How Blockchain Revolution is Going to Make Global Economy More Fair: Federico Pistono
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Federico Pistono is a charismatic writer, entrepreneur, researcher, angel investor, TV presenter and public speaker who routinely tours around the world, lecturing on exponential technologies and their economic impact on society.
In 2012 Pistono wrote the book “Robots Will Steal Your Job, But That’s OK: How to Survive the Economic Collapse and be Happy,” which became an international success. Recently he published another book, Startup Zero, to help his compatriots Italians get a better understanding of the startup culture.
In addition, Federico has more than a decade of professional experience in different fields that vary from IT Management and human machine interaction to screenwriting and directing.
We speak with Federico Pistono about his views on how Blockchain could really change the current global economic model that is unfair, how close we came to the AI ruling the world, and how could we find our place in the emerging paradigm.
CG: How did you get involved in the fintech industry?
FP: Computers always fascinated me, and systems in general and just learning new things.I have a background in mathematics and computer science, so that was double spending and operating research, data structures, algorithms. Those were things that really interested me at the mathematical level. To then think that those principles could be applied for social change, it was kind of a love at first sight of blending these things together.
I started programming when I was 12 or 13 and got into Blockchain around 2011 when I read the Bitcoin whitepaper written by Satoshi. At the time, I was very interested in the Byzantine general’s problem.
Then I was one of the first people to get into Ethereum and from then on it just grew more and more. Now I am leading the Blockchain theme at Hyperloop Transportation Technologies, which is this new tech that’s essentially a supersonic speed travel on a train.
So you have an evacuated tube, you got a tube you suck out the air, you put a capsule inside with about 30 people, and then you have got magnetic levitation-passive magnetic levitation, it’s called Indutrack. And you can just move this thing at super high speed- supersonic so more than 1,200 km/h.
CG: What would you say about the relationship between AI and Blockchain?
FP: Regarding AI and Blockchain, I would say one of the biggest issues probably is how we decide to structure the algorithm and the incentive mechanisms that we put into the system because, in the end, you get your reward.
AI’s today and probably for the foreseeable future, are not really intelligent in any sort. They perform narrow tasks, and they optimize for specific things that we tell them to do, and so we don’t know really know how to give them the right constraints.
If we just say ‘hey make profit,’ and ‘do this,’ they may find all sorts of ways around to perform that task very well to optimize for that factor.
Now we have a system where there is a huge centralization of power, centralization of capital, centralization of risk, and in particular, the big players are de-risking everything by hedging the risk on the small guys particularly in developing countries.
I think every time that you have a shift in technology or dramatic shift, you have the ability to change things by creating a new incentive structure, by changing the rules of the game. Right now that is that moment that seismic event that can change the incentive structure and the mechanisms underneath.
The Blockchain is a way to do it distributively, securely and I think we can do great things, but they don’t come by themselves we have to actively pursue a specific goal and to agree on how to design these new systems.
CG: Are we ready for above-mentioned inventions or do we have to evolve further?
FP: I think currently we are not ready for this change.
Well, first of all, the technology isn’t ready. We haven’t figured out still so many things about Blockchain systems. We are still in the very very early stage of the protocols and of the mechanisms that we are building.
I mean we don’t know how to scale, we don’t know how to do it securely, we don’t know how to do it fast enough. We really don’t have the game theory behind it; we don’t know how all these things are going to be put together.
We don’t have the social infrastructure and the technological infrastructure.
But it’s a feedback loop – it’s a system of systems, so by interacting with the system by allowing ourselves to make mistakes and to do it faster and faster we create resilience in the network. Where a single entity might die or go bust, the overall network captures some of that value, and then you can increase the value again, again and again.
Hopefully, we can find something that’s not just resilient, but it’s anti-fragile so that by stressing the system it becomes stronger- something like your body.
When you go to the gym, and you do exercise you actually stress your muscles and you break them apart and because you break them apart, they become stronger afterwards – so that’s an anti-fragile system.
