The Ingenesist Project

The Next Economic Paradigm

Tag: NSPE

Zertify Zillow Zestimates On Blockchain

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On December 9, 2015

In General Information

Big Problem with Zillow Zestimates:

Perhaps the best example of metadata being imposed upon an unwary public is the “Zillow Zestimate”.  Zillow.com is a real estate website that aggregates public information and boldly publishes the value of your personal property while quietly disclaiming that invalidity of their own valuation.  In all fairness, RedFin.com and Trulia.com also provide similarly structured valuations of your most valuable asset with no physical verification. The slightest misrepresentation could cost the homeowner tens of thousands of dollars for which there is absolutely no recourse.

According to Homevisor.com: if your house (or a house you are looking to buy) has a Zestimate of $300,000 – there is almost a 25% chance that the house will sell for less than $240,000 or more than $360,000. That is a pretty wide margin of error. 

There must be a way to Zertify Zilliow Zestimates on blockchain

Implications:

The result is that responsible homeowners who have conscientiously maintained and improved their property at great expense of time and money may be punished in a market while those who neglected their properties may be overly rewarded.  Neither the buyer nor the seller has any way of inspecting comparable homes used by Zillow.  This causes market distortion that affects the buyer, the seller, and the community at large.

Root Cause:

Zillow, Trulia, and RedFin all scan from public data sources.  The problem is that there is no trusted public ledger where owners can register valuable improvements and amenities that may dramatically impact the value – and which lower the risk of owning a particular property.  If such a trusted ledger did exist, it is certain that data scrapers such as Zillow, Trulia, and RedFin would be happy to scrape the data at no marginal cost.

Solution:

An organization such as the National Society of Professional Engineers has sufficient authority to provide a blockchain based ledger where a licensed professional engineer could physically review major components of a property including structural, plumbing, electrical, envelope, energy efficiency, HVAC, Solar Installations, mold, corrosion, critical slope, tree liabilities, view amenities, etc., and formulate an annual cost of ownership statement (ACOS) over a standard period of time.  The licensed engineer will register the ACOS, along with recent remodeling permits filed with the city, on the NSPE blockchain where it may be accessed by Zillow, Redfin, Trulia, MLS, banks, insurance, and the public, etc.

Value Proposition:

The ACOS and the Professional Engineering condition assessment could be provided to owners for a flat fee or subscription fee with a ROI greater than 10:1. This means that viability threshold for engineering assessment is defined as adding more than 10,000 dollars to the average sales price of the property for every 1000 dollars that the homeowner spends on the engineering report.  Owners that don’t meet this minimum threshold would not benefit from an ACOS and could not be listed on the NSPE Registry.

Size of market:

Assuming that there are about 100 million private homes in the US.  The percentage of under-valued homes that would benefit from a 10:1 PE registry are characterized at over +1 standard deviation on a bell curve distribution and higher.  This is roughly equivalent to 14% of 100 million, or approximately 14 million properties.  If each of those spends a minimum of  $1000 dollars for assessments, the value of the market would exceed $1.4B dollars. According to Homevisor.com estimates, the market would bear an engineering cost of $6000 yielding a $60,000 ROI, or roughly a $10B dollar market.

Conclusion:

Such a blockchain would safeguard the health and welfare of people and property while increasing  the visibility of professional engineers as a public financial institution with real financial impact.  The NSPE data would reduce volatility in banking and insurance ledgers so that pricing becomes more efficient. Real Estate professionals, renovation contractors, and real estate appraisers would also benefit from the registry by delivering the right product to the right client at the right time. It will increase the demand for a retail professional engineering sector to defend the technical best interest of society.  It will signal high integrity rather than low integrity to the preventive maintenance market.  Most importantly, the homeowners who maintain their property and those who will buy those properties benefit from fair market assessment of property values at a far greater utility than the typical point-of-sale home inspection.

Notes:

  • The ideas presented here are the sole creation of the author and not meant to reflect the intentions or interests of the National Society of Professional Engineers, Zillow, or any other referenced entity. 
  • Zertify takes its name from a portmanteau between the word certify and the statistical z-test https://en.wikipedia.org/wiki/Z-test
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Bitcoin Protocol Impact on the Engineering Profession

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On April 15, 2015

In General Information

I will be delivering a very serious presentation at the Nation Society of Professional Engineers Annual Conference on July 2015 in Seattle.  My point will be crystal clear. Money must represent human productivity. Period. The base layer of any economy is a nation’s infrastructure.  As such, any new Cryptocurrency MUST be associated with the engineering domain otherwise it is equal to any other financial derivative whose value is also ultimately dependent on the value of engineered infrastructure.

It’s time to stop the poetry and time start building a civilization we can all be proud of.  It is time to build Curiosumé

Abstract: 

The Bitcoin Protocol and Future Currency Impact on the Engineering Profession

In a Wall Street Journal essay, two authors wrote, “The digital currency known as bitcoin is only six years old, and many of its critics are already declaring it dead. But such dire predictions miss a far more important point: Whether bitcoin survives or not, the technology underlying it is here to stay.” This session will cover what digital currency means for the engineering profession.

