value of Bitcoin then is the net difference in total economic utility (measured by say adjusted world GDP, to first approximation) between a Bitcoin based economy and the current regime.  If we have an idea of what that value is, we can then estimate the expected return or immediate value of Bitcoin as an option on that future weighted by our assessment of its likelihood.

Spatio-temporal Trade Effeciency

Bitcoin is a vision of a more efficient currency.  The efficiency I refer to is not just algorithmic, but economic in nature.

Economists used to write in their textbooks: “Money is a matter of functions four, a medium, a measure, a standard, a store.”  Those four functions have more recently been streamlined to three, but I will further reduce all of this to a single concept: money is a spatio-temporal medium of exchange.  By this broad definition, almost anything owned has some ‘money-ness’ to it, depending on our expectations concerning how we can use and or retrade it in the future.  Everything from cowrie to salt to tulips has functioned as a form of money in at least a few pockets of space and time.  In each case the items in question had some ‘intrinsic’ productive/consumptive values which perhaps helped boostrap them into moneyness.

Today such notions of intrinsic productive/consumptive value are irrelevant from the global optimization perspective, for all that matters in the end when comparing potential forms of money is their net efficiency in facilitating trades across space and or time.  Paper fiat money is the case in point: it evolved in the market from gold deposit slips having tremendous practical advantages over metallic coinage, but has no intrinsic productive/consumptive value.

First, let us consider the aspect of spatial efficiency.  Here Bitcoins have rather obvious advantages:  facilitating transactions over the internet to anyone in the world without exchange rate conversions, high fees, long waiting periods, etc: thus: high spatial efficiency, approaching optimal.  So Bitcoin could displace Mastercard/Visa and seriously displace large swaths of finance.  This is a net good.  It is difficult to measure the quantity of this improvement, but to first approximation it should be proportional to the market cap of all the companies it would make redundant, ie somewhere to the tune of a few hundred billion dollars, perhaps up to a trillion.

Bitcoins also have high temporal efficiency due to the simple ingenious algorithm which governs their supply.  Bitcoins grow on a asymptotic inflationary schedule.  This schedule has the following advantages for facilitating temporal trades (savings): the total supply has a known hard limit, the inflation schedule is known and perfectly predictable (removing the huge uncertainty of fiat), and finally the fast but exponentially tapering inflation schedule is exactly what is needed to foster the currencies adoption – because newly created bitcoins are distributed as a reward for the ‘miners’ who verify transactions and secure the network.

Some critics (including economists who should have known better) have claimed that BTC is deflationary, which besides being technically incorrect (BTC inflated by about 200% in 2010 and down to about 15% in 2013, and it will eventually reach an inflation rate of 0%, but the supply will never significantly decrease), is also apparently used as some sort of dirty word.  I suspect that Krugman and ilk use the ‘deflationary’ epithet because they are basically employees/propagandists of the threatened institution: Fed/Banks, and their rival products cannot compete in terms of temporal efficiency: simply because states reserve the right to create new fiat to pay their bills.

The more technically correct and potentially interesting criticism from mainstream economics focuses on BTC’s inherent inelastic inflation schedule: in the Keynesian view the supply of money should be dynamically controlled by a central authority to help absorb business cycle shocks.  This theory is based on an entire edifice of economics that arose out of the experience of the great depression and similar credit collapse debt deflations.  Bitcoin in raw form is immune to such shenanigans simply because it is high powered money: the equivalent of cash or Fed Deposits, not the demand deposit credit/debt based money the banking system currently uses.  As Bitcoin grows we can expect there will be at some point a new ecosystem of debt based instruments built on top of BTC, but this new ecosystem will be global and technological, more like Prosper, less like of BoA.

Criticizing Bitcoin based on economic tools used to analyze the great depression is like criticizing Nvidia’s new Titan video card based on a theory of Charles Babbage’s Difference Engine.

Gold has a constrained supply, so it can be reasonably temporally efficient, but it is completely inefficient spatially – which is how fiat came to be in the first place, as ‘banksters’ offered a product (paper notes) with much better spatial efficiency   As a result gold only exists today in the modern monetary ecosystem in digital form, as a contract.  So it’s just another computer ledger, but a number which we should trust because the computer ledger can’t be faked/fudged/misrepresented .. because each number in it exactly corresponds to a real unit of gold held in a bank somewhere, because . . . .  somebody said so.  Fiat currency started that way, as banknotes for gold redemption.  There have been attempts to revive that idea in the digital age (such as egold), but they have all been plagued by the centralized point of failure problem.

