FinTech Lecture 3 : Internet Technology and Governance (1)
Slides I used for Lecture 3 of FinTech - Financial Innovation and the Internet 2021 Fall at Graduate School of Business and Finance, Waseda University on October 8, 2021.
and the Internet 2021 Fall Lecture 3 : Internet Technology and Governance (1) Kenji Saito, Graduate School of Business and Finance, Waseda University Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.1/51
required Zoom names : change your names to whatever you want to be called Please link your Zoon names to your real names in your reports You do need to speak often (we are going to have a lot of dialogue) 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 The recordings could be used for research on online learning Transcribed for use and anonymized Will let you know when the necessity arises Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.2/51
Now points to a collection Sorry, it seems as if only I can see the page; a feature request has been sent to Speaker Deck Things can change if you take actions Recording and chat text will be posted at Moodle and Discord Trial automatic transcription will be posted at Discord Problem from last week was solved right after I reported it to the author of the software as the author was unaware of the problem Plus I have installed an audio routing so that hopefully everyone’s speech is recognized now Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.3/51
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 The World of Apps (1) Lecture 6 10/29 The World of Apps (2) Lecture 7 11/12 Blockchain (1) Lecture 8 11/19 Blockchain (2) Lecture 9 11/26 Other Ledger Technology and Applications (1) Lecture 10 12/3 Other Ledger Technology and Applications (2) Lecture 11 12/10 Cyber-Physical Society and Future of Finance (1) Lecture 12 12/17 Cyber-Physical Society and Future of Finance (2) Lecture 13 1/7 FinTech Ideathon (1) Lecture 14 1/14 FinTech Ideathon (2) Lecture 15 1/21 Presentations and Conclusions Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.4/51
How Society/Civilization Changes Tetrad — A Tool for Analyzing Media (Industrial Tools) Gutenberg Galaxy and Its Reverse Future of Monetary-Financial System? Discussion : Does FinTech Free People? — actually, we didn’t ⇒ But we can talk about it a little Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.5/51
“Are you looking forward to working today?” At so-called “corporate slave corridor” in JR Shinagawa Station, October 4, 2021 Like “WAR IS PEACE / FREEDOM IS SLAVERY / IGNORANCE IS STRENGTH” The ad was taken down the next day because “we sincerely apologize for our lack of consideration for the users of the station” “But specialization is in fact only a fancy form of slavery wherein the “expert” is fooled into accepting his slavery by making him feel that in return he is in a socially and culturally preferred, ergo, highly secure, lifelong position” — Fuller, “Operating Manual for Spaceship Earth” Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.6/51
automated Example : Bitcoin If you think of users as shareholders, coins as shares, and miners (validators of transactions) as employees . . . Its program code can be thought of as describing how the organization operates in the business of transferring shares DeFi (Decentralized Finance) movement (← although the word has been invaded by speculators ;)) Open-source autonomous financial toolkit Financial applications on censorship-resistant execution environments If we generalize, the idea of “law” will change That’s the power of software to begin with Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.7/51
money → Money will soon disappear from our view Different kinds of money, coupons, and point systems can operate behind the scenes Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.8/51
like Bitcoin Digitization of the national currencies (“digital JPY” in Japan) MUFG Coin, J-Coin Pay, S Coin, Ginko Pay (OEM) Attempts by communities (e.g. Zen) Attempts by central banks (CBDC : Central Bank Digital Currency) Local currencies, “Cause-Oriented Economy” Cause-Oriented Economy is a term coined by Saito (example for active space-debris removal) Beginning of world where a variety of digital currencies are used (◦◦Pay, . . . ) The complexity is not going to be in our minds; we only clarify our policies If we would like to keep Amazon-Go-style experiences Then we don’t even know if it is money that is moving behind the scenes The sharing economy comes in there ⇒ Decline of the monetary economy! Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.9/51
