Have you been looking for a George Gilder Life After Google review? Well, here you are and this is my personal take on Life After Google by Geroge Gilder.
There are some big ideas expressed in this book. The crux of Mr. Gilder’s argument runs in a few sentences pretty much like this:
The developed world economy is currently dominated by Google’s business model of Big Data. This business model has some inherent weaknesses, it is top-down, centralized, and therefore insecure. Big Data and all it represents may have passed its peak and will eventually be replaced by something he calls the Cryptocosm. The Cryptocosm is a bottom-up model, built on blockchain technology. The Cryptocosm principles are, decentralized peer-to-peer architecture, inherently secure, and in direct opposition to the centralized attributes of Big Data. Cryptocurrencies, which are integral to the Cryptocosm will replace national currencies.
But that isn’t all the book has to offer.
It wanders in many directions, a bit like the random walk hypothesis of the internet surfer which is apparently linked to Google’s algorithms in some mysterious way. Some of these excursions seem to relate in necessary ways and build towards his main argument. Others seem to be interesting digressions.
As a reader, you aren’t told upfront whether the chapter you might be wading through will turn out to be a keystone in a supporting wall or an ornamental feature of the structure the author is building. Or maybe it all profoundly matters and I just wasn’t paying attention.
Newton and the industrial age
Mr. Gilder goes into great length tracing the history of how Google has shaped the now dominant online economy.
He starts in the times of Sir Issac Newton, whose explanations of the mechanics of the physical world of our everyday experiences laid the foundations for the industrial age.
From Newton, he moves on to explain the works of great mathematical minds of the 20th century. How Turing, von Neumann, and others debated the frameworks that enabled computer programming and the information age.
Gilder then explains a number of changes each of which contributed to what the information age has now become.
From the information age to Big Data
He explains how the Google founders saw weaknesses in the dominant advertising model. How they could transform that model from a transaction between the advertiser and the media channel to one that leverages users’ search data to feed them ads that match their individual interests. Powerful, energy-efficient processors and lightning-fast networks enabled the construction of Google’s machines that can analyze and serve the right content with paid advertising to users.
He explains how some of the tenets of information theory have been used to develop AI and machine learning that enable speech recognition, self-driving vehicles, and fabulously profitable hedge funds. How all of these achievements require aggregated data in one place. But also that the processing speed required means we have reached the limits of serial processing and parallel processing has now taken over.
Though we could have taken different directions, the age of Big Data was born.
Characteristics of the Big Data age
The online world that has been shaped primarily by Google is characterized by the following features:
- Big data,
- Machine learning,
- Free searches,
- Free content,
- Personalized ads.
Gilder points out that one of the guiding principles of Google’s business model is that everything should be free to users.
As he explains, what has essentially happened is that the advertising model has been migrated away from TV, radio, and print media onto the online platform. The vision implemented by Google’s founders was that internet users will only be fed content that they want and only be shown ads or sponsored content that is finely tuned to their wants.
This is essentially a new variant of the advertising model. By making everything free the commodity that is scarce, or rather that is competed for is the users’ attention measured in eyeballs and seconds.
The inherent problems of Big Data
But to make this work, Google needs to know about what we the users are doing when we search and click-through on our online journeys.
Google needs to build a replica of the internet and through their algorithms, populate the massive Google data and processing machine with information about where each of us been, what we have been attracted to, what we have clicked on, what we have liked. All this so Google will know what content, ads, and sponsored material to feed to us…. and other scary things we hardly know about ourselves but that is another story.
As is now common knowledge, if you are getting something for free then you are not a client or a customer, you are a user. You, or your attention have become the product that is being packaged and sold to the advertisers.
The Big Data model requires that it is all brought together in one place, i.e. centralized for the algorithms to work their magic. This centralization makes it vulnerable to attack from hackers and other belligerents and hence insecure.
The ascendancy of hacking
We’ve all seen the news stories about computer system hacks where social security numbers, credit card numbers, etc have been stolen in their millions. We have also heard how organizations in the private and public sectors have to continue devoting more and more resources to combatting security breeches and the problem gets worse and worse with no obvious end in sight.
This is one of the fundamental weaknesses of the Big Data model. By bringing all the data together in one place, those with malintent know where to find it.
The gold standard and unit of account
We have to go back to Sir Issac Newton to get this point.
In addition to his revolutionary contributions to science and more lifetime achievements than most nation-states, he was Master of the Royal Mint for the last 28 years of his life. One of his big achievements in this role was to move Britain to the gold standard. This pegged the value of the pound sterling to gold, thereby stabilizing the currency and facilitating international trade which was a key component, along with ruthless military expansionism and attitudes of imperial superiority, etc, in the rise of the British empire.
Currently, no country operates on a gold standard. All currencies either fluctuate in free exchange against other currencies as a function of interest rates and government monetary policies or they peg themselves directly to other stronger currencies.
