End of 2017: We are losing the control

We are approaching the end of year 2017. It is a good time to reflect what has happened, and what it means for the humanity going forward.

Wow, what a year it has been!

2017 was an extraordinary year in many ways. We saw the breathtaking rise of cryptocurrencies, large scale algorithmic manipulation leading to loss of public trust to traditional news outlets, next generation AIs taking off, and massive changes in the political landscape all over the world.

Here’s my analysis of the year and thoughts on the future.

The Cryptocurrency Revolution

Since the beginning of the year, cryptocurrency market has grown 3500%, from less than $18B to over $635B. The pace of growth has been blistering, creating a new global class of crypto-millionaires.

While most people are still trying to understand what cryptocurrency even means, these new breed currencies have taken off like rocketships.

Is this growth sustainable? Absolutely not. We will see a correction at some point. Just like startups, 90% of cryptocurrency projects will probably fail. As of now, they represent a global penny stock market of alpha and beta projects with insane value multipliers.

But many cryptocurrencies will succeed.

Will those succeeding cryptocurrencies take over the world and replace the traditional ones? My prediction is yes, and this will happen faster than the existing systems can adjust. Why?

Because cryptocurrencies make money programmable with smart contracts.

In the past, growing a business required people to negotiate contracts between themselves. This meant days, weeks or even months of back and forth communication, lawyers and meetings. Even if your contracts were standard templates, you often needed to meet the customer in person, review the contract and exchange signatures.

In the future, algorithms will negotiate contracts with other algorithms.

This means that business growth will escape human time frames. Algorithms don’t sleep, don’t take vacations, don’t have to meet in person, don’t have to overcome personal differences, and don’t use human psychology.

They simply execute logic towards a goal in microsecond intervals.

This will enable developers to create algorithms that automatically arbitrage or leverage any and all markets that are based on smart contracts. At the time of writing this, there is 9361 verified smart contracts on Ethereum alone.

In a few years, there will be millions of smart contracts open for business.

What do you think will happen when algorithms start tapping into data sources via tokenized smart contracts, apply AI on it, and resell the resulting enhanced data to other smart contracts that pay for it? All this while the total market cap of the existing smart contracts are valued in trillions of dollars?

New tokenized businesses and ecosystems can grow from zero to billions of dollars in value in a matter of days. Or even hours. See the chart below.

This is the value growth chart of Cardano, a smart contract platform and cryptocurrency that launced in the beginning of October. It opened at $0.5B market cap, and skyrocketed to $14.6B in less than 3 months.

This project definitely hasn’t realized anything that would warrant such a market cap in such a rapid time frame. But it shows us the way to the future.

We are entering a new era, where projects can grow to billions in matter of days.

Today, technological progress has reached a velocity that escapes human time frames. It is getting out of our control and going beyond our understanding.

The Artificial Intelligence Revolution

The only technology more disruptive than cryptocurrencies today is artificial intelligence. It is also the technology that will go beyond us and leave us a past leader in intelligence in the tree of evolution.

Remember AlphaGo, the Google-developed AI that beat the Go champions during the past years? See the timeline below.

AlphaGo algorithms went from beating 2-dan player in 2015 to beating 9-dan player a few months later. In May this year, the reigning world champion agreed to match it, and promptly lost.

The most mind blowing thing happened in October, when Google released AlphaGo zero, a next generation algorithm that learned to play Go from scratch to beat the 2016 algorithm in 3 days and the best previous algorithm in 21 days.

Years of development was surpassed by a self-learning algorithm that started from scratch in a few days.

This is not even the most impressive feat by Google’s AI.

In May 2017, Google launched AutoML, an AI that creates new AIs. By November 2017, AutoML had created an AI that handily beats every human-created AI in image recognition. Who needs AI developers, anyway?

So what does this all mean? Next, I will debate what I think will happen.

My predictions to 2018 and beyond

Cryptocurrency shakeout

In 2018, cryptocurrencies will hit the magic $1 trillion market cap. We will also see a correction that can be bloody. Many token projects that are scams or don’t solve any real problem will collapse. One of the biggest flameouts could be Tether, which many believe is not actually backed by dollars. If it is outed as a scam, it will have major consequences to the whole ecosystem.

While upcoming crash is almost inevitable, the recovery from it will be faster than in any previous crashes, as the speed of change is accelerating beyond human understanding. It could happen in matter of months, if solid new token projects take off, or existing projects announce technological breakthroughs that increase their utility massively.