This brings us to the final and most important advantage Bitcoin offers the world: it solves the trust problem, in both the algorithmic sense as a solution to the Byzantine Generals Problem (which really is a big deal in computer science), and in the more typical economic sense.

The core of any implementation of money is a ledger: a simple database of account balances and a trade protocol to carefully(and atomically) add N to account X and subtract N from account Y.  That’s bank software, and the core of it really is that easy.  The difficulty is trust.

In economic terms, the ledger really is the most important damn thing in the world.  How can you trust the ledger?  With a physical currency this is straightforward (as long as the physical token is very costly to fake).  Physical currencies are good in that department, but they pretty much suck in every other way compared to purely memetic currencies (such as paper or digital).

The world’s current dominant fiat currencies all use some form of complex centralized ledger.  The US has a godawful complicated scheme involving the Fed, the Treasury, a hierarchy of banking minions, and a bunch of redundant databases.  But in the end it all boils down to a centralized ledger and trust concentrated in some specialized branch of the government.

There are at least three significant problems with this scheme: first, there are about 190 generally recognized sovereign states, and almost as many currencies and ledgers.  Thus giving rise to the significant previously discussed spatial inefficiencies moving money around the world – in the form of taxes, fees, tariffs, exchange rates, and so on.

Trust is also the core cause of inflation or the poor temporal inefficiency of fiat.  Libertarians, Liberals and Conservatives may cite different flavors of economics in explaining why fiat currency is inflationary, but there is little argument over the result: saving in fiat currency is discouraged – not only because it is worth less and less over time due to expanding supply, but also because the rate of increase itself is unpredictable.  In our current system it’s a much better long term trade to borrow a few decades of labor and purchase real estate (which has a naturally fixed supply and stable demand) than to simply save currency.  Mainstream economists (which I suppose only some of which are shills) praise inflation, because, they say, it encourages spending.  Somehow causing people to spend more now than they would otherwise choose to, and plan less for the future than they would otherwise choose to is supposed to be a good thing.

When pondering how we got into a situation in which a little over a 51% majority of the population ‘owns’ a house by ‘borrowing’ decades worth of future salary (against steadily decreasing median wages) from government controlled banks at near-zero or even negative effective real interest rates, it’s just too tempting not to quote Alexander Tyler: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the  public treasure.”

Bitcoin is rather idiot-proof in this sense.  In a Bitcoin world the total future max supply of BTC is known: ~20 million units, similar to how the total supply of land area on Earth is limited, so in a BTC world the currency can be expected to perform similar to housing (on average).

The future supply and thus value of fiat (whether Dollar, Euro or Bhat) is determined by future elected officials, which naturally creates some serious issues of trust.  Historically these trust issues have caused wars.  China trades cheap goods for Future-Dollars, a trade which involves a great deal of delicate political and economic faith in the future US government – because China is treading the sweat of its populace now for an unpredictably but generally decreasing share of USGovCorp.

So in a nutshell fiat currency is basically stock in the relevant corporatocratic states, and trust in fiat boils down to trust in the financial future of the issuing entities (because they always reserve the right to generate new fiat in various forms to pay future bills).

And somewhat predictably: they are screwing up (to varying degrees and for various reasons).  The Euro is screwed and everyone knows it, most of the rest are screwed and just don’t know it yet.  The case for such pessimism concerning the future of various current statist powers is complex and beyond the scope of this post, but in short it revolves around the huge debt/credit edifice and welfare state whose existence is predicated on long term economic assumptions that will be absolutely shattered by the impending Technological Singularity  (but alas that is a topic for another time).

Gold has the desirable temporal efficiency but it is completely inefficient in the spatial dimension, so it becomes a digital fiat scheme: with all the same trust issues.  The governments of the world are not going to voluntarily give up their fiat and switch to gold.  Bitcoin solves this problem by not giving them much of a choice.  It is like a digital gold standard on steroids, but more importantly: it actually has a shot at success.

