Introducing the Internet of Agreements

Introducing the Internet of Agreements



so let us begin so this is largely going to be a talk about regulation at the fact that inside of most of our computer systems regulation is completely invisible so I can't think of a single piece of software that attempts to build a comprehensive map called the regulatory structure and all the world there is no API for access to the English law there is certainly no artificially intelligent representation of thought law they'll help me decipher that are given act is legal or illegal and the absence of any kind of framework for thinking about regulation in the context of something like the blockchain means that it's relatively easy to deliberately or accidentally give an illegal instruction to a blockchain system because of what chain has no understanding of regulation because there's no API to send a deal for a regulatory channel if you're doing something for the first time you're going to need to be a human being in the loop to take a look and figure out whether it's legal or not and this is clearly completely excessive for the vast majority of things you might want to do so if your objective is to do something like you know chip I don't know cheese the prawns then fairly clearly this is going to go how to go through some kind of check for food quality I thought was going across the border between an EU and a non EU state there would be a clear set of establishments and credentials that you would have to have and even a very simple system to check whether or not you have those credentials before it would allow you to go for you know make your transaction so right now we just don't have machine representations of the wall even in areas going to be extremely supportive my assertion is that it's necessary for us to build this because the lender on what we can automate is going to be strictly defined by our ability to figure out exactly what it is that we're doing with the regulation of these kind of spaces if we can't figure out what is legal then we cannot proceed to automate and it become automate the long term impact of the blockchain serrated edges the second thing is the vast majority of the people who are early after to the blockchain space are fairly substantially dematerialized and they're what often referred to as route was global.nomads you see these folks drift into conferences they have a single backpack but basically everything they own in the world apart from a quarter of million dollars worth of Bitcoin the lives of the USB key chain around their throat that template is very very common in the space you can make some assertions about this being tied to autism it might also just be that these people with any kind of hyper postmodern future but one way or another when you get to the sheer gritty nasty reality of regulation when you have to deal with the heavy weight deep structures of the world it's very very very hard for people to fully get their heads around that as a you know physical tangible artifacts very few of the people that work in the blockchain space I've ever worked in a container poor very few of them have ever had to handle logistics so they don't have an immediate intuition for the paperwork for the heaviness of the project that they're engaged in when they start talking about doing things like applying the blockchain to our supply chain it's an enormous shift in consciousness from a very very light almost dematerialized culture through to this very very very heavy kind of deep bedrock of civilization and in the real world logistics is everything you know every single thing that we can see in this room was brought in on the back of a truck sometime in the last couple of days the walls came on a truck the chairs came on a truck you know the the stage that I'm standing on the screen that you're looking at the podium all of this stuff got in and out of this building because of a logistical Network that moved it around and that logistical framework is more or less the target of almost all real finance so when you finally resolve you know complicated futures deals or even high-frequency trading at some point all of that stuff will eventually collapse back down and into the real world there will be a point where although somebody is buying and selling and trading gold stocks it will eventually turn into a company that digs a hole in the ground that extracts physical gold same thing if you're thinking about you know buying and selling shares in a stock market eventually these companies almost all either produce physical stuff or they sell things the people that produce physical stuff the media industry you think of media as being this dematerialized situation but it's not d materialized the media is enormous ly dependent on things like stage sets these vast vast constructions hundreds of acres on a side that are you know essential parts of building out the rest of the structure that allows you to tell the stories you want to tell so in that kind of setting if you imagine that this entire digital world dissolves and revolves around real physical artifacts it gives you a much better feeling for what the blockchain is fundamentally for the blockchain is way of controlling the movement of physical stuff through many many many tiers and layers of abstraction until you hit this kind of bedrock hard reality at the bottom of the pile that there's an enormous amount of thinking about block chains and supply chains this is a really really common thread and the basic conceptual model of the abstract is that information flows one way in goods for the other way you know the information is in the form of payment it's in the form of an order the goods are moving in the other direction it's the physical stuff it might be insurance it might be credentials attached the physical stuff like safety certificates there are boxes manufactured in China it gets a bunch of safety certifications it's transferred to a chef it's moved along the ship with bills of lading and so on gets