The Ingenesist Project

The Next Economic Paradigm

Month: November 2019

The Six Tenets of Curiosumé

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On November 26, 2019

In General Information

Over the years we have identified several features of Curiosumé that every VC and “investor” wants to change – but these features are so fundamental to the operation of Curiosumé that to change them would render the application useless. More clinical, the Math falls apart.

On the other hand, this phenomenon serves as a very powerful test of human nature. Violating one or more of the six tenets represents the temptation of control and power over others – people who seek to exploit other people cannot resist this temptation and will shortcut or manipulate one of the following 6 tenets, thus guaranteeing failure. Those whose hearts are truly focused on empowering people can easily resist, and even thrive, in an environment of collaboration and inclusion, thus guaranteeing success.

The Six Tenets of Curiosumé

You are forewarned, each of these six tenets pass directly against the grain of traditional venture capital and investment systems making the work difficult to fund by traditional means:

1. The topmost ontology must belong to the Commons.  We specify Wikipedia, or other public databases for Curiosumé.  There will always be a strong tendency from investors to want to own the private database or to define the ontology because this is the most tangible form of control. In Curiosumé all data must reconcile upward to the single ontology owned by the commons. Investors will have a strong desire to own the ontology and privatize the database – we must resist this.

2. Non-competitive ranking system. Our culture is steeped in tradition of competition; war, sports, even evolution (survival of the fittest), etc – all purport the necessity of competition as a means of arriving at the best solution. It was very difficult to find a suitable rating systems that does not invoke some form of competitive hierarchy. But in reality, Nature exhibits many more examples of collaboration than competition, yet collaboration is not intuitive to the Capitalist psychology. We are not saying that competition is bad, it is just inefficient on a crowded planet. Instead, there should be a perfectly valid market for everyone. There will be a strong tendency for investors to rank people on a hierarchy – we must resist this.  

3. Self-selecting: People must self-identify their participation in a community. That way, they cannot cheat because they would only be cheating themselves. There is a strong tendency to tell people what to do, how to behave, and how to appear to a “market”. We must avoid this. If we can eliminate the incentive to cheat, then we can avoid the crippling friction of a punitive vetting mechanism in our processes. There will be a strong desire by investors to have a means of punishing people who game the game. We must resist this. Instead, we need to develop a system that allows people to game the game to improve the game. This is where creativity and innovation will come from.

4. “Learn-collaborate-teach” scale. It is extremely important that people are ranked ONLY on units of learning, units of collaboration, and units of teaching. The reason is that students and teachers do not compete with each other. Besides, people who is unwilling to teach others in an organization are just as useless as people who are unwilling to learn new things. Nobody knows everything and everyone knows something that can be taught to someone else. Learners represent demand for knowledge, teachers represent supply of knowledge, and collaborators represent factors of production in our new proto-economy. There will always be a temptation to create winners by producing and abandoning “losers”, we must avoid this.

5. Anonymity until the point of transaction (AUPOT): There is no reason anyone needs to know your identity until there is a tangible transaction, then and only then you must show your cards. Lack of privacy is what makes Big Data both invasive and unreliable. People acting anonymously behave differently (for better or worse) than those whose identities are known. The intrinsic unbiased activity data has completely different meaning than biased, impulsed, or controlled behaviors. The utility of such data would inherently be more beneficial to markets and society. There will always be a strong desire from investors to own the one-way communication channel (advertising, propaganda, control, etc) where they may impose controls – we must resist this.

6. Formation of the Asset: An asset can only be described in terms of a Quantity and a Quality of something. 100 gallons of drinking water is a completely different asset than 100 gallons of irrigation water. “100 gallons of water” without specifying the qualities of the water is not an asset. Curiosumé a claim as a “quantity” and a validation as a “quality” as a means of formatting a knowledge asset. This is called a unit asset and represents a node in the network. Investors will often want the asset to be described in terms of money where the components are explicitly risk vs return. We must arrive there a different way.

