Financial technology in the living room. Generated by Stable Diffusion XL Beta FinTech — Financial Innovation and the Internet 2023 Fall Lecture 5 : The World of Apps (1) Kenji Saito, Graduate School of Business and Finance, Waseda University Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.1/35

This class is recorded Using Zoom The recordings could be used for research on (online) learning Transcribed for use and anonymized Will let you know when the necessity arises Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.2/35

The lecture slides can be found at : https://speakerdeck.com/ks91 Trial automatic transcription for lectures will be posted at Discord Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.3/35

Schedule (provisional) Lecture 1 10/6 Overview of FinTech (1) • Lecture 2 10/13 Overview of FinTech (2) • Lecture 3 10/20 Internet Technology and Governance (1) • Lecture 4 10/27 Internet Technology and Governance (2) on-demand • Lecture 5 11/10 The World of Apps (1) • Lecture 6 11/17 The World of Apps (2) Lecture 7 11/24 Blockchain (1) Lecture 8 12/1 Blockchain (2) Lecture 9 12/8 Smart Contracts (1) Lecture 10 12/15 Smart Contracts (2) Lecture 11 12/22 Smart Contracts (3) Lecture 12 1/12 Cyber-Physical Society and Future of Finance Lecture 13 1/19 FinTech Ideathon Lecture 14 1/26 Presentations and Conclusions Online presence is possible but not recommended for non-online lectures for interactivity reasons Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.4/35

Last Time (on-demand) , We Did . . . Internet Technology Internet Governance Discussion (at Moodle Q & A Forum) “Commons” in Finance What have we discussed? Assignment Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.5/35

Today’s Topics Assignment Review The World of the Web Web 1-2-3 True Stories Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.6/35

Assignment Review Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.7/35

Assignment 2. “Bank/Payment API” Given that banks and xxPay will publish APIs (Application Programming Interface), think of a new and unusual example application, and describe it briefly Deadline and how to submit November 7, 2023 at 17:59 JST From Moodle (Q&A Forum) (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 Just plain text, please You may always add your comments or questions about the class Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.8/35

Trends and Measures Trends . . . of your reports Measures . . . how to improve the class 21 out of 26 students submitted (as of Thursday morning)(always better late than never) Applications : conscious consumption / cryptocurrencies and virtual worlds / smart budget tracking, smart spending, with or without advertisements / bet / subscription management / scholarship and other aids / track the lowest price / sell our data / credit scoring / wellness fund / recruiting or dating due diligence / split bills / (earthquake warning) Very interesting! Putting aside the new and unusual . . . Most answers were straight to the point, but a few had lengthy preambles Write the most important points first, so that if readers stop reading in the middle, they can still get the important information Probably you have learned the elevator pitch Example from how to write an abstract for a scientific paper I know you are business-oriented, but since this is also academia Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.9/35

How to Write a Good Abstract The real first step is to give it a good title (probably 3 below is your title), then Abstract in 4 simple sentences, by Kent Beck: Sentence 1 : State the problem Sentence 2 : Why the problem is a problem Sentence 3 : A “startling” sentence Sentence 4 : Implications of the startling sentence Example: The rejection rate for OOPSLA papers is near 90% 1 Most papers are rejected not because of a lack of good ideas, but because they are poorly structured 2 Following four simple steps in writing a paper will dramatically increase your chances of acceptance 3 If everyone followed these steps, the amount of communication in the object community would increase, improving the rate of progress 4 cf. https://plg.uwaterloo.ca/∼migod/research/beckOOPSLA.html Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.10/35

T-san’s App (conscious consumption and investment) EcoInvest: Dive deep into conscious consumption with this innovative app that seamlessly intertwines your finances with environmental responsibility For every transaction you make, EcoInvest calculates the estimated carbon footprint of your purchase Whether you’re buying a coffee, booking a flight, or getting a new gadget, you’ll be presented with its environmental impact in relatable terms, like “equivalent to X hours of TV watching” or “Y miles driven in a car” But it doesn’t stop there EcoInvest then suggests a small offset amount tailored to the carbon impact of your spend This isn’t just a donation — it’s an investment By agreeing, you channel that amount into a portfolio of green initiatives, from renewable energy projects to sustainable agriculture ventures ⇒ This must feel good! Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.11/35

M-san’s App (lowest price tracking) The API can be used to track the lowest price Given that we can acquire the price/quantity/goods information in each transaction, we can track the lowest price for customers in the same day and provide the information to the users It can help price-sensitive customer to purchase goods at lowest prices under the high-inflation environment ⇒ We have kakaku.com in Japan, but this can be more complete and live Probably better with payers’ feedback on the purchases It would be nice to have a flow line for it Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.12/35