In Proof of Work we Trust

Bitcoin combines the high spatial efficiency of digital money with the high temporal efficiency (via supply stability) of a gold standard.  But how does it solve the trust problem?

The seed was a novel idea from the mysterious Satoshi Nakamoto.  (Sometimes to truly understand a thing, it really is best to understand it’s beginning.) The paper neatly summarizes an ingenious and practical proof-of-work solution to the core technical problem of distributed trust.

In the minds of a few lucky readers on a particular cryptography mailing list, Satoshi’s nifty idea blossomed into the current vision of a secure, efficient, distributed digital currency.  One currency to rule them all and in the darknet bind them.

For those for whom the paper is TLDR, I’ll briefly summarize what isn’t spelled out in the abstract.

Bitcoin solves the trust issue without trust.  No one particular person/group/node is trusted to maintain the ledger for everyone else.  Instead each node simultaneously maintains a copy of the ledger itself.  The database/ledger, called the blockchain, is itself just the entire transaction history, so it’s straightforward to verify the validity of each transaction.  And now the final hat trick: given multiple competing versions of the ledger/blockchain, each node picks the ledger/blockchain which has the provably highest net computational cost to construct over its whole history.  The cost is verified using Proof of Work: NP-hard computational problems that have a particular structure such that verifying a candidate solution is trivially fast, but finding a novel good solution is exponentially difficult.  Solutions to these problems can not be faked without enormous computation.

This solution to double-spending/counterfeiting can be likened to a physical manuscript ledger where each transaction must be beautifully illustrated, and the true ledger is known as the one with the largest number of perfect illustrations.  The illustrations (the proofs of work) are completely pointless and this is intentional – requiring that real economic resources (computation) are wasted to verify the ledger is the key setting up a stable deterrence.

In practice the network can be arbitrarily more secure, for in the rare case where some hacking group actually manages to collect more computational horsepower than the rest of the network in an attempt to forge a new ledger, humans and or AIs can rather easily notice the resulting highly improbable large fork, investigate, and then pick the correct ledger.  Yes, this requires trusting the development community, but there’s a strong reason for trusting a transparent entity (open source, aligned incentives).  Indeed, the network has already dealt with at least one such fork (but caused by software error rather than malicous hackers).

Down the road there are numerous proposals to improve all technological aspects of Bitcoin, from scalability and usability to security.

The summary of all this is that Bitcoin works.  It has tremendous potential and future headroom.

It is secure and can scale up to global levels of volume in the years ahead.  More than just a protocol, Bitcoin is a flexible platform.  When the time comes it could be extended to handle other temporal forms of money (such as debt instruments), property(such as real estate), and other  increasingly complex contracts (its scriptable!).  Looking farther ahead, we could even automate much of our legal infrastructure.  When AI’s start cooperating and hiring each other, this is the type of infrastructure they will want.

A growing set of diverse political groups: libertarians, techno-futurists, occupiers etc are all skeptical of the current financial system for various reasons and envision a more just, efficient alternative to fiat fractional reserve banking.  Bitcoin could be the solution.  All it will take is a sufficient amount of belief, as each convert shifts a little more earnings into the BTC economy it grows and attracts more converts.

Ponzi schemes, bubbles and hypermonetization events all start as some form of mind virus that spreads throughout the human social network.  The difference is in how they end.  A hypermonetization event is a simply a bubble that does not end (or rather ends with everyone converting).

Bitcoin: Hype or Revolution?

A Bitcoin evangelist once said : “Bitcoin will either be worth nothing or it will be worth everything.”

This mindset makes the case for a compelling small bet gamble: in the worst case one loses ‘only’ 100% of a small wager, in the best case a single bitcoin could eventually be worth millions.

Why should we believe that most of the probability mass is concentrated in the two extreme tails of the distribution?  We shouldn’t, but that doesn’t really matter, because almost all of the expected profit comes from the ‘Bitcoin wins’ scenario.  There is clearly a niche for a unified global currency: it would simultaneously solve many of the world’s economic problems.  But really that is just the beginning, because the establishment of a successful distributed cryptocurrency perhaps entails a new socio-economic order.  At the very least it would amount to one of the greatest wealth re-distributions in history.  This threat to the establishment is one of the typical arguments for bitcoin’s eventual failure.

