FinTech Lecture 13 : Cyber-Physical Society and Future of Finance

Slides I used for Lecture 13 of FinTech - Financial Innovation and the Internet 2021 Fall at Graduate School of Business and Finance, Waseda University on January 7, 2022.

Transcript

1. Changes in the economy and labor. FinTech — Financial Innovation and the Internet 2021 Fall Lecture 13 : Cyber-Physical Society and Future of Finance Kenji Saito, Graduate School of Business and Finance, Waseda University Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.1/26
2. This class is recorded Camera ON is recommended, but not required Zoom names : change your names to whatever you want to be called Please link your Zoom names to your real names in your reports Zoom names are important, because if you choose to be called by your real names, still I don’t know whether I should call you by your given or family names You do need to speak often (we are going to have a lot of dialogues) We will use breakout rooms a lot, but those won’t be recorded unless you do it yourselves (need to be allowed) Keep your Zoom client updated! We might use latest features Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.2/26
3. The lecture slides can be found at : https://speakerdeck.com/ks91 Recording and chat text will be posted at Moodle and Discord Trial automatic transcription will be posted at Discord Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.3/26
4. Schedule (provisional) Lecture 1 9/24 Overview of FinTech (1) • Lecture 2 10/1 Overview of FinTech (2) • Lecture 3 10/8 Internet Technology and Governance (1) • Lecture 4 10/15 Internet Technology and Governance (2) • Lecture 5 10/22 Internet Governance and the World of Apps • Lecture 6 10/29 The World of Apps - continued • Lecture 7 11/12 Basics of Cryptography and Blockchain • Lecture 8 11/19 Blockchain • Lecture 9 11/26 Blockchain and Smart Contracts • Lecture 10 12/3 Smart Contracts • Lecture 11 12/10 Further Smart Contracts • Lecture 12 12/17 DeFi : Decentralized Finance • Lecture 13 1/7 Cyber-Physical Society and Future of Finance • Lecture 14 1/14 FinTech Ideathon Lecture 15 1/21 Presentations and Conclusions Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.4/26
5. Last Week, We Did. . . Smart Contract Programming Demo Let’s sell and buy land rights with digital tokens Understanding Applications of Blockchain (revisited) Assignment Review — The DAO Attacked Discussion on the DAO Attack Blockchain and Anonymity — How to Disappear (couldn’t quite cover it) Did you check the slides? Questions at Discord are welcome Assignment Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.5/26
6. Today’s Topics Assignment Review Self-driving cars and smart contracts Cyber-Physical Society and Future of Finance Discussion Changes in Economy and Labor Assignment International aviation business and FinTech This can be the theme for the ideathon and presentations But if you have other specific ideas, please pursue them! Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.6/26
7. Assignment Review Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.7/26
8. Assignment 6. “Cyber-Physical” Briefly describe your idea of combining self-driving cars with smart contracts A smart contract is the code and data stored and maintained on a censorship-resistant ledger (not necessarily a (legally valid) contract) Begin with 4 sentences (problem, why it is a problem, your startling sentence, its consequence) Deadline and how to submit Janurary 4, 2022 at 17:59 JST From Moodle (mandatory) — this time, we are using a Q&A forum So that your classmates can read your report, refer to it, and comment on it Optionally, you can also post to #assignments channel at Discord So that anyone in our Discord can read your report, refer to it, and comment on it Just plain text, and be concise, please Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.8/26
9. Trends and Measures Trends . . . of your reports Measures . . . how to improve the class 18 out of 29+α students submitted (always better late than never) Who started with the specified 4 sentences : 6 students This is a well-established method for communicating ideas to people in an instant, so please learn to use it Applications of smart contracts to self-driving cars : evidence preservation (driving records) (4) / insurance (3) / mobility as a service (2) / energy charges and management (2) / distribution of data (1) / auto leases (1) / logistics safety (1) / machine to machine communication (M2M)(1) / standardization (1) / maintaining the infrastructure (1) Pretty good, with some fascinating ideas Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.9/26
10. J-san’s Idea Safety is one of the biggest obstacles towards consumer acceptance of autonomous cars This can make it challenging for future businesses that plan to offer transportation services using autonomous vehicles Using smart contracts, the travel and maintenance history of each vehicle can be displayed and used to create a safety score for users to view By showing users this information, it may help alleviate some of the doubt consumers have towards self-driving cars ⇒ Great idea! It could be used not only for self-driving cars, but also for the used car market, etc. Although there is a difficulty we call the “eel problem” It’s not the eels but the QR code on the bag of eels that is being tracked It would require automatic identification of parts and automation of the process Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.10/26
11. X-san’s Idea First of all, it is long-distance transportation, avoiding the risk of accidents caused by drivers’ fatigue driving The second problem is the handover of goods Since all information about the vehicle operation will be recorded in a censorship-resistant ledger, including whether the doors have been opened on the way, we can make sure that no one has touched the cargo during the transportation If any unexpected situation is sent during the transportation, all the parties involved will also be notified at the first time ⇒ Important idea! cf. https://arxiv.org/abs/2011.05442 Shorter, updated and official version will be available from IEEE soon (not the extended abstract) Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.11/26
12. T-san’s Idea [snip] M2M, especially in the case that nodes didn’t know each other has a security issue The question is, how can we trust that the data stream is authentically from the expected node? This security concern can be mitigated by using blockchain and smart contracts While broadcasting its data, each node will also push the hashed value of the data and its identification up into the blockchain For the receiving end, the collected data will be hashed and authenticated via a smart contract This operation is both not calculation and bandwidth intensive, appropriate for a safety-critical system By doing this, we can reduce the required level of trust for the autonomous vehicle while using an optimal solution for data exchanging ⇒ For real-time and massive use, probably some second layer technology is required cf. https://doi.org/10.1016/j.icte.2021.08.012 I think this technique can be used for M2M when they exchange their identities (also used for identifying devices in the work listed in the previous page) Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.12/26