Conclusion

We are open to any new ideas on how we would build the Curiosumé application. However, the 6 tenets discussed here are non-negotiable features of Curiosumé that must remain intact otherwise the whole project will fail. Each one of the tenets rubs against the grain of current VC models, corporate investment models, even academic commercialization models. Obviously, these 6 tenets have made funding for our programs difficult.

On the other hand, the reasons why nobody has copied us is because they would have the same problems in funding. Breaking this legacy funding mold will be absolutely essential to emergence of a new economic paradigm.  

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The WIKiD Tools Algorithm

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On November 18, 2019

In General Information

The WIKiD Tool algorithm provides a mathematical framework for analyzing dynamic data related to social interactions in a network and memorialized on a Blockchain. This example uses an analogy to the position / velocity / acceleration equations that some people may remember from their school days.

These types of relationships are important for measuring things like innovation. Ask any VC for a definition of Innovation and they’ll probably say “I’ll know it when I see it” or “it’s a good idea with an economic outcome”. Neither of these things are measurable until long after the innovation occurs which is not practical. However, if we could measure something that is closely related (correlates) with innovation, perhaps we could use that to measure the thing we can’t see.

A similar thing happens on Wall street – how do you measure consumer confidence? Financial analysts noticed that the price of some commodities track closely with consumer confidence so they use that as a proxy for the thing they cannot measure directly. This is called a derivative – something whose value is derived from the value of something else. Suppose we use the same idea to measure things like Wisdom, Innovation, Knowledge, Information, and Data (WIKiD)?

As engineers interact with each other to form transaction records, the blockchain records the chronological order of every event, so we can now correlate all events with respect to time.  The connections that are made may be analyzed for both quantity and quality (magnitude and direction). We can now use common mathematical tools from finance and physics.

We have established that the blockchain records the time function for all events to an immutable ledger.  In order to represent vector magnitude we’ll follow a well known analogy to the displacement-velocity-acceleration formulas from physics and associated Calculus.

WIKiD stands for:

(W) = Wisdom
(I) = Innovation
(K) = Knowledge
(i) = information
(D) = Data

Data: In general, we can define data as points placed on such a coordinate system. Each point defines a position in space and the time where an event is recorded. The distance between data points can be called “displacement”, because of the relative distance between the points. In the simplest sense, we can see that Data (D1) and Displacement (D2) share an analogy.

Information: When you draw a line connecting two points, or you draw a line approximating a cluster of points, the slope of that line on a graph provided information about the phenomenon under observation. Is it getting larger slowly? Is it getting smaller rapidly? In essence, the slope of the line represents the rate of change in displacement with respect to time and gives the observation its “velocity”.

This may be represented by the relationship simply stated as:

i = dD/dt

Information is proportional to the rate of change in the data with respect to time

It should be clear that we are defining ‘information’ as a derivative of ‘data’.  a derivative in physics is the same as a derivative in finance, that is “something whose value is derived from the value of something else” That said, we now proceed down the latter of derivatives.

Knowledge: The analogy between velocity and knowledge is intuitive. Knowledge is a phenomenon that may be modeled as the derivative of ‘information’. Strictly speaking, the value of knowledge is derived from the value of the information from which knowledge was created. It is intuitive that one accumulates knowledge over a long period of absorbing information and integral data. Education is the process of absorbing information from a printed page or screen, and combining that with other previously accumulated information to form knowledge.

Hence, the following relationship holds and is simply stated as follows:

K = di/dt =d2D1/dt2

Knowledge is proportional to the rate of change of information with respect to time

Innovation: The analogy between acceleration and innovation is also intuitive but a little more difficult to put to words  (that is why we use equations). Consider an child who is knowledgeable in riding a bicycle on pavement. Suppose that the child, for the first time, encounters sand on the pavement while also executing a sharp turn. During the ensuing deceleration, the child experiences a very high increase in knowledge about their environment within an extremely short period of time. In any case, the child is forced to innovate a solution. Likewise, the motocross racer is constantly innovating to adapt to the conditions of the track.  You can read a book about riding bicycles, but none can adequately describe the moment when the child must create the experience anew.