“Decentralization” is a term being applied to platforms that use the Blockchain Protocol pioneered by Satoshi Nakamoto, the inventor of Bitcoin.  As a cryptographic currency, Bitcoin remains problematic.  However, as an algorithmic protocol, blockchain technology will enable society to cheaply perform common business processes that are now controlled by institutions such as banks, insurance companies, corporations, government, etc.  Today, rapidly emerging platforms are under development to bring “smart contracts” (algorithms based on blockchain technology) into the mainstream.  

An important and essential variant of smart contracts is called an “Adjudicated Smart Contract” that requires an independent 3rd party adjudicator that would “flip the switch” on algorithmic agreements in finance, insurance, and decisions of governance.  There is a staggering opportunity ahead for the engineering profession to position itself for the role of the adjudicator in a wide variety of important and high value transactions.  The caveat is that we too must change the way that we organize ourselves.   

This presentation, Decentralizing the Engineering Profession, begins with the failure of the NAFTA MRD followed by an introduction to blockchain technologies, and ending with specifications on how our profession can jump to the top of the value chain in the era of Social Capitalism – if, and only if, [the engineering profession] can choose to change.  

Date:

Thursday, July 16, 2015
Start Time: 3:15 pm
End Time: 4:15 pm
Number of PDHs: 1
Speaker: Dan Robles, P.E.
REF:

Bitcoin Protocol Impact on the Engineering Profession

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The Mother of All Hedge Funds

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On May 9, 2014

In General Information

Money is supposed to represent human productivity; otherwise nobody would work for it (think about that for a second).

Today, money is created from future productivity in the form of debt;  when you take a loan, money is created out of thin air and posted as an asset on the banks ledger.  Unfortunately, the money required to pay interest is never created at all, which drives eternal scarcity.

What Happens Next:

Through the miracles of the fractional reserve system and high finance; money gets thrown into a blender where it is then divorced from the productivity of those who create it, and is converted to exotic financial instruments that bet for or against the future productivity of the future productivity of the future productivity, etc – in both Calculus and Finance, these are called derivatives.

Why does it still work?

So the question becomes; if money does not represent productivity, then why do people still work for it? Well, there is no other alternative to money as we know it.

Then came … and went … Bitcoin;

Bitcoin is all the rage because it behaved sort of like a currency – it had many of the desirable characteristics for the storage, exchange, and unit of account for value. But something about it didn’t sit right with society in general – most people aren’t willing to work in exchange for it.

Bitcoin has 3 fatal flaws:

  1. Bitcoin does not represent human productivity.
  2. The total available Bitcoins were highly concentrated among a very few people.
  3. Bitcoin are speculative in value.

Many words have been committed to these topics so I’ll leave a deeper understanding to the reader to research on their own.  However, we can now ask the question;

What if a virtual currency could be designed that does represent human productivity, is widely distributed among the users, and empowered by those who interact with it?

 

Consider an Engineering Backed Currency:

Let’s consider an engineering backed currency and the existing institution of the National Society of Professional Engineers (NSPE)

 Condition 1: Engineering works increase human productivity in the form of roads, bridges, machinery, energy, clean water, sanitation, and generalized problem solving.  A currency backed by engineering would invariably be backed by human productivity thereby satisfying condition #1.

Condition 2:  Suppose that upon paying their 300 dollar dues to the National Society of Professional Engineers, the NSPE Knowledge Bank issues 3000 NSPE Bucks, a virtual currency, to the member so that any member can trade with any other member for the purposes of learning, teaching, and collaboration (don’t worry yet about the technical challenges of doing this).

If any member gets stuck on a project, or they need to understand new technologies, or are looking for complementary knowledge, they can compensate another engineer in the NSPE Technical Network using NSPE Bucks.  Young engineers can teach seniors about new tech, social media, hot mobile apps, and seniors can teach young engineers about nuances of engineering practice, etc., all in exchange for NSPE-Bucks.  NSPE bucks will become evenly distributed thereby satisfying condition #2.

 Condition 3: The NSPE Bucks act as a form of insurance.  If an engineer gets stuck on a project or needs a review of their work or intersects another discipline, they can get rapid and effective support across a vast network of knowledge assets in the profession.  An engineer may be empowered to interact with their peers and innovate in their careers knowing that the wisdom and experience of their peers is mutually accessible.  As such, condition number 3 is met.

Hold on to your seat – this last point will blow you away:

Innovation is the domain of engineering – the two words are synonymous.  People innovate today for the purpose of increasing productivity in the future.  Remember, debt is also a currency backed by future productivity.  Therefore, when you have two currencies that are backed by the EXACT same underlying asset, they are fully convertible on an open exchange.  So NSPE bucks can be easily converted back to dollars or simply traded broadly in a market.

The Mother of All Hedge Funds

As the dollar weakens in scarcity, the NSPE Buck will strengthen in abundance, value will be preserved in the works of engineering that are created. In fact, an engineering backed currency would hedge the dollar as it weaken in it’s ability to maintain infrastructure, build schools, solve climate problems, and provide for the safety health and welfare of people and property.

There is no shortage of work to do and there is no shortage of innovation – there is only a shortage of money.  If Banks can print money out of thin air, why can’t engineers?

 

 

 

 

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