L-san’s Question With regard to the governing bodies of the Internet, I believe the IETF is more influential than the UN because the group is specialized, smaller in size, and less bureaucratic However, what are the risks associated with power being concentrated within a small group? ⇒ I do not think it is a concentration of power And it is not a small group . . . it is an open group And by refusing to even have a voting system, it is avoiding having any kind of authority Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.13/35

The World of the Web Applications of the Internet Birth, technology and evolution of World Wide Web Consequences and problems of World Wide Web Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.14/35

Applications and Port Numbers 3BJMT 5P[BJ-JOF 8BTFEB4U &YJU 8BTFEB6OJW 8BTFEB 3BJMT .JUB-JOF .JUB4U ̖&YJU ,FJP6OJW .JUB 3BJMT ɹ0UFNBDIJ4U .JUB-JOFc5P[BJ-JOF "QQMJDBUJPO 8BTFEB6OJWFSTJUZ JTMJTUFOJOHPO BTQFDJpDQPSU *1 BEESFTT 1PSUOVNCFS * * 5 5 Like many web servers used to be listening mainly on port 80 (when HTTP was OK) Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.15/35

Client-Server Model 5IF*OUFSOFU (JWFNFTPNFUIJOH )FSFZPVBSF $MJFOU $MJFOU 4FSWFS 4FSWFS4PGUXBSF "QQMJDBUJPOMJTUFOJOH GPSSFRVFTUTGSPN DMJFOUTPOBTQFDJpD QPSU $MJFOU4PGUXBSF "QQMJDBUJPOUIBU DPNNVOJDBUFTXJUI TFSWFSTPGUXBSF TFOEJOHSFRVFTUT XIFOOFFEFE One of the basic models of communication on the Internet Two types of computers Servers: computers providing services Clients: computers to be serviced Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.16/35

Before Web What the Internet was used for (everything is still out there) Window system (X window) Mail (SMTP/POP) Netnews (NNTP) There were already “flaming” File transfer (FTP) Below came around the same time as Web Chat (IRC) Information retrieval (gopher) Now little used Now actually sounds more like an iconic mascot of the Go project Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.17/35

To Web Changes in the way information is shared File storage and sharing services Save file on server (upload) Users access the server to download files (Files at the time were often scientific papers and program code) ⇓ WWW : World Wide Web Embed “Relation” links in the file → Hypertext (by Ted Nelson, 1963, 1974) The way files around the world link to one another is referred to as “Cobweb (web)”, and is named “World-Wide Web” Birth of a digital information infrastructure in which various data are organically linked Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.18/35

World Wide Web #SPXTFS #SPXTFS XXXBNB[PODPKQ MJOLT TFSWFST EBUBTUSVDUVSF BDDFTT MJOLT MJOLT CSPXTF CSPXTF CSPXTF CSPXTF CSPXTF CSPXTF XXXHPPHMFDPKQ XXXZBIPPDPKQ A browser fetches a page, and if a user clicks on (or touches) a link, fetches another page Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.19/35

Birth, Technology and Evolution of World Wide Web The Great Meeting of Hypertext and the Internet Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.20/35

History of World Wide Web In 1989 Draft proposal by Tim Berners-Lee at CERN Adopts the concept of hypertext In 1990 WWW server and browser implemented on NeXT, HTML 1.0 Draft In 1991 Released WWW system (server, browser, library), started to be used by universities and laboratories In 1993 Mark Andreessen et al. developed the Mosaic browser, which made WWW widely spread In 1994 Tim Berners-Lee founded the W3C (World Wide Web Consortium) In 1995 Published HTML 2.0 In 2014 HTML5 In 2021 HTML Living Standard Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.21/35

Element Technologies of the World Wide Web HTTP/HTTPS HyperText Transfer Protocol (Secure) Protocol used for transferring HTML files HTML Hyper Text Markup Language Markup language for describing web pages Designed and recommended by the W3C → WHATWG URI Uniform Resource Identifier Identifier of an information resource on the Internet (not necessarily on WWW) URL (Uniform Resource Locator) is one way to implement URI Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.22/35

Format of URL (Uniform Resource Locator) In case of https scheme Scheme https://www . google . com Host name : Port # 443/search Path ? Search string q = refrigerator Port number, path, and search string are optional For https scheme, the port number defaults to 443 Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.23/35

HTTPS Demo $ openssl s_client -connect www.waseda.jp:443 Then GET / Install openssl in your environment and try it out You may want to try www.google.com:443 and GET /search?q=refrigerator instead Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.24/35