For the fact of innovation, we provide the following relationship simply stated as follows:

I = dk/dt = d2i/dt2 =d3D/dt3

Innovation is proportional to the rate of change of knowledge with respect to time

Innovation Example: One of the gross errors that we make in business is due to the inability to differentiate an economic event from it’s constituent physical parts.  The classic example is innovation; Venture Capitalists often describe innovation as a new idea that has an economic outcome.  This is problematic because innovation is defined with one equation having two unknowns.  This is mathematically impossible to solve, except by laborious and expensive iterations.

The rational (mathematical) approach would be to test and observe high rates of change of knowledge in a community and use that as a proxy to identify the presence of innovation (as defined above). After that, the community may be tested for economic outcomes.  Unfortunately, I=dk/dt is not normally possible to observe in a hierarchical business structure.  However, when formatted and validated correctly, and applied to a network organizational structure, then I=dk/dt can be represented graphically and accurately identified even by a child.

Wisdom: When we think of wisdom, our minds conjure the image of an elderly person with a lifetime of experiences behind them. Somehow, our elders seem to be able to predict the outcome of a series of actions before those actions take place.   This is why we seek wisdom to lead our organizations and institutions.

Consider the manager of a factory floor who has 30 years experience. During those 30 years, they have seen many things succeed and many things fail. In fact, their experience represent a statistically significant sample of representative events that they have experienced in the past.   The wise manager is able to process new information with old information to predict the probability that the new idea will yield the desired results. The propensity for wisdom may be modeled as a time function in a similar manner.

W = dI/dt = dK2/dt2 = d3i/dt3 = d4D/dt4  

 Wisdom is proportional to the rate of change of innovation with respect to time

In general we could say that Wisdom is the second derivative of Knowledge and the fourth derivative of Data. Similarly, Innovation is the first derivative of Knowledge and the second derivative of information, and so on.  In order to identify innovation, we would measure high rates of change of knowledge.  Wisdom would be proportional to high rates of innovation, etc.  The utility of these functions should be apparent.

Conclusion

The WIKiD tools algorithm provides a set of relationships for what are now considered intangible assets that are integrated by a time function.  The Blockchain provides the master schedule for the time function to be recorded, leaving us with a somewhat routine task of identifying rates of change in observable events.  

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Valuation of Hierarchy vs. Network

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On November 18, 2019

In General Information

Modern platforms such as Google, Facebook, AirBnB, and others enjoy astronomical market valuations despite having comparatively less hard assets as legacy firms like Marriot, Boeing, T-Mobile, or Walmart. The difference may have something to do with their organizational structure.

Hierarchy: Since the dawn of the industrial revolution, centralized organizations comprised of multiple levels of management have been the proven means for allocating resources and minimizing risk.  The value of such a construct is expressed in terms of market demand and sensitivity to risk as expressed by the Capital Asset Pricing Model (CAPM).

E(Ri) = Rf + Bi (E(Rm)-Rf)

Where:

E(Ri) = Expected rate of return on capital amount
Rf = Risk free rate of return
Bi = Sensitivity to market volatility
(E(Rm) = Expected market return

The CAPM valuation model for an organization is dominated by market risk multiplied by a firms sensitivity to market risk.  CAPM valuations are limited by market expectations and performance.  CAPM is largely a linear function except in the exclusive state where volatility is very low and market returns are very high, such as monopoly or some duopoly conditions.

Networks: A network is characterized by a collection of nodes (which may represent a switch, a computer, a sensor, or a person) and branches (wires, signals, instructions, or communications) connecting the nodes.  The value of networks is a function of the total number of nodes and the total number of possible connections that can be completed between them multiplied by some coefficient of value for the quality of those connections. 

Metcalfe’s law for Networks suggests that the theoretical value of a network will be proportional to the square of the number of nodes according to the following relationship.