We should do that for the economic system, and also for decision-making and everything. Since we know that we are going to make mistakes- we should design a system that gets better as we make more mistakes because we learn from them, instead of just repeating the same shit over and over and not learning from it, which is mostly what has been happening recently.
CG: Tell us about your books…
FP: I wrote a few books. First, one is called Robots Will Steal Your Job, But That’s OK. I wrote it six years ago. Kind of unsuspected time – I was told ‘I was a charlatan, I didn’t have a PhD in economics, I wasn’t a professor from MIT or Oxford, I should just stick to my computer science and not talk about these things, how little do you know.’
Then, two to three years later, professors from MIT and Oxford have written the papers that say exactly the same things with exactly the same numbers, but using different methodologies, so they were kind of validating everything that I was saying.
Thus I went from a charlatan to an oracle. It was kind of weird, but you know, same stuff just has caused different reactions from people.
Then I wrote another book, a fiction book this time called “Tale of Two Futures.” It’s a short sci-fi. It shows two different paths we can take. One where things have taken the decentralized, open source model and a more sensible approach on how to use technology to better society and the other is this hyper-capitalistic narrowly focused, mindless, repetitive work that leads to a dystopian society.
The third book I wrote was a book for Italians about how to build startups because in Italy no one knows how to build startups. Very few people know and the few people who do they leave the country and go elsewhere and they never tell anyone back in town.
Now, they call startups everything, like if a pizzeria were a startup. No that’s not a startup- a startup is something else!
So I wrote this most recent book that’s called Startup Zero.0. To kind of give the idea that we are not even step one we are at step zero, we should get the basics first and understand them. So I have been doing that a lot of that.
I also have a TV show in Italy on national TV it’s called Codice, La vita è digitale, it means Code Life is Digital.
We have had about two or three mln people watching it every week. First, it was just about Blockchain and Bitcoin. We went to BitFury, China, Japan, we interviewed Roger Ver; we had a bunch of people there. I think it was very well done the episode on Blockchain. We did one on IoT, smart cities, the cognitive revolution, artificial intelligence, robotics, synthetic biology, genetic engineering. We are bringing these emerging technologies to the wider audience.
Also I am an angel investor. I invest in about 20 companies so far- mostly in Blockchain but also I am moving to the medical sector, things that I think will help humanity in one way or another. I try to give my contribution in some way. Now I am spending most of my time doing Hyperloop.
CG: What does that mean “Blockchain Revolution?” How will it change the globe?
FP: I think one of the biggest opportunities we have is to use autonomous agents to automate all things that should be automated, particularly in bureaucracy and in how systems interoperate.
There is no reason why I should go ask a person to verify my identity or to stamp something and wait for months for a paper to come back or fax it somewhere, I mean some places still need a fax machine.
A lot of this stuff is because you don’t trust the computer to verify that transaction or that information that is being conveyed. Now the Blockchain can solve that. Not only can it solve it, but it can solve it systematically, securely and for anybody.
Also its censorship resistant – not just the government censoring information but also a company not releasing some of the data that maybe you should own. For example, from all the social networks the only one that gives you the contacts is LinkedIn.
Everyone else doesn’t allow you to export the contacts. They are your contacts! Why shouldn’t you be allowed to have your own contacts and information about them? It’s crazy, but this happens!
Think about all the corruption that happens throughout the world- trillions of dollar worth of value and hundreds of millions of people in distress who can be forced into doing things because they have no legal recourse. The Blockchain can help all these people.
Before it helps the First World, it can help the long tail of the supply chain that’s now being held hostage by the owners of capital who have an unfair advantage in that game.
They can be less efficient than them but still win just because they have access to cheap capital. That is really unfair. All the risk is on these people who have no power, no legal recourse and their lives are miserable because the game is tilted.
The game is unfair. Blockchain can allow for that to change, but we need to actively pursue that goal because it will not come automatically by itself. I think that’s a moral responsibility that we have. I think we have to step up and take that responsibility.