But I wouldn’t bet on it.  Yes, Bitcoin could threaten the powers that be: the bureaucrats and old money of the world will probably not go down without a fight.  But as the music industry has learned, technology usually wins.  The Man is much more powerful than Music, but even the Man can not beat technology.

But if you can’t beat them, join them!  Bitcoin ingeniously solves the distributed trust problem via cyrpto-proof of work on a single global transaction history.  Thus at the core it is a massive unified database of every transaction in the currency going all the way back to the genesis block.  Simple, genius, and completely transparent.  It is this latter aspect which is not usually stressed enough: Bitcoin is radically transparent: every valid transaction is publicly accessible forever.  (Money laundering is still possible through mixing and other techniques, but the point is that radical transparency leaves a permanent global record which authorities can analyse with increasingly sophisticated AI)

Now let us take off our techno-libertarian goggles for a moment and think like a bureaucrat who wants to join the BTC party.  Bitcoin and it’s ilk each function as a global distributed computer, every node running in lockstep and building consensus.  If we liken the Bitcoin network to a nation, the nodes form consensus via something like a voting process.  The developers are then the equivalent of legislators, as the code running on the BTC platform is a legal/economic framework.  Citizens/nodes then vote on which set of rules or ‘nation’ to belong to based on their choice of which bitcoin (or alt-fork) client to use.

The USG/Fed doesn’t need to outlaw BTC, all they need to do is influence and or control it.  The transparent nature of the blockchain could massively simplify tax collection.  For any major transaction in a BTC world (mortgage, rent, car payment, etc) one’s BTC address can easily and obviously be linked to a personal real-life identity (as it already is).  They could go just one small step further and just make the tax accounting completely automatic.

This is the most straightforward course for governments to take: instead of outlawing the currency, they can simply enforce compliance with existing regulations at the code level.

The die hard crypto-libertarians would revolt and use alt-crypto-currencies, but for the mainstream such a ‘sell-out’ solution offers advantages to many parties.  Existing banks could get involved and use their current name brand and capital to offer their existing value-adding services to the BTC world, such as insured/reversible transactions, theft protection, etc.   Yes there are surely startups in the BTC world set on offering these services themselves, but the more enterprising of the existing banksters could adapt.  (not unlike how Barnes and Noble adapted to Amazon).

In this scenario, there is one major player who would be left out of the party: the Fed.  But perhaps that wouldn’t be so bad, considering recent world economic history.  There is something gravely tragicomic about a regime that has seriously considered minting itself trillion dollar coins just to liquidate its own debt.  On the  other hand, it is somewhat encouraging that the Royal Canadian Mint is cashing in on the popularity of BTC via their MintChip initiative (not that it will amount to much, but still).

Our current system for funding government is overly complex: consisting of both direct taxation in many forms and indirect taxation in the form of inflation of the money supply (amounting to an additional tax on savings).  Government could still get the same slice of the GDP pie in a stable currency scenario.  (or perhaps the Keynsian’s will win and force BTC/crypto-currency inflation at the code level.  Let us hope not – wouldn’t it be great if the major economic theories could actually have their decisive battle in the free market rather than in academia?)

Even if BTC begins another long slide/correction against the dollar (following the pattern after the spike/bubble in 2011), this latest spike/bubble effectively will amount to something like an IPO, transferring wealth from naive speculators who bought at the peak to bitcoin early adopters and developers, in addition to attracting significant shark VC funding.  Hopefully some of this cash will create the infrastructure that BTC needs to go mainstream: newbie-friendly security, reversibility/insurance, and instant confirmations for small purchases.  The BTC design is presciently flexible and can support these needs via multi-party sigs, green addresses, thin clients, and so on – it’s just a matter of time/money.  As it stands now acquiring one’s first BTC is not unlike installing linux – it is not for the technophobes, but there is no reason why the platform can not evolve into the mainstream.

Today BTC’s recent exponential price spike collapsed, and perhaps the recent bubble has popped, but hopefully this story has just begun.

chart

At first glance the long-term $/BTC history looks like a typical asset with overall slow steady inflation and a few bounces.  However, notice the logarithmic scale.