to a place like Singapore and essentially robotic port will take the two containers off reallocate the one two different ships somebody will process the paperwork reload the boats and move it along and that process repeats at every point where you change jurisdiction or where you change custody of the goods until you've worked your way all the way across to some loading dock in America you take the stuff off your unloading and it goes through a similar of a different system to handle the Box logistics until individual you know computers or any individual shops that structure is well understood everybody knows the blockchain is going to be huge on in that area because the existing systems are very archaic they're very inefficient they're more or less the only remaining manual paperwork in the global system the design the execution the ordering the payments all of that stuff is happening electronically and then you get to this very very very stubborn last little par which is the logistics system is still running on paper so we know that this stuff closes eventually but once again we had this regulatory void if we're gonna automate all of this stuff there is an element of human intelligence in handling the paperwork where somebody who's been in the business for 35 years says you got shipped bananas to Brazil they don't let anything into the country that works like fruit or whatever the local regulation has to be you know they're these nuts are you know these are Imperial nuts and you're sending them to Germany there's no way this shipment is correct so that problem of embedded human intelligence all the way along the supply chain and makes it very very very hard to see in grasp but fully understand the complexity of the global logistics network that were operating inside of at an abstract level this is toss a implicit knowledge of the kind that knowledge managers would typically think of as being nightmarishly hard to go in there and extract but this is the knowledge the frameworks of regulation the basic structures what is it isn't feasible to do there has to be extracted before you can do folios automated trade for just X because what you want is the ability for two people to make an agreement on the internet send payment across the internet and then receive goods in the physical world without it dropping from this pure digital environment all the way down into this mess of paperwork and remembered opinions about things we do and we don't do based on some lucifer kind of workman's understanding of the law that drop is going to be an enormous block to us building this kind of global automated reject ruble logistics network so this is basically about completing the necessary bridge between the physical and the digital right we start right now in a world where digital mapping of physical space has been an enormous empowerment it's made the delivery of goods possible it shapes the way we travel it's generating things like uber all of that stuff is completely dependent on having essentially perfect digital maps similarly we've got excellent representations of things like stocks and bonds and flows of value and transactions and cash and all the rest of that all of that Maps very nearly into computer systems blockchain or non-blocking these are solved problems in the middle there is this enormous slab which we could term regulatory space and where we are right now is we have no good maps of regulatory space certainly not that are publicly accessible across api's certainly not that are in the form of software that you could download if you wanted to the entire regulatory space area is come we block its terra incognita so as we start attempting to build automated systems that interact with the real world they're automatically going to hit there's regulatory space void which point you basically have to narrow down the transactions you're doing to a tiny subset of all possible transactions that have been harmed designed by your lawyers right you take this enormous automated trade that work to make this enormous automated contracting and payment network and yet narrow it down to the 5% of the deals that your lawyers have approved everything else you don't know whether it's legal or illegal legitimate or illegitimate because your legal team has looked in there for you know nothing about it and that enormous black hole or you just have no idea what happened and you don't know what to do is the vast majority of the Suffolk we actually want to execute using this kind of blockchain plus Robo logistics network so a good example of this would be how you did route finding before the age of Internet maps on your phone you would send out in front of the computer you would figure out a route using a map you would then write the route down or print out the instructions that you'd fold them exactly and if you left the track you were lost this is how it is navigating through regulatory space using current abstractions and current technologies it's extremely hard to come to a conclusion about whether something is okay because we just have no maps and with no Maps you can't build automated systems to help you navigate in the sea of regulation we are lost at sea and we can't realise the full value of things like self-driving cars Ruba logistics until we get the rest of the way up that regulatory curve to the point where you really can't understand what the regulations say inside the context of a blockchain system so what I'm essentially suggesting is that we need a regulatory Oracle in which you could take a business take a transaction within that business show it to the regulatory Oracle and receive some kind of proof that this is considered to be legal by your advisers you can think of it as being due diligence but automated and without that how are we going to build the interfaces between the blockchain in the real world in a comprehensive 360 way not possible so imagine that we take this to the rest of the way the full extent with which one could close this loop to human beings