investment Specialization, agricultural/industrial society Inequality, exploitation and bankruptcy Bullshit jobs Digital currencies, FinTech and beyond ENH REV RET OBS Control and obedience, hierarchy Maximization of profits Moneyless credit system Gift economy Generailzation (of skills), hunter-gatherer society New medium “retrieves” what was previously made “obsolete” Will “gift economy”, “generalization (of skills)” and “hunter-gatherer society” really be retrieved? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.10/51
bullshit job is a form of paid employment that is so completely pointless, unnecessary, or pernicious that even the employee cannot justify its existence even though, as part of the conditions of employment, the employee feels obliged to pretend that this is not the case” Five types : flunkies, goons, duct tapers, box tickers, and taskmasters Different from jobs that are necessary, but merely bad (shit jobs) Graeber (deceased last year) pointed out that increase of bullshit jobs started when financial sector and corporate executive classes effectively fused (1970s) With the tetrad from the previous page, we know that rise of bullshit jobs is a reverse effect of financial capitalism fueled by its retrieval of control, obedience and hierarchy Since financial system is a cause, and automation may free those people working bullshit or shit jobs (though past automation was another cause of such jobs — why?), the questions raised by this book are not unrelated to this class Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.11/51
(by the gap between rich and poor) → Sharing economy emerges (which is ultimate form of FinTech) (why?) Lifestyle that operates without specialization (thanks in part to AI and DigiFab) → The degeneracy of economic activities to be taxed Changes in the way the public is served ← Opportunity for us → At that point, money is already declining (disturbance for PO/GO and expansion of NPO/NGO concepts) By advancing the principle of the monetary economy, conversely, accommodation solutions that do not require money are selected, and money rather disappears from the front view → The ideas of “employment” and “separation of buying and selling” collapse “Rulers” do not exist any longer; “consumers” do not exist any longer Specifically, what kind of society is it? → Consider with SciFi prototyping Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.12/51
and just take it home (and share it with family members) Isn’t it similar to something we know? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.13/51
of the Internet Write a bulleted list of what the Internet “enhances”, makes “obsolete”, “retrieves” and what it “reverses” into (2) Based on the tetrad you drew, briefly describe how the Internet affects finance Please be concise Deadline and how to submit October 5, 2021 at 17:59 JST From Moodle (mandatory) Optionally, you can also post to #assignments channel at Discord So that your classmates can read your report, refer to it, and comment on it Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.16/51
Measures . . . how to improve the class 23 out of 29 students submitted (as of Tuesday night; better later than never) Let me remind you that submission at Waseda Moodle is mandatory, and optionally you can share your assignments at Discord as well If you don’t see your listed items in the big tetrad we will see shortly, did you by any chance submit only at Discord, or at Moodle but using image instead of text so that they cannot be copied and pasted easily? (Just text, please) At Discord, too, please consider sharing by plain-text, as sharing by PDF means that we have to download your reports and manage files Effects on finance may be a little too conventional (albeit they are good) Normally, what everyone knows is 20 years behind (Drucker, 1990) RET and REV seemed difficult to think about (you did pretty good on RET, though) RET in this case : what was made “obsolete” primarily by TV, printing or physical space REV in this case : similar effects as those of TV, printing or physical space Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.17/51