Theoretical value is proportional to: n(n-1)/2

The Actual value would be related to the quality of the nodes, the actual number of existing branches, and the net quality for the transactions that transpire over the network. For example, the Value of Facebook is estimated at:

VFacebook = (5.70 x 10-9) x n2

Where (n2) is the total number of users and (5.70 x 10-9), is an incredibly small number represents the average quantity and quality of nodes and branches between them. The Facebook platform objective is to maximize total number of connects AND maximize quantity AND quality of the interactions.  For reference; MySpace still has 500M registered users giving it a valuable network, however, a low coefficient of interaction has eroded value of the platform substantially.

Self-regulation, fault-tolerance, and Management Autonomy

The network can make independent decisions: An engineer that is mis-allocated can quickly move closer to their area of interest and competence.  Overlap between civil, mechanical, and electrical engineers can be managed appropriately.   A corrupt engineer would have a very difficult time gaining access to a target without enduring a long and difficult road to establishing a transaction record that would permit sufficient isolation to the target to actually profit from the crime. It would be difficult to corrupt an engineer without knowing if they will be assigned to a target.  It would be difficult to which engineer will be assigned to a potential target in advance of the attack.  If an attack was attempted, it would be easy to identify who committed the crime.  High impact targets may be covered with redundancy or a Byzantine proof.  Obviously, Bots would be quickly and easily dispatched to the null condition.

Network Learning

Interactions between nodes will tend to optimize claims such that the value of the compensation received is proportional to the effort required to establish and verify a claim.   This is a common practice in professional societies and certification bodies today.  Further, strong professional communities with sufficient diversity, create conditions for rapidly and iterative teaching, learning, and collaboration leading to a high rates of innovation.  Finally, professionals may reflect artistic or literary expertise or cite membership in multiple networks on their own valuation and the valuation of their team.  Reflecting diverse interests from professional, recreational, and social opportunities will increase the individuals stake in the network and everyone’s stake in a team.

The Value of the Quantchain Network:

Economist Robert Solow received a nobel prize for his work in estimating that 80% of economic growth can be attributed to technological change. Said another way, for every 2 dollars spent on engineering, society can expect 8 dollars returned to the economy.  This conveniently provided an average nodal value for engineers.

It is easy to count the number of engineers on the Quantchain, therefore the only variable left is the ability to assess the value and diversity of the interactions. Quantchain accomplishes this precise objective in several ways:

  • The decentralization of engineers diversifies interactions
  • Dominant game strategy = cultivate a diverse community of claimants and validators approaching Dunbar Number.
  • The Percentile Search Engine assigns optimum probability vs. cost to all transactions. 
  • Individual transactions and collective transactions are readily analyzed.    

Engineering networks can be assembled and subdivided in any number of ways and theoretical values may be assigned to them making the valuation of teams, mergers of teams, divestiture of teams, or scenario testing of any imaginable combination of teams, a quick and accurate projection of network value.

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TVG: The Value Game

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On November 18, 2019

In General Information

A New Class of Business Methods

The Value Game (TVG) is a new class of business methods where value is extracted from an asset, not by consuming the asset, rather, by preserving the asset.  The process of preservation and maintenance is the substrate for the creation of social, creative, and intellectual capital in a community.  TVG is a difficult thing to sustain in a legacy economic model, but may be quite efficient and profitable in the modern networked organizational structures enabled by decentralized adjudication, a decentralized ledger. and simple game mechanics.

To illustrate, we cite examples from on-line games collectively referred to a Fantasy Sports.   Fantasy baseball for example is a game played by adapting real life game statistics to create hypothetical game scenarios using some randomization system such as a set of dice.  Over time these games have become more sophisticated, computerized, and have spread to other sports, and now they are on-line.  Today, fantasy sports are estimated to be a 2 billion dollar industry involving over 56 million people.