In either scenario, the value of the currency, in terms of what it can buy in products and services is determined by government fiat, which literally means by order of the government.
The problem of fiat money
Even a little knowledge of history will tell us that governments can’t always be trusted to be honest custodians of their currencies. We see periods of inflation or deflation which effectively mean the transfer of wealth from one group in society to another and all the upheaval that involves.
Right now, in early 2021 huge quantities of liquidity have been injected into the economies of the world by central banks printing money and holding interest rates artificially low. All this is to combat the economic effects of the coronavirus. But an inevitable side effect can only be to store up inflationary pressures that will be felt sooner or later. But that is another story.
Gilder explains well how Bitcoin was developed, what it is, and importantly what it is not. Bitcoin is intrinsically secure due to its decentralized peer-to-peer structure, trustworthy since all transactions are transparent to everyone and scarce because the number of Bitcoins is limited to 21 million.
So Bitcoin shares some of the attributes of gold as a basis for currency except that it has no external unit of measure that can be used to peg it as a unit of account. For this reason, says Gilder, Bitcoin as a currency will ultimately fail.
While there are now many cryptocurrencies, the other big rival with Bitcoin for our attention is Ethereum, which is technically the particular blockchain while Ether is the fuel that runs on the network.
Ethereum is quite different from Bitcoin. While Bitcoin can just record transactions in an ever-expanding ledger, the ledger that runs on the Ethereum network can be programmed to enable conditional transactions, often referred to as smart contracts.
All cryptocurrencies, including Bitcoin and Ethereum, are built on blockchain technology. Gilder explains how many of the core features of blockchain provide solutions to the inherent weaknesses of Big Data and fiat currencies. Blockchain:
- is decentralized and therefore innately secure
- is developed through collaboration in a bottom-up fashion rather than top-down
- is transparent and open by design every node has the full record of all transactions so cannot be falsified and is hence trustworthy
- facilitates direct transactions between end-users eliminating the middlemen
- can function as a store of value and hence as currency
Much about blockchain technology and its proponents have a ring of fanaticism or just anti-government and anti-regulation about it. The book succeeds in explaining and in many ways justifying the fervor of the blockchain community.
Style, and other things
I must admit as I was reading through I wondered why I needed to be led on these lengthy excursions on the development of the computer. And the bits about information theory and Markov’s theorems and Turing machines and all that. Maybe it was necessary for my education but some of these threads while interesting in their own right were either left dangling or not really changed or resolved by the coming demise of the great evils of Big Data.
I often found the writing style to be a bit turgid, condescending, and superior in unnecessary ways. It often feels that he goes into excessive detail to prove a point that as readers we would have already accepted on the basis of less ponderous evidence.
Investing in new trends
I should point out that there is a fundamental premise behind this book, which actually some of the content contradicts.
That premise also lies behind many of the basic assumptions made by the investing public. This is the notion that we can research what is happening in the world, what are the trends in the economy, industry, and social demographics and predict what is going to happen. Predict the hot products and services of tomorrow, who will be the winners, who the losers, which new industries will emerge which old ones will dwindle – and then to invest in the winners.
One of the lessons of Life after Google is that machine learning and AI have already proved then can outwit investors and particularly investors who rely on using company fundamentals to determine the prospects for their share prices.
Machines learning to invest
The book talks about hedge funds that use machine learning to mine databases of stock, currency and commodity prices, news feeds, government data to find and exploit relationships that can predict prices. Even when those relationships don’t make any obvious sense to us mere human beings. The book points out how some of these funds have achieved significant and superior returns even over market downturns.
Gilder concludes, however, that this wealth creaming is not wealth-creating through long-term investment. It is more about short-term exploitation of arbitrage opportunities that adds a tad of liquidity but isn’t the same as nurturing innovation.
Strangely, he doesn’t provide any solution to this problem. Nor is it explained how the new Cryptocosm will undo the wealth-grabbing advantages that machine learning hedge funds currently enjoy. Or at least if he did, I must have missed it.
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Questions and answers
Q. Is Life after Google a good read?
A. Yes. You definitely will be rewarded with a glowing sense that you have successfully waded through a challenging tome penned by a visionary of entrepreneurship. However, the writing style is occasionally condescending and not all the threads of the narrative are brought together. Which left me wondering why I had to read through all of them.
Q. What does Life after Google predict?
A. That technologies and industries built on blockchain technology will rise and eventually overcome the centralized data behemoths and that cryptocurrencies will become the more trusted and secure stores of value and mediums of exchange.
Q. What is the meaning of Cryptocosm?
A. Everybody, whether individuals, companies, public organizations, industries, or economies who use blockchain technology as the foundation for secure and widely trusted transactions, all networked together will form the Cryptocosm.
Single page summary
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