in a room together having a discussion about doing a deal over the course about the agrea set terms and then they make a verbal said we're gonna do this if this isn't an area where that are already doing a lot of deals of this format it may be a standard set of contract terms that agree in two hours would read for example and in stuff which is a very common financial instrument which is heavily standardizing the deal could then be extracted from their conversation by an AI recorded in the form of a smart contract validate and verified by humans if necessary somebody then sends a payment to that smart contract which starts a cascade of interactions through a robo just takes that work resulting in the delivery of a physical box every step of that logistical trade is recorded on the same block chain as your original contract was agreed on and what we have is a completely seamless loop between human speech and a change in the physical world and form a delivery of goods and services this is obviously the future that people want and it sounds like science fiction if you sort of think about this for a minute you know every step in that sounds distinctly kind of sci-fi apart from the fact that it's not I do this all the time at home right Alexa won't be more printer paper an Amazon has a pre-existing set of contracts with me it's got some mechanisms for catching problems if the AI makes a mistake it has its own Robo logistics grid in the form of its warehouses at the edge of the Robo just experience still using human delivery drivers I'm sure the release of as fast as they could get to them at that point what I'm really talking about is simply taking the existing infrastructure which must exist inside of Amazon that allows you to do things like not ship alcohol to places where alcohol is forbidden you know knock pocket knives to four-year-olds whatever it is their system of regulations prevents people from doing country by country that's essentially the remark of regulatory space the rural districts grid I've just described it's their ability to use robots to move their packages and the ability to put an AI front end or not the understands human attention is a letter so all of this stuff is already here but in the blockchain world we've been so busy and so focused on the exact details of the you know initial phases where we're taking things like statutory registers unloading all of that information onto the blockchain we're taking things like smart contracts for instance we're loading over onto the blockchain we haven't really gotten our heads above the parapet and taking a broader look around all of the places where the blockchain technologies could be interacting with other systems so blockchain and AI is largely unexplored blockchain or global logistics is largely unexplored people are beginning to look at this stuff but where the cutting edge is in areas where we are not so focused on the blockchain has moved a good deal ahead in the past few years you know when Bitcoin was invented alexa was still a pipe dream and over the course of time that it's taken bitcoin to get as well established as it has that it's taken the blockchain to get as well-established as it has artificial intelligence has gone through a total phase transition and we need to basically catch up and bring the blockchain back into the conversation with I bring the conversation repeating blockchain and robotics back up to speed and we really need to look at this stuff again because actually the world has become much more sophisticated much more complicated and much more exciting than it was the last time that we really took you know a moment looks around us and sober everything interconnected that one last step by the economics and then I'll talk a little about the future right now it's fairly easy to imagine a situation in which China simply does all of the world's manufacturing and Amazon does all the world's logistics and delivery and you wind up with a single global robot logistics network that has incredibly low margins to the point where nothing can slide underneath it and it's operated more or less like an electricity utility would have been 50 years previously the idea that you could see a kind of global trading platform across which everything flows and you why would you build anything else it basically becomes kind of goods as a service you just plug in your orders the stuff comes out the same whether you plugged in your toaster and I'll tricity came out and the idea that you needed to build a competitive market for electricity was a far-away vision right so it's possible that we're heading into a direction where to all intents and purposes and the supply of physical goods will be a natural monopoly and more or less everything in the world will be made in China delivered by Amazon that vision of the future may or may not come to pass I think if it does come to pass it will enormous lease all up both cultural and technological progress because innovation happens and the edges and anything that becomes monopoly shaped to eventually ossify and become useless and this is particularly true where government regulators get involved and you start with a set of common practices in business which could change when people change their minds and then these things become regulations you wind up moving at the pace of government rather than the pace of Commerce so I think it's quite important that we don't passively accept the creation of a single logistics monopoly in a single manufacturing monopoly I think it would be much more sensible for us to think about what happens if we decentralized Andry localized manufacturing and if we operate logistics as a commercial market with lots of automation to enable deal creation and deal finding rather than accepting that this stuff will be done by natural monopolies and it might require some effort particularly from legislators to ensure that the kind of logistics a a transformation that they were midway through and becomes a marketplace it becomes a series of