What if a “fantasy play” could be replicated given a set of validated statistics, in real life? How would the real world game actually turn out?  This is not an uncommon thought. Many HR directors, corporate recruiters, and entrepreneurs dwell on this topic extensively: “How could we identify social capital, creative capital, and intellectual capital of people, given a set of market measures, and allocate them into a self-optimizing game to yield production and profit?”.

Building A Value Game

  • The Value Game starts by identifying any asset that a group of people may share.
  • The next step is to find 3 or more diverse communities that have a vested interest in preserving the asset rather than consuming the asset.
  • Each player acting in their own best interest will seek to play their expertise among the others as best as possible.
  • Any threats to the shared asset will be neutralized by the majority of players in a network.
  • The transactions between the diverse communities of people will “mine” social capital, creative capital, and intellectual capital into existence generating tokens in the process.
  • Individual transaction records will be memorialized on a blockchain under the control of the individual.
  • Validated transaction records may be transferable to other Value Games, blockchains, or tokens.

Example:  A condominium is an arrangement of several individual owners (of living units) who all have individual talents.  It is in the best interest of each that the building is well maintained, but none are necessarily qualified to manage and maintain a complex structure.  Another community of nearby vendors such as restaurants, accountants, engineers, physicians, and employers have in their best interest that the condominium is maintained because the value of the units impacts the value of commerce – and the productivity of the residents is the primary source of revenue for vendors.  It is also in the best interest of neighboring buildings, the school district, and the city tax pool, civil servants, etc., that the shared asset is maintained to optimize it’s value.  Each player is aware of the impacts in the network based on the analysis of similar networks.

While malicious actors may be a symptom of illness, by actual attack vector is apathy and neglect. Gravity, weather, and deferred maintenance are constantly trying to reduce that condominium structure to lower state of value.  Maintaining an asset creates value equal to the entropy of the system plus asset appreciation due to the creation of social, creative, and intellectual capital.

The Value Game would form a cryptographic token that may be exchanged among the parties in whose best interest it is to preserve an asset rather than to consume the asset.  This is done in many forms today – a restaurant may offer a coupon to residents for a lunch special.  A physician may locate close and rely on referral instead of advertising.  An trades person saving time and travel expenses may pass that on to local community.  When a drug dealer comes to town, they are quickly identified and excised from the community by the community.

Almost any shared asset may be used to form a value game. 

  • A residential or commercial building
  • A Corporation
  • A car, airplane, or other transportation asset
  • Land for farming, mining, or urban forest
  • Water, food, and energy
  • Engineers, Doctors, Civil Servants
  • Educators, mentors, apprentices
  • Laborers, Maintainers, cleaners
  • Planet Earth

New Value Entrepreneur 

The objective of the New Value Entrepreneur will be to organize three or more communities to interact around a shared asset where the interactions among these communities act to preserve the asset rather than consume the asset.  As people interact with each other, they teach, learn, and iterate with each other.  This activity manufactures social capital, creative capital, and intellectual capital memorialized by transaction records represented by the community token.

In general, once a value game is started, it will improve itself.   All players will eventually find and play roles in Value Games that correspond most closely to their natural interest and passions and therefore maximize their personal value.

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The Return of The Ingenesist Project

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On November 13, 2019

In General Information

After about 4 years of not posting to this site, I have decided to return to the original ideas that resulted in so much innovation in this space. For a quick review, the term “Ingenesist” is derived from the Latin word for Engineer – A Maker of Useful Things.

The TIP archives found here include almost 600 blog posts (site map) approaching 1/2 million words. You’ll find the original thesis for the international mobility of engineers under NAFTA between US, Canada, and Mexico. That project involved 6 universities, the California Board of Professional Engineers, The National Council of Examiners for Engineers and Surveyors, and the National Society of Professional Engineers – and with the cooperation and support of CETYS University, the Baja California State Government, and over 250 Engineers from Mexico who presented the US Engineering Board exams.

