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New Factors Of Production

by Dan Robles on July 28, 2015

From classical economics, we are familiar with land, labor, and capital (money) as those things that the benevolent merchant class allocates as a means of producing all things useful to society.

Today, we observe that the new factor of production in an economy is data. Data is the dominant factor being allocated, or constrained, by the merchant class as a means of producing some useful and some not-so-useful things that society may or may not need.

Yet, the collection, processing, normalization, distribution, interpretation, transmission, integration, differentiation, and segmentation of data are the domain of the engineering profession.

Data are the fundamental building blocks of information, knowledge, innovation, and wisdom.  These are the new factors of production upon which new Capitalism is based.

It would seem then that there is an opportunity for the engineers and technologists to claim this important factor of production as our own and thus allocate data to those things that safeguard the health and welfare of people and property while constraining data from those things that do not.

Blockchain technology allows society a quantum leap to leave abandon legacy data systems, not unlike cellular telephony allows society to abandon land wires. Engineers are at a critical phase right now. Either we ignore block chain technology, or we do not.

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Engineering With Blockchains

by Dan Robles on July 11, 2015

Bitcoin uses Proof-Of-Work (POW) to create a new block in a blockchain.   This is analogous to the kidnappers taking a photo of the victim holding the daily newspaper to establish that they are still alive.  Consequently, no proof can last more than a few seconds until the next newspaper is printed.  In other words, the solution to the last puzzle becomes part of the solution to the next puzzle.  In the case of Bitcoin, if we assume that the newspaper has no other reason for existing except to prove that the victim is still alive, it is easy to see how POW can becomes energy and labor intensive.

Proof-of-Stake (POS) is a bit more like Poker. Only after a player shows their cards can a determination be agreed upon by the community of players permitting a payout and allowing the next round begin.

The information required for proof of stake is as follows: 1. the result of the last round of the game, 2. the identity of the card holder, 3. the timestamp that the poker hand was revealed.  4. The account balance of chips on the table, and 5. the result of the playing-card algorithm.

If an account has all of these components, then a new block may be formed. If one draws a rough analogy between POW and POS and compares that to the Professional-Of-Engineering Stamp (POE) Model – and by extension, all scientific validation marks – an interesting similarity emerges:

In an environment of construction, product development, or even research and development, the following is observed:   1. It is relatively easy to use the results of a test, inspection, or observation to establish that a condition exists.  2. The condition the prior event defines the state of play for the next event. 3. the identity of the adjudicator is established in their qualifications (or licensure or Curiosumé) 4. The value of the project is established contractually, by pro forma, or prior block 5. The design of the project represents the algorithm of the game.

Once this information can be established, a signatory can create the new block. The difference between POE (Proof-OF-Engineering) and PWO/POS is that POE has an intrinsic value which is stored in the asset being created (road, bridge, software, security, energy, education, medicine, etc).  Where multiple players engage with a shared asset, they are all intrinsically motivated to preserve the asset rather than consume or destroy the asset.  They will interact with each other accordingly.

Perhaps the bigger question is: Should society emulate cryptocurrencies or should cryptocurrencies emulate society upon our shared asset Earth?

 

 

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Engineering as Adjudicator Of Smart Contracts

by Dan Robles on July 9, 2015

The opportunities for the future of Professional engineering are just staggering.   Banks and insurance companies are investing heavily in blockchain technology in order to both head off a threat of decentralized cryptocurrencies and to release fantastic efficiencies for their own centralized processes. However, no matter how big or how powerful these institutions are, they must contend with the issue of representing a physical asset with the virtual asset.  This is the source of widespread liquidity issues across the cryptocurrency movement and a problem that remains largely unsolved.

Adjudicator stoolFinancial institutions will need, more than anything else in the world, some provision to identify, the quantity, quality, and variance in  all physical assets represented by virtual currencies. There is simply no way around this.  Sure, crypto-pundits will try to explain this little fact away by claiming that intrinsic value of a currency is no longer a requisite for money.  They are wrong.

The Professional Engineering Community is in a very unique opportunity to serve this extremely important function, in part because of the legal structure that they are associated with as well as the simple fact that the PE stamp already performs a similar function in legacy finance.  As a third party adjudicator of traditional contracts, the engineer flips the switches of money transfer to infrastructure projects (and much more), upon compliance with a legal contract.  This same structure can be readily adapted to the virtual currency domain via engineering as adjudicator of smart contracts.

Engineers need to think about their role in society more like a financial instrument than a commercial service or job function. Only then can they have a direct and profound influence on what is built when, and how.  It is in this capacity that engineers can increase effectiveness in their historical doctrine to safeguard the health and welfare of people and property (planet).

Today, a great many decisions that impact the safety, health, and welfare of people and property (planet) are being made by non-engineers, blind shareholders, financial institutions, and short-term politics.  Yet the majority of the future challenges for civilization will be technical in nature.  The integration of a technical policy in finance is precisely the balance that the global economy needs to transition into the next millennium.