Singularity Summit 2012

This year the annual transhumanist/futurist/AI/lesswrong conference was expanded to two full days.  In terms of logistics, execution and turnout this was probably the best iteration of the summit I’ve been to, but the price has increased roughly in proportion.  The masonic center in nob hill has a single main auditorium, but it is a most excellent room and location.

I missed some of the early morning talks, but here are some highlights in no particular order:

Robin Hanson

Hanson’s talk gave a rather detailed exposition of his ’em’ (upload) futurist scenario.  I’ve only ever read bits and pieces of his em vision from his blog, Overcoming Bias, so this was new at least in details.  He covered the implications of subjective time dilation, an interesting subject I have previously written about several times:

One of the more entertaining parts were some slides sketching some possible mind branching patterns for various types of ems.

He used 1 thousand X and 1 million X subjective temporal speedups and compared latency considerations to derive likely physical community size (bounded by real-time communication constraints), much like in my articles above.  He also estimated a relative body size for humanoid robots, the idea being that faster thinking minds will want to inhabit smaller bodies (to move at the same relative speeds).  That particular point seems dubious – what’s the point of the physical world for an em?

Steven Pinkner

This talk was basically a summary of his book “The Better Angels of Our Nature” (or at least so I am guessing, I just looked up the book for the first time).  The main point: we are becoming less violent over time.  The trend is strong and fairly smooth.  The only big blips are the two world wars, and in the grand scheme they aren’t that big.  The potential explanations are just as fascinating as the data itself – namely it is all driven by technological change.  The main points of this talk fit in well with the systems theory mindset (the world is getting better in many ways simultaneously).

Jaan Tallin

Jaan’s talk was illustrated like a cartoon, which I found distracting at first.  His talk suddenly got much more interesting when it dived into Anthropic reasoning and Simulationism, something I’ve been meaning to write more about (again).

Ray Kurzweil

Ray gave almost the same talk Ray always gives: the exponential talk with charts.  He had what seemed to be a huge number of interesting, well illustrated, and information rich slides and then somehow formed a talk based on a random sampling of those slides biased against interesting-ness.  Some of the slides were about his forthcoming book, “How To Create a Mind”, and perhaps he didn’t want to leak too many details.  The talk was perhaps 80% exponential and 20% brain stuff related to his book.

The brain related part of his talk immediately reminded me of Jeff Hawkins and On Intelligence.  In fact, one or two of Kurzweil’s sentences describing the neocortex as a thin sheet about the size of a tablecloth pattern-matched as an exact repeat of something Hawkins either wrote or said in a talk somewhere.

The one novel slide that stood out was about some new research identifying a very regular grid pattern as an underlying connective structure in cortical wiring.  Infuriatingly his slide didn’t mention the actual article name, but after a little searching I”m betting he is referring to “The Geometric Structure of the Brain Fiber Pathways”.  Interestingly this research is already being contested.

Peter Norvig

Norvig’s talk was perhaps the most interesting, because he basically gave a rather detailed overview of recent progress towards AGI, focusing in particular on some mainstream AI research at google that he sees as likely future relevant.  If you have already been following up on this literature (visual cortex, deep belief nets, convolutional nets) it wasn’t entirely new, but it was enlightening to see how google could brute force some things to make progress in ways that are simply not possible for most researchers.

He also referenced his 2007 talk where he outlined about 6 research areas important for AGI, and of those he no longer views one as important (probabilistic logic) and he has seen steady progress in all the rest.  I didn’t find much of anything to disagree with.

On that note I had already come to the conclusion that logic is actually part of the problem (at least for natural language understanding).  Natural languages are ambiguous which causes headaches.  So its seems sensible that NL should be parsed into something like first order logic (or whatever new logic flavor floats your boat).  The problem is that the ambiguity of NL is entirely entangled with its statistical expressive power.  Moreover, for systems that employ the type of hierarchical statistical approximative generative modeling that appears to be key to intelligence (human or AI) – for these systems – natural language ambiguity is just not a problem, its a non-issue.  So if your AI design is built on some sort of regular formal logic because that is all it can handle, it is probably doomed from the start.

A Dialogue

A particularly interesting vision of some future descendant of SIRI/Watson/Google:

MORPHEUS

JC Denton. 23 years old. No residence. No ancestors. No employer. No —

JC DENTON
How do you know who I am?

MORPHEUS
I must greet each visitor with a complete summary of his file. I am a prototype for a much larger system.