Characteristics of HTTP/HTTPS You can get 1 resource (file) per request Each request is independent (state-less) It was enough to achieve its original purpose Original purpose → easy access to documents such as scientific papers But then there appeared a lot of applications for which this is inadequate . . . Want to treat a series of requests as a session Shopping, logging into membership site, etc. Art of maintaining states for that purpose Unique URL generation including a representation of the state HTTP cookies (like shared magic numbers) Access tokens Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.25/35

Generalized Access Token 8FC4FSWFS SFRVFTU SFRVFTU SFTQPOTF SFTQPOTF TFBSDI SFHJTUFS HFOFSBUFTUPLFO EBUBQSPUFDUFECZBDDFTTSJHIU %BUBCBTF #SPXTFS 5JNF JOEFQFOEFOUDPOOFDUJPO JOEFQFOEFOUDPOOFDUJPO IFBEFS SFTPVSDF IFBEFS IFBEFS SFTPVSDF 9Z;X 9Z;X 9Z;X EBUBQSPUFDUFE CZBDDFTTSJHIU Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.26/35

Consequences and problems of World Wide Web Changes in how people use the Internet Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.27/35

What World Wide Web Brought Information distribution Information now contains links and information is organically linked across distributed servers Information providers create information (data) with links in mind Information users follow links to obtain new information (data) Finding information (data) Need some way to find a server that stores information (data) Large numbers of servers and distributed volumes of information (data) Search engine is important How information (data) is collected Distributed across the Internet, servers with popular information (data) are being accessed intensively as the number of users increases Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.28/35

Web 1-2-3 True Stories Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.29/35

History of Web 1-2-3 so-called Web1.0 Web2.0 WWW Orthodox History (Finance is irrelevant) Users themselves are the producers of the data A little off topic Quite off topic lift (Aufheben) 1989 Web3.0 ˠ web3 2014 1990 1995 2000 2005 2010 2015 2020 2005 2006 Web3.0 Is the data freely available for the users themselves and for the public good? Get your data back in your hands! Don't let organizations control it Solve all problems by making everything a financial token! Berners-Lee’ s Berners-Lee’ s O’ Reilly’ s Wood’ s Bitcoin Ethereum How did this happen? Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.30/35

What’s Web3? (1/3) So-called Web 1.0 (Berners-Lee, 1989) : a World Wide (spider’s) Web You can get scientific papers in hypertext (a starting point) Everyone had the potential to be a producer of data Web 2.0 (O’Reilly, 2005) : Rise of blogging and social media Everyone became a producer of data → But data fragmented by platform barriers? ⇑ Common issues shared by Web 3.0 and web3 Web 3.0 (Berners-Lee, 2006) : Undivided and free information exchange infrastructure again Ontology-based Semantic Web (standardization of data handling) → Not popular → Solid (Social linked data) Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.31/35

What’s Web3? (2/3) Web 3.0 (Wood, 2014) → web3 : Get the data back to everyone The following 4 elements were assumed to allow you to manage your data yourself 1) Publishing system that cannot be censored (realized with Ethereum) 2) Messaging with pseudonyms (realized with Ethereum) 3) Consensus engine (?) (naïve understanding that this was achieved with Ethereum) · Haven’t created any mechanism for human beings to agree (What is being done is “replication” as part of 1)) 4) Browsers and user interfaces that integrate them (Ethereum to be available on the web) The {Javascript|Python} library to achieve 4) above is called web3.{js|py} (2014∼) Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.32/35

What’s Web3? (3/3) Then things got somewhat strange . . . “What makes Web3 different — and more than a little weird — is that it would build financial assets, in the form of tokens, into the inner workings of almost anything you do online” — Olga Kharif, “What You Need to Know About Web3, Crypto’s Attempt to Reinvent the Internet”, Bloomberg (2021) Why do they want to do it? (Do you want to do it?) Perhaps because, after all, only tokens can express “ownership” in the blockchain? (original development motivation) Tokens can be freely disposed of by their holders → realization of the modern concept of ownership But does that mean you own the data? Is “owning” a “better way” in the first place? Is it a belief (or assumption) that all of society’s problems can be solved by incentives? This may be a belief that we can’t solve our problems without using humans, Because the only party to whom assets can be exercised is human (nature does not accept money) What about the fear of being wiped out in some way as a result of diversity being compromised because everyone works with the same incentives? Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.33/35

Discussion What do you want to do with web3? Whatever you want to do, this class will always answer it with true stories Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.34/35

Have a Nice Weekend and See You Next Week! Lecture 5 : The World of Apps (1) — FinTech — Financial Innovation and the Internet 2023 Fall — 2023-11-10 – p.35/35