NSPE and A Platform

In order to take advantage of these opportunities, the engineering profession needs to reorganize itself.  The NSPE constrains itself to a mandate that serves only State Licensed engineers.  Taken alone, this makes the PE less of a physical science and more of a political science.  The NSPE, precisely by their State Registration, is also in a unique position to act as the decentralized platform for all engineers.  All engineers must be elevated to the position of financial instruments and interact directly with the Banking and Insurance companies.

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Bitcoin 2.0 Smart Contracts About What ?

by Dan Robles on July 9, 2015

– Nick Szabo

The advantages of cryptocurrencies have the potential to be immense.  The first thing that people notice is that there are no transaction fees.  If one wants to email someone 20 dollars, all they need to do is convert 20 dollars to bitcoin, send the bitcoin, and exchange back to dollars – no brokers, no bankers, no fees, no taxes.

People also realized that by keeping their money in Bitcoin, they could buy and sell goods and services without credit card fees, bank fees, or sales tax.  They could even send micro-payments directly to an artist for a copy of a song – no record label, no iTunes, no banks, no taxes, etc.

This functionally resembles the ease with which a corporation can transfer resources internally.  It didn’t take long for people to realize that any kind of contract can be entered into a block chain and irrevocably time stamped. This includes patents, and trademarks, notary, and business agreements, etc.

Szabo 2 – Nick Szabo

Now people are looking at the possibility to transmitting even more complicated contracts across block chains; such as an escrow service and insurance.  For example, a buyer could convert cash to crypto coin, and lock it to an escrow contract. If the product checks out, the program passes the payment to the seller. If it does not, the algorithms sends it back to the buyer.

Next, an insurance product is not much more than an escrow account between multiple persons.  Theoretically, people can form their own insurance pools – good drivers can team up and self-insure, no longer needing to subsidize poor drivers.

The blockchain can scale magnificently with near zero marginal cost per transaction.  It is easy to see how this innovation would have profound implications for Banking and Insurance.  This brings us back to the engineering profession and the 3-legged stool.

Banks and insurance companies fought bitcoin at first.  But now, they are rapidly trying to incorporate blockchain technology into their business system. This allows them to make a quantum technological leap out of legacy data systems while also enabling them to eliminate their own legions of brokers.  The potential profits for the banking and insurance industry are staggering.

Bitcoin 2.0 Smart Contracts About What ?

- Nick Szabo – Nick Szabo

Unfortunately, they will eventually run into a problem which would be extremely difficult for them to solve. Crypto-currencies are virtual – they don’t actually exist. They can only represent something that actually exists.

It is precisely this “representation” that is the domain of the engineering profession.  The engineer, in their capacity to design and build things is the proxy that can bridge this extremely important gap.  A some point, a crypto contract needs to interact with something that does actually exists.

The Digital Engineering Stamp

July 9, 2015

The Professional Engineering licensure is holding on by a thread – albeit a very strong thread – called State Government regulations supported by the Banks and Insurance companies.  However, that may change soon –  not because of something that the government or the engineers are doing, rather, there is a huge technological changes occurring in […]

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The Engineering Asset

July 9, 2015

The professional  Engineering licensure system has developed a qualification system that serves to define the engineer as an asset much in the same form as any financial instrument would format an asset. Engineers need to understand how this design empowers them as a financial instrument otherwise, they can easily be sequestered in the domain of the […]

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The Definition of Asset

July 9, 2015

The definition of Asset is broadly overlooked in discussions about finance and cash flow.  The definition of Asset must be upheld on the accounting sheet or else the “asset” ceases to exist, is classified as an “intangibles” or becomes a liability. In the prior post, I make the claim that engineers are money. On certain […]

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To Control Engineering Is To Control The World

July 9, 2015

Engineers are the critical component in Global finance.  They are needed to keep the electricity on, the Internet running, to fight wars,  to provide food, shelter, warmth, and transportation to all mankind. However, economies are segmented by political boundaries, not necessarily engineering boundaries.  The political laws vary, but the physical laws do not.  It is […]

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The Death of Global Engineering

July 9, 2015

The North American Free Trade Act was unique in that it provided for the free trade of professional services such as financial services and engineering services.  Unfortunately, international trade in financial services was accomplished without also achieving international trade in engineering.  This created a vacuum on productivity (The actual giant sucking sound). Most trade agreements […]

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Cryptocurrencies 101

July 4, 2015

To describe how Cryptocurrencies would be applied by Professional Engineers, we need to start with a brief discussion on cryptocurrencies and blockchains. Cryptocurrencies 101 It all starts with something called a hash. Basically, a computer program generates a large random number.  Then a key generation program fashions the random number into keys that are mathematically related […]

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