That work was further developed at the Boeing Commercial Aircraft Company and published at the Boeing Technical Excellence series of conferences by their Technical Fellowship. From this effort, TIP developed The Innovation Bank that would match most worthy knowledge surplus to most worthy knowledge deficit to form an internal market (network) for knowledge transfer. That work is memorialized in an old 2007 Patent Application

Later, TIP co-founded Social Flights – a ride sharing service for private jets. The innovation was our ability to predict most likely passengers and match them with most likely seats available on private aircraft. Supply and demand were both dynamic. Keep in mind that this was before Uber and we were acting within a highly regulated industry. Ultimately Social Flights was acquired.

TIP developed three key innovations:

The Value Game: An economic game where multiple self-interested agents must share a common asset. Their motivation and incentive would be to preserve the asset rather than consume the asset. This was supposed to simulate a sustainable economy such as what is desperately needed for our planet. The Value Game originated at Boeing and was tested with Social Flights and successfully deployed in several remodeling projects for condominium associations (shares asset communities)

The WIKiD Tools Algorithm. WIKiD Tools creates a mathematical relationship between (viewed backwards) Data, information, Knowledge, Innovation, and Wisdom. WIKiD tools is useful when you can’t measure something like innovation directly, you could measure a derivative such as the “rate of change in knowledge” as a proxy. In this way,the richness of Wisdom, Information, Knowledge, information, and Data can be more predictable.

Curiosumé is a combination of the words Curate and Resumé. The idea behind curiosumé is to convert the CV or Resumé to a form of code that can be overlaid on other information databases such as Wikipedia, Amazon ontology, even the Library of Congress. This allows us to measure intangible assets as they act in a community.

Then Came Blockchain:

We stopped publishing to The Ingenesist Project in 2016 in order to apply TIP innovations to emerging technologies such as Social Media, Blockchain, AI, etc. It appeared that the decentralization of the engineering profession would be an important step in achieving the original goals of sustainable global enterprise. During this time, I also started a small engineering consulting firm called CoEngineers, PLLC that served a traditional local market bringing engineering services to a retail clientele. CoEngineers, PLLC helped pay the bills while also serving as a sandbox for testing and developing TIP Innovations. Our first entry into blockchain was the creation of a token called Quant on the BitShares Blockchain.

SIBOS, NSPE Task Force, and National Association of Insurance Commisioners: Collectively each of these organizations represent the Banking Industry, The Insurance Industry, and the Engineering Profession. TIP published 3 whitepapers that became the basis for the next iteration. It was noted that each of these industries trade an invisible currency called Risk. It was found that TIP methodologies were better described by actuarial math (probabilities) rather than interest laden monetary metrics. This 3-way association became the genesis of the Insurance / Engineering Blockchain Consortium. This was later changed to the Integrated Engineering Blockchain Consortium or IEBC.

IEBC: Over the course of several years, IEBC was the umbrella organization for 150 engineers, scientists, and business persons who advanced the idea of a decentralized engineering network to mesh with the banking and insurance environments. IEBC published numerous seminal documents and spoke at dozens of industry conferences. The two main achievements were to publish a whitepaper with detailed specifications for a blockchain strategy that would accommodate all prior TIP innovations. The IEBC team built a prototype blockchain by cloning an existing successful chain and modifying it to suit MVP demonstration. IEBC ultimately ramped down for lack of funding. But everything we learned is now open for iteration.

Where to re-Start? TIP has always been a place where ideas are formed and implemented either by ourselves or by others. Many TIP Ideas survive to this day in the many hundreds of engineers and scientists who have participated in the conversations, the start-ups, the publications, lectures, and webinars over the last 15-20 years. We can see many past TIP contributors advancing in their careers, businesses, and leadership roles.

There is something that binds people to this network – it has to do with the underlying belief that Makers Of Useful Things are the cause, not the effect, of sound and sustainable economic activity. The flaw of market capitalism has the world operating in a mirror image of the economy that was supposed to happen. The solution is more about perception than it is about revolution.

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