interlocking marketplaces rather than being run by monopolies but Antibes monopolies regulation is a core function of the state it's well understood that market capitalism does not operate smoothly without some mechanism for breaking up monopolies and I don't think it's too much of an ask to the state to take effective action on making sure that we don't wind up with a logistics monopoly in the age of self-driving cars and in that case we're going to need a good alternative to a logistic casona Polly which means that we have to take the intelligence of the Napoles half about what is or is not we go inside of the space and we have to make that intelligence available on block chains as Oracle's and in other systems as kind of API based AI calls where you could go and check something with somebody else if you don't build those systems then what will happen is that the software which handles compliance and regulation will become the core intellectual property asset all four natural monopolies and it'll be very hard for other people to match fir and as a result we will wind up with a kind of regulatory monopoly partnership of the kind that was common in telecoms all the way through the dark years of telecoms in which there was no innovation because bounded and a half to innovate because they owned everything on were essentially an arm of the state finally so I should say a word about hacks here capital hacks here comp laws bicarbonate projects we're investing in the intersections between lots of different technologies to see what happens where these technologies being across we're just in the early stages of putting together a fund and it's always very exciting the basic case is that things get weird even before we get strong AI is everybody familiar with the concept of a singularity you've heard you've heard the basic idea no okay so the singularity is the idea that eventually we will be able to design their artificial intelligence program which is smart enough to design an artificial intelligence program which is better than it is the second program which is better than the first program will design the third program and you'll get thing that we call runaway super intelligence and this is something that people like you want must carry enormous ly worried by the Silicon Valley can a long-range thinkers are all very panicked by this as an outcome so even before we get to that point even before we get to that discussion things are getting weird they're getting really strange if you haven't bought an Amazon Alexa they're 50 bucks you could buy an Amazon Prime they'll deliver it to your two hours plug it into your computer into your home network and just have a play with it it will pull your mind right plug it into your speakers put Spotify on it you'll be surprised at delighted um that shift into technologies that we really don't understand all that well it's happening very very very quickly and where those technologies cross things get weirder and better even faster the ability to do a two-hour delivery loop pretty a place an order by voice and the stuff shows up with your doorstep two hours later feels properly white magic because it is probably white magic and these kind of magical hybrids ai+ robots equals self-driving cars AI first doctor a language process and klas robo logistics is instant delivery AI plus virtual reality will be form we don't know by guarantee that it will be fascinating surprising and amazing when I arrives and these systems often feel completely magical the first time you interact with a system made of two technologies both of which are a breakthrough point neither which you understand very well it is like magic the thing operates outside of your space of your sense of the real and it hits you at the immediacy of something which is just sorcery Wow where did that come from and I think that that emotional response to the world is going to be an increasingly large part of our relationship with technology technology is going to see more and more more like weird interconnected magic and less and less and less like boxes it sound or desks and hummingbird electricity so that's it twenty minutes thank you we have a few minutes for questions [Applause]

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5 thoughts on “Introducing the Internet of Agreements”

  • Interesting talk overall, but there's one part I have to call out. At 19:00 you talk about the "dark age" of telecom monopolies when you claim there was "basically no innovation" because AT&T was a government-regulated monopoly. During that "dark age", Bell Labs produced the transistor, information theory, communication satellites and the UNIX operating system. Many of those inventions they were not able to profit off of, due to that same government regulation (for instance, they were banned by the government from going into the PC business) leading to a huge number of new companies springing up to profit off of their inventions. Once the Bell monopoly was broken up, Bell Labs went into terminal decline, and most companies today have too much pressure on quarterly earning reports to really invest in long-term R&D with revolutionary potential the way Bell could back in the day. I simply can't fathom the backwardness and lack of historical perspective that can convince the Silicon Valley crowd that innovation happens best through startups.

  • I'm starting to understand how this is relevant to highly structured, organized, and regulated economies, but what about the vast informal economy around the world, where transactions are off the books and range from the black market to street vending to crop harvest to bidi cigarette rollers? Most of the employees in that economy are women, and when factoring in agriculture it can comprise of nearly 90% of all employment in some countries (~30-40% for non-agricultural), and there's little if any digital trail or regulation governing the trillions of dollars that collective economy involves.

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