Corporate layoffs will change consumption

In 2018, we will see massive layoffs by corporations, especially banks and financial institutions, who realize that running large organizations of humans slows them down too much to compete.

This new class of former corporate employees will have to change their habits a lot to adjust to the new reality. These people, many of whom have carelessly spent everything they got with the expectation of next promotion being around the corner, will become freelancers and see their income become much less predictable.

In 2018, we will see a cultural shift away from consumerism.

It will be increasingly hard to sell stuff to people, as they realize that they already have everything they need, and start preferring the flexibility of using services over the stress of owning things.

Instead of buying a car, people will use DriveNow or Uber. Instead of buying a home, people are looking for the flexibility to live in multiple countries and cities in temporary rentals, apartment hotels and AirBnB apartments.

Increased mobility changes how we live

By 2020, tokenization will turn real estate into a liquid asset class that is traded like any stock in the stock market. At that point, it won’t make sense to invest into a specific apartment or a house anymore. By owning tokenized share of a real estate, you can have the flexibility to move anywhere, and sell you real estate investment any time when other asset classes look like a better investment.

This trend of increased mobility, driven in part by the reduction of corporate jobs, will also lead to lower investments in physical goods. Crypto-millionaires are a new class of global citizens who have money to spend, but won’t spend it on things, but rather on services. Those who buy Lambos with their crypto-winnings are going to be the ones who lose shirt on downturns.

Tokenization of investments

In 2017, ICOs raised more funding than startups raised angel investments worldwide. In 2018, we will see a further shift away from traditional startup equity investing into tokenized investments. This is driven by the general acceleration of the pace of change that makes investors wary of waiting for 10 years for potential returns.

As the requirement for successful ICO will increase, startups will start raising their funding from new tokenized venture funds. There are already many projects underway in that front, and the trend will accelerate through 2018.

Politics will become a war between algorithms

As you may have read from the news, manipulation algorithms have already been applied in large scale during the presidential election in the US. They were also used to create fake support for the repeal of net neutrality in the US.

In 2018, politically motivated parties will apply algorithms to sway opinions of masses by delivering individually targeted messages to millions of people. They will also flood discussion forums with carefully crafted fake messages supporting their causes and discrediting opponents. If people have lost their trust to mass media already, now they will lose their trust to all public forums.

Social media will continue to shift to private channels

This loss of trust to public social media channels will accelerate the already rapid movement of social media into private groups and chats. People will spend majority of their social media time on private channels.

These channels will be increasingly hard to monetize with ads, which co-incides with the cultural shift away from consumerism. The bot-fest that is already prevalent in Instagram, Twitter and other channels will increasingly be just that, bots showing stuff to other bots.

The biggest growth in marketing will therefore happen in the utilization of micro-influencers who run their own groups and chats.

AI and data-driven services see massive growth

During 2018, many of the artificial intelligence projects will start solving real world problems in large scale. This will contribute to the corporate layoff trend, as whole functions can be replaced with algorithms.

In B2B markets, there will be a large shift away from SaaS tools towards data-driven services. Companies who are already laying off people don’t want to buy new tools for people to use, but rather data-driven services that end the need for human labor in specific functions altogether.

Final words: Do we have hope?

I am an optimistic person. Artificial Intelligence provides us an opportunity to bring abundance to everyone. Cryptocurrencies provide us hope of bringing back equal opportunity ownership after capitalism aggregated all the money and power to a tiny elite.

The biggest obstacle for us to realize an AI-fueled utopia is our tendency of being selfish and greedy. These characteristics make us create AIs that addict you on some useless activity just to monetize your attention with ads. It makes our leaders create big brother societies and reduce our civil rights just to stay in power. It makes intelligent people join a hedge funds instead of creating solutions that can provide free healthcare and education for all using AI.

We need a new generation of benevolent entrepreneurs who want to make the world a better place.

We need people, who see their life goal in solving fundamental problems that the humanity faces. If they win, we will all win. Let’s hope that we collectively evolve enough to make it happen.

I hope you enjoyed my analysis and predictions. Which thoughts do you agree with? Which ones do you disagree with?

Happy holidays and a successful new year 2018!

Berlin, 19.12.2017

Mikko Alasaarela

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I am founder and CEO of Inbot. Join the Inbot Ambassador community today, and become a shareholder in the future of AI simply by making intros.

If you liked this story, check out some of my previous stories:

The Rise of Emotionally Intelligent AI
The Human API
How Humans will merge with Machines
Tokens could give birth to AGI, Artificial General Intelligence
AI offers us a new path to opportunity