13. Cyber-physical Society and Future of Finance Key concepts : Cyber-physical and Cognitive Aim for future — like passing the ball to a moving teammate Life with Earth-Scale OS (Operating System) and Meta-Nature Changes of Economy Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.13/26
14. Cyber-physical Cyber ← Cybernetics Focus on communication and control, so that animals, machines and other systems can be uniformly understood Reference to our nervous system → sensing and actuation (physical to begin with) Cyber-physical Apply cybernetics, physical to begin with, to the physical society Specific space, or the whole society functions by sensing and actuation Social infrastructures that support human lives and computer networks will be tightly connected through a variety of (AI-assisted) sensors, actuators, mobile devices such as smart phones, or even laws Today, we are always connected with information environments through smart phones and such, and therefore we are already at the entrance of the cyber-physical age Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.14/26
15. Cognitive Not general-purpose artificial intelligence (not replacement of human) No need to have “consciousness” → no need to be ASTROBOY ( ) Does “learn” and “infer” → can be like GIGANTOR (Tetsujin 28-Go; 28 ) Extension of human abilities of recognition and intellectual processing It really is off-the-shelf technology today Demonstration of hand-written number recognition (http://cs.stanford.edu/people/karpathy/convnetjs/) Perhaps, children’s work-place experience at a post office should start with something like above? It is not a question of machines taking people’s jobs It is a question of people sticking to jobs machines or machine-assisted users are better at ⇒ There is going to be an inevitable social shifts Important part of cyber-physical society : “Artificial Neural Network” Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.15/26
16. Aim for Future What’s the trends of the changes from today → 30 years later? Even to aim a little ahead, we must be sure of the direction, because things are moving If you see things too closely to present, the business will be short-lived if social changes are rapid e.g. × Business assuming that self-driving cars are personally owned Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.16/26
17. Earth-Scale OS (Operating System) (2007) This is cyber-physical, applying cybernetics to the physical world “Centers” are going to be automated → Rise of DeFi (Decentralized Finance) Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.17/26
18. Earth-Scale OS and Meta-Nature Anthropology Informatics Environmental Studies Sociology Business Administration Politics Today Hardware Applications User OS Human Business Financial System Human Business Earth-Scale OS Automation System Earth Earth Near Future (as of 2007) Human Meta-Nature (Highly-automated decentralized social environment) Earth Near Future (as of 2021) To the left is just an excerpt of the typical studies involved Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.18/26
19. Amazon Go Shoppers are insensible of money → money will soon be invisible Variety of monetary media, coupons and points can work underneath the visible shopping environments Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.19/26
20. World with a Variety of Digital Currencies Global currencies such as bitcoin Digitization of national currencies (“digital JPY” in Japan) MUFG coin, J-coin, S-coin (digital coins by banks and alike) Trials by communities Trials by central banks (CBDC : Central Bank Digital Currency) Local currencies, “cause-oriented economy” Making an entry to the world where a variety of digital currencies are in use We will be insensible of its complexity, and we will just clarify our policies We will not even care whether the mechanism underneath is monetary or not Agents (e.g. smart phone apps) will start suggesting actions according to the policies Sharing economy will join, too ⇒ Decline of Monetary Economy! cf. “Maneki Neko” by BRUCE STERLING Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.20/26
21. Tetrad of Monetary Economy Exchange, Consumption, Saving, Investment Specialization Agricultural / Industrial Society Economic Gaps, Exploitation, Bankruptcy Bullshit jobs Digital Currency, FinTech → Meta-Nature ENH REV RET OBS Domination and Obedience Hierarchy Profit Maximization (Money-less) Trust System, Gift Economy Omnipotence Hunting and Gathering Society ENH : enhancement OBS : obsolescence RET : retrieval REV : reversal New media revive what have been once made obsolete, but will “gift economy” and “omnipotence” be revived? Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.21/26
22. Trends of the Changes Radicalization of money and finance leads to stagnation of exchanges and consumptions → Rise of sharing economy Life style of running economy without specialization (also boosted by AI or digital fabrication) → Degeneration of taxable economic activities Changes in how public works are carried out ← opportunities for us → At that point, we have already seen decline of money, have we not? By pushing the principles of monetary economy forward, money would rather retreat from the front stage of our lives, because accommodation without needing money are preferred → Destroys “employments” and “separation of selling and buying” Distinction between “ruler and ruled” or “producers and consumers” will melt away Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.22/26
23. Discussion : Changes in Economy and Labor How will economy be like after 30 years from now? How are we going to live through the path leading to that economy? How do we begin? Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.23/26
24. Assignment Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.24/26
25. Assignment 7. “International Aviation Business” Summarize an idea for applying FinTech to the international aviation business This includes anything that appears at international airports and beyond Examples : passports, visas, tickets, immigration, customs, airplanes, money exchange, duty-free shops, etc. Use of blockchain (or better versions of them) is recommended because of the need to handle legal or any rightful records across countries Or, if you have a specific idea for another application, summarize that instead In any case, begin with four sentences : 1) problem, 2) why it is a problem, 3) your startling sentence, 4) its consequence Deadline and how to submit Janurary 11, 2022 at 17:59 JST From Moodle (mandatory) — this time, we are using a Q&A forum Optionally, you can also post to #assignments channel at Discord Just plain text, and be concise, please Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.25/26
26. See You Next Week! Have a nice weekend Lecture 13 : Cyber-Physical Society and Future of Finance — FinTech — Financial Innovation and the Internet 2021 Fall — 2022-01-07 – p.26/26