Digital Transformation: Business process re-engineering with digital technologies Technology used to make existing work more efficient, now technology is transforming the work itself Example: single shared item lookup process in blockchain supply chain Productivity gains Capital investment in technology Data centers Blockchain as a Service, Deep Learning nets Skilled work force development Train 1000 software developers Hyperledger, Ethereum, Corda Machine Learning, AI, Deep Learning Scale efficiencies Natural resources, regional strength, large companies Manage global trade supply chain with blockchain/deep learning

1. Zhejiang Strategic Outlook
Hangzhou, June 7, 2018
Slides: http://slideshare.net/LaBlogga
The Future of the Digital Economy
Melanie Swan
Philosophy, Purdue University
melanie@BlockchainStudies.org
早上好

2. 7 Jun 2018
Blockchain 1
Melanie Swan, Technology Theorist
 Founder, Institute for Blockchain Studies
 Philosophy Department, Purdue University,
Indiana, USA
 Singularity University Instructor; Institute for Ethics and
Emerging Technology Affiliate Scholar; EDGE invited
contributor; FQXi Advisor
Traditional Markets Background
Economics and Financial
Theory Leadership
New Economies research group
Source: http://www.melanieswan.com, http://blockchainstudies.org
https://www.facebook.com/groups/NewEconomies

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Blockchain
Agenda
 Digital Economy
 Blockchain Technology
 Deep Learning Algorithms
 Future of the Digital Economy
2

4. 7 Jun 2018
Blockchain
What is the Digital Economy?
 Economy based on digital computing technologies
3
Source: https://www.forbes.com/sites/koshagada/2016/06/16/what-is-the-digital-economy/
 Internet sector
(specifically)
 6% GDP
 Digital computing
technologies
(generally)
 33% GDP

5. 7 Jun 2018
Blockchain
Digital Economy: Consumer
4
Source: https://www.forbes.com/sites/koshagada/2016/06/16/what-is-the-digital-economy/
 $2.9 trillion global market
 Devices 37%
 eCommerce 34%
 Search 17%
 Social Media 12%

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Blockchain
Digital Economy: Enterprise
 $3.86 trillion global IT spend 2018 (Gartner)
 Digital transformation: Blockchain, IoT, AI, Cloud
 $1.3 trillion Digital Transformation Technologies (IDC)
5
Source: https://www.zdnet.com/article/gartner-sees-it-spending-hitting-3-7-trillion-in-2018-led-by-blockchain-ai-iot/,
https://www.idc.com/getdoc.jsp?containerId=prUS43381817
Digital Transformation:
 Business process re-
engineering with digital
technologies
 Technology used to make
existing work more
efficient, now technology is
transforming the work itself
 Example: single shared item
lookup process in blockchain
supply chain

7. 7 Jun 2018
Blockchain
Future of the Digital Economy
6
Digital InfrastructurePhysical Infrastructure
Digital
Networks
• Natural Resources
• Electricity
• Data
• Communications
Intelligent
Networks
Transportation
Networks
• Blockchain
• Deep Learning
Smart Infrastructure
Traditional
Economy
Digital Economy
1700-1970 1970-2015 2015-2050
Phase 1 Phase 2
Now
IntelligenceDigitization

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Blockchain
Longer-term Economic Futures
7
Traditional
Economy
Digital
Economy
CRISPR
Bioprinting
Cellular Therapies
Natural resources
Electricity
Manufacturing
Atoms Bits Cells Energy
Social Networks
Apps
Payments
Now
Biological
Economy
Space
Economy
Phase 1 Phase 2
IntelligenceDigitization
1700-1970 1970-2015 2015-2050 2020-2080 2025-2100
Value
Mining
Settlement
Exploration
Blockchain
Deep Learning

9