(= any technology or artifact) ENHANCES . . . What does the medium enhance? OBSOLESCES . . . What does the medium make obsolete? RETRIEVES . . . What does the medium retrieve that had been made obsolete earlier? REVERSES . . . What does the medium reverse or flip into when pushed to extremes? – McLuhan, “Laws of Media” Questions that can be asked of any media What are the side effects of the media on people and society? Especially, when a new medium (M1) appears, it would obsolesces some existing medium (M2) that has obsolesced some other medium (M3), so that M3 would be retrieved by M1, as M2 is now becoming obsolete Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.18/51
REV Important but often overlooked effects Revived because of the obsolescence Communication * Globalization * Information storage * Speed of distribution * Populism * Information overload * Privacy leakage * Freedom of expression * Creativity * Education Services * Geographic proxy to people * Time-bound access to information * VR * Work efficiency * Narrowing the information gap * Entertainment * Convenience of public affairs * Diversity of merchant online services * Repetitive and tedious bookkeeping tasks * Sharing economy in the digital age * Medical industry * Tourism * Paying for knowledge * Record release * Traditional handicrafts on the verge of loss * Unsalable agricultural products in remote mountainous areas * TV * Talent/property agency * Market entry barriers of consulting * Communication * Information sharing and retrieval è Knowledge * Efficiency and practicality in personal and business life * Physical Social interactions and direct communication * Virtual Reality world * Easy access to deep and vast cross-cultural information * General and horizontal/widespread knowledge * Physical resources of information (Books, discographies, encyclopedias…) * Traditional communication channels (landline, letters … ) * information transparency * international communication * international trading * efficiency in communication * easiness in social interaction * work from everywhere * IoT & automation * Environmental friendly movement * “everything is confidential” mindset * Hierarchical social structure * transaction using hard cash * written signature * handwriting * face to face meeting * large-scale non-productive asset (e.g. big offices) * business trip * traditional marketing strategies * middle man in a transaction * verbal communication * flat society * interpersonal trust * home offices appliance * leisure trip * unclear separation between personal & business matter * breach of privacy and personal information * turning the social interaction into transactional * health deterioration (especially motoric function) * threat for traditional businesses (e.g. stamp and paper producers) * Information Resources * Stay in home for long * Internet fraud * Communicate with others in any time * More information all around world * Newspaper * Fax * Productivity * Data collection * Information transfer * Misleading message * Decentralized database * 3G / 4G / 5G / IoT * Web2.0 / Web3.0 * Blockchain * Metaverse * Social network * Phone book * Address book * Better quality of education UFMFHSBN Information can be more transparent EFNPDSBDZBOEFRVBMJUZ KPCMPTTGPSIVNBO &YQSFTTJWFOFTTUISPVHIBOPOZNJUZ 4IBSJOHPGJOUFMMFDUVBMSFTPVSDFT 3FTQPOTFUJNF 5BSHFUFENBSLFUJOH 1PUFOUJBMGPSGBMTFOFXTTQSFBEJOH Mailing BTPQQPTFEUPQIPOJOH TribalismUISPVHITPDJBMNFEJB 8PSLSFMBUFEUSBWFM 1BQFSCBTFEEPDVNFOUBUJPO 1BZJOHGPSJOGPSNBUJPOLOPXMFEHF $SJNFBOE-FHBM*TTVFT 5FDIOJDBM"TZNNFUSZ * Adaption to New Technology %FDFOUSBMJ[FE4PDJFUZ4USVDUVSF *OGPSNBUJPO"TZNNFUSZ *OEVTUSZ.POPQPMZ *OGPSNBUJPOBDDFTT #SJDLBOENPSUBSTUPSFT $BTI * Mental health * Ecommerce *OGPSNBUJPOPWFSMPBE %JWFSTJUZJOJEFPMPHZBOECFMJFWF (FPHSBQIJDBMMZCPVOEFETPDJFUZ &YUSFNFJOGPSNBUJPOBMBEWBOUBHFT Renaissance 3FCJSUIPG4DJFODFBOE$VMUVSF *OEJWJEVBMJTN 1VCMJDEFCBUFTBOEEJTDVTTJPOT Meta-verse Ideology polarization En-masse social manipulation $POOFDUJPO USBEJOH EFDFOUSBMJ[BUJPO CMPDLDIBJO ɼ anonymity POMJOFCMBDLNBJM JOEJSFDUDPNNVOJDBUJPO * lifelong learning * alleviation of pressure * crosscheck (credibility of information) * human’ s health (diseases or addiction) IVNBO` TQPUFOUJBMJUZ OFXNFEJVNMFBEUPOFXDIBODFT BTFOTFPGBDIJFWFNFOU OPWFMFOUFSUBJONFOU platform of speech *OUFSQFSTPOBMBMJFOBUJPO tangibleCPPLTMFUUFSTUFMFQIPOFGBY 5IPVHIUMFTT"DUT "UIFOT'PSVNT &BTJOFTTJOCSPBEDBTUJOHZPVSPXONJOE #SPLFUIFJOGPSNBUJPONPOPQPMZ *OGPSNBUJPOCSPLFST *OEFQFOEFOUXPSLFS QFPQMF` TBCJMJUZUPEPVCUJOGPSNBUJPO 5IFXPSMECFDBNFTNBMMBHBJO "OBSDIZ * Spam (junk information) * People be governed in a hidden way (e.g. recommendation algorithm) * the Matthew Effect 'PMLUSBEJUJPOBMTLJMMTUFDIOPMPHZ * Online service & Big data & Digital currency %BUBPCTFTTJPO 'SJFOET'PMMPXFST$POUBDUT 1SPYZSFQSFTFOUBUJPO +PVSOBMJTN BTJUFOBCMFTQFPQMFUPBWPJE UIFNJEEMFNBOSPMFPGKPVSOBMJTUTKPVSOBMT Distance Blue . . . interesting Black . . . suitable Gray . . . controversial (IMHO) Let’s see whether the classi- fication is right or not later Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.19/51