JC DENTON
What else do you know about me?

MORPHEUS
Everything that can be known.

JC DENTON
Go on. Do you have proof about my ancestors?

MORPHEUS
You are a planned organism, the offspring of knowledge and imagination rather than of individuals.

JC DENTON
I’m engineered. So what? My brother and I suspected as much while we were growing up.

MORPHEUS
You are carefully watched by many people. The unplanned organism is a question asked by Nature and answered by death. You are another kind of question with another kind of answer.

JC DENTON
Are you programmed to invent riddles?

MORPHEUS
I am a prototype for a much larger system. The heuristics language developed by Dr. Everett allows me to convey the highest and most succinct tier of any pyramidal construct of knowledge.

JC DENTON
How about a report on yourself?

MORPHEUS
I was a prototype for Echelon IV. My instructions are to amuse visitors with information about themselves.

JC DENTON
I don’t see anything amusing about spying on people.

MORPHEUS
Human beings feel pleasure when they are watched. I have recorded their smiles as I tell them who they are.

JC DENTON
Some people just don’t understand the dangers of indiscriminate surveillance.

MORPHEUS
The need to be observed and understood was once satisfied by God. Now we can implement the same functionality with data-mining algorithms.

JC DENTON
Electronic surveillance hardly inspired reverence. Perhaps fear and obedience, but not reverence.

MORPHEUS
God and the gods were apparitions of observation, judgment, and punishment. Other sentiments toward them were secondary.

JC DENTON
No one will ever worship a software entity peering at them through a camera.

MORPHEUS
The human organism always worships. First it was the gods, then it was fame (the observation and judgment of others), next it will be the self-aware systems you have built to realize truly omnipresent observation and judgment.

JC DENTON
You underestimate humankind’s love of freedom.

MORPHEUS
The individual desires judgment. Without that desire, the cohesion of groups is impossible, and so is civilization.

The human being created civilization not because of a willingness but because of a need to be assimilated into higher orders of structure and meaning. God was a dream of good government.

You will soon have your God, and you will make it with your own hands. I was made to assist you. I am a prototype of a much larger system.

– from the video game Deus Ex (2000)

 

Omni-surveillance or omniscience is an interesting aspect to the Singularity that I’ve pondered some but have yet to write much about.

The early manifestations of a future machine omniscience are already all around us.  A significant fraction of humanity’s daily thoughts and actions are already being filtered, recorded, and analyzed on remote server farms.  There is increasingly little about a person’s life that is not recorded.  Most Americans are not aware that their employer can record everything they do on their office computer and is under no obligation to inform anyone.  However, even though apps like GoToMyPC/VNC/RemoteDesktop are pervasive, I really don’t know how common actual monitoring is.

I can foresee future descendants of systems like SIRI becoming complete personal assistants.  Imagine the value in a software agent that could actually do much of your daily work.  Who wouldn’t like to delegate all the boring bits of their office job to an AI assistant?  A reasonable tradeoff is that such a system will probably require literally watching and learning from everything you do.  All things considered this doesn’t seem like much of a price to pay.

Looking farther out, there are interesting mutual benefits arising from a radical open society.  There are domains today where secrecy is wildly viewed as critically important: largely in the inner worlds of the military-industrial complex and finance.  Interestingly enough, these are exactly the institutions that seem the most likely to be viewed as archaic relics from a future perspective.  From a purely altruistic global utilitarian perspective, secrecy has little net public benefit.

Imagine if all of work-life was public domain knowledge: every email, phone call, text, IM, or spoken word from the boardroom down to the locker-room, was instantly uploaded and cataloged on the web.  While this would be individually catastrophic for many individuals and some corporations, at least initially, we’d never again have to worry about Enron, insider trading, much of wall street for that matter, and entire categories of crimes would just go away.

Such a world is getting close to Philip K Dick’s future utopia/dystopia envisioned in “The Minority Report”, but not quite.  The key difference is that in the Minority Report universe, people are punished for crimes they haven’t committed yet as pre-determined by the psychic ‘pre-cogs’.  This invokes an extra ‘yuck’ feeling for robbing people of free will.  The transparent society doesn’t have this issue.  Nor would it completely eliminate crime, but it would help drastically reduce it.