AI, paranoia, and seeing the game ahead

Artificial Intelligence is more feared than understood, a bit like a barking dog. They bark because they are scared. We then react scared to their barking. A complex circle of mutual misunderstanding is then complete. 

The current fear and paranoia surrounding AI are replete with these self-endorsing feedback loops. We all get scared of the unknown. When those who “really know” tell us to be scared and give us about 24 months left to survive, then even the naturally paranoid would seem to have good evidence to remain paranoid.

AI may be the first technological change that affects the liberal, educated and vociferous. Perhaps that is why the noise of opposition parading as concern is so vocal

There are some uncanny parallels in history. The most famous is the Luddite movement of the 1800s. English workers in cotton and Wool factories destroyed machines that they thought would threaten their jobs. 

The term Luddite today remains one used to refer to those who oppose progress, particularly technological progress. There have also been the good vs bad arguments about technological change. 

As I write this, Prince Harry is in court attacking the press over the use of phone hacking into the privacy of people’s lives and then damaging them by publishing their findings. Few would object to MI5 bugging a terrorist’s phone to prevent an attack. The technology is the same. It’s the use of it that raises ethical concerns.

The internet is similar. The first use of sites like Facebook to show people demonstrating for freedom and rights in oppressed countries was generally greeted as one of the good outcomes of free uncensored communication. The falsehoods and lies spread about Brexit, Covid and a vast array of other matters are now seen as insidious destruction of truth and independent quality journalism.

AI may be the first technological change that affects the liberal, educated and vociferous. Perhaps that is why the noise of opposition parading as concern is so vocal. Writers, artists, doctors, and lawyers may all be at risk. However, there is a customer reaction to this that may see a lot of good. 

An expensive lawyer being replaced by AI that can read a text, have immediate access to all laws, cases, outcomes and precedents and provide a well-researched outcome for a client could be seen as a positive outcome. A medical AI doctor who could run multiple tests and analyses with more accuracy than a human doctor and be available 24/7 without having to fight an officious surgery reception could be a welcome relief.

 In finance, we have used algorithms, a fixed process in calculation or problem solving for a long time. Then came machine learning algorithms. These sort of learn as they go, like learning a language by living in a country rather than learning it remotely in a class.  In all cases, data is amassed and then analysed. In modern AI, this is augmented by learning both in and from the environment and not just by analysing data. There are dangers here. Data analysis can lead to data prejudice against minorities.

Being able to analyse data and see in real-time 3D market waves and movements can allow AI to make investment decisions faster and with greater accuracy than humans. As a result, this should reduce the overall risk of such investments and improve the risk-reward ratios as well.  

There is no way of putting the genie back in the bottle. Even if we could and did, the Chinese and Russians wouldn’t. What is called Artificial Intelligence is not yet sentient or emotional in the way we humans are. 

However, recent neurological research has shown that the neural networks in AI are perhaps more closely following the biological ones in humans. This does pose the risk that if fitted to the machinery of war, it could make decisions about who to kill without human intervention. 

The big fear is that it could decide it has no need for humans and start to kill us by creating a plague or launching a nuclear war. Having said that, almost every time in history someone says this is a “New Paradigm”, it usually isn’t.

Within the world of crypto funds management, we are in the vanguard of using AI to augment our investment decisions. We already use algorithms, machine learning, neural networks and now AI. All are part of the same evolving technological process. Within my own firm Atitlan Asset Management, a multi-manager Crypto investment company, we very quickly realised the value of AI. 

We are either using it directly or researching if it has added value across the investment spectrum. Faster analysis of historical data. Faster and more accurate correlation analysis. Quicker multiple scenario testing. 

Constant reading of market news to be ahead of both opportunities and risk is one we are looking at for the future to allow our traders and analysts time to sleep. The opportunities are enormous, and the removal of human bias, tiredness and mistakes is vastly reduced. It is, of course, early days, and the hype has yet to live up to the promise. 

However, you can’t ignore it. It is probably more benign than dangerous, and it can keep you ahead in the game.  What’s not to like?

This is written by a bot, although Ian Morley, chairman of Wentworth Hall Family Office, might have had something to do with it…