effort Human network Commons, neutrality and diversity Cyber crimes, fake news Firewalls, network divisions Echo chambers, no privacy ENH REV RET OBS Hunter-gatherer society (generalization) Versatility of individuals, holacracy Credit systems and gift economy Agricultural or industrial society (specialization) Control and obedience, hierarchy Profits and monetary economy Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.20/51
global financial fraud easier Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.21/51
actions in a virtual society have a cost near to zero, financing will only be useful when relating to science, technology, ideas or arts, which can be summarized as intellectual results If the society has enough production ability, finance will be eliminated Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.22/51
probability in a decentralized free market may make the environment re-centralized Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.23/51
Key Opinion Leaders (KOL) have more influence More and more people are used to follow KOL’s idea KOL’s opinion, whether it makes sense or not, are able to affect finance activities Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.24/51
of the Internet on finance? Let’s discuss in breakout rooms First, look at the tetrad you made collectively, see if blue, black and gray classification is right and if there are more effects of the Internet Then discuss side effects of the Internet to finance Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.25/51
are on the unspecialization trend Which, as I get the sense from the lecture, is the main base factor for the death of money But I disagree with that trend assumption If we look at the things that we can achieve individually, then yes it does increase But does that mean we can satisfy our own needs? I wouldn’t say so, human needs keep evolving as well What would be the counterargument for the perpetually evolving human needs? ⇒ Do our needs evolve without changes to our bodies? Desire, maybe, but desires are constructed by our society, and we will have a different society Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.26/51
“network”? What’s “TCP/IP”? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.27/51
number to a character (encoding) (65 (0x41)) (97 (0x61)) (‘0x’ stands for hexadecimal) ASCII (American Standard Code for Information Interchange) / UTF-8 If you want to convert uppercase to lowercase, add 32 (0x20) to the letter Ex2 : Audio CD (sampling and quantization) ← Do you know what CD is? ;) Stereo 44.1kHz sampling and 16bit quantization (which is far below studio quality today) Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.28/51
base Put everything in a USB flash drive, put everything on the web “Put anything on it” is the whole idea of USB (Universal Serial Bus) to begin with Do you know what bus is? Improvement of transmission quality → No degradation of information Degradation occurs during sampling and quantization, but does not occur after that Concealment or proof of communication → Encryption or digital signature Public key cryptography (we will have a chance to take a deeper look at it in later class) More efficient transmission → Packet communication, compression One single physical communication medium shared by multiple uses at the same time Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.29/51
conveyed Digitization determines the amount of information and conveys it efficiently But some things are always lost Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.30/51
exchanged Social / requirement aspect Network of networks Technological / functional aspect What’s communication? What’s network? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.31/51
think they can Those who think they cannot Why? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.32/51
as by speech, signals, writing, or behavior 2. Interpersonal rapport — “The American Heritage Dictionary” It’s undeniable that you feel that humans and dogs feel close to each other . . . Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.33/51
communicate with each other in any environment? We use signals under water The meaning is conveyed What can you change? What has to remain unchanged? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.36/51
governing affairs of state or diplomatic occasions 2. the original draft of a diplomatic document, especially of the terms of a treaty agreed to in conference and signed by the parties 3. a formal or official record of scientific experimental observations 4. Computing a set of rules governing the exchange or transmission of data between devices — “Oxford Dictionary of English” Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.38/51
or things a complex system of railways, roads, or other routes: the railway network a group of people who exchange information and contacts for professional or social purposes: a support network . . . a number of interconnected computers, machines, or operations: a computer network . . . — “Oxford Dictionary of English” Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.41/51
line” is a network (hopefully someday this map will look familiar for everyone) Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.42/51
performance or reliability requirements for lower layer networks No lower limit, and no upper limit ↑ Easy to enter, and does not hinder new development for improvements Does not guarantee packet delivery order Can cope with congestions and faults by changing the route TCP recovers from errors Resend packets and/or rearrange the order Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.46/51
Keio Univ. Two among the best private universities in Japan These two universities are known for their rivalry and matches in baseball and other sports known as “ ” (first characters of Waseda, Keio and match), although Keio students would often call it “ ” ;) For undergraduates, classes may have to be cancelled for students to go cheer on the baseball team Story The head of the Keio cheerleading squad sends a letter of challenge in the form of a traditional scroll to the head of Waseda’s cheerleading squad It is a very long scroll that has to be untied from Keio’s Mita campus, slipped into Mita Station on the Mita Line, and then slipped out from Waseda Station on the Tozai Line to reach the Waseda campus so that the head of Waseda’s cheerleading squad can read it This is a metaphor of stream communication over the Internet as we do it via Zoom at the class Two ways TCP (Transmission Control Protocol) . . . Don’t miss reading every word of it (e.g. browsing a web page) UDP (User Datagram Protocol) . . . Well, it’s a long scroll, and it’s okay if it’s missing parts (e.g. Zoom) Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.48/51
way, inside the entrance of Mita Station, there is a photocopier, which copies just part of the scroll at a time, and students pass through the ticket gate with one fragment each in their hand Each fragment is sequentially numbered from the top of the scroll Students are not familiar with the railway network, and when they ask the station staff how to get to Waseda, they are told to go to Otemachi, so they do Students ask again at Otemachi Station (router), and are told to change to the Tozai Line When they arrive at Waseda Station, a student operates a scanner/printer before the exit, scanning the fragments in numerical order and outputting a long scroll on the printer, and students pull it to the Waseda campus Now, some students may get lost on the way What would you do? Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.49/51
TCP Students pick up their receipts (with fragment #) at Waseda Station and take them back to Mita Station At Mita Station, if a receipt is not returned, it is assumed that the fragment was not delivered, and another student is sent out with the fragment UDP Why do we care if some students get lost? (They are grown up, and we are certain that they will make it to their home) Lecture 3 : Internet Technology and Governance (1) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-08 – p.50/51
ks91
databricksjapan
kawaguti
ysknsid25
toshi_atsumi
bengo4com
meihei3
soudai
kzkmaeda
bun913
pelelgrino
tamaiyutaro
holman
addyosmani
skipperchong
danielanewman
lauravandoore
jponch
zakiyama
andyhume
smashingmag
keithpitt
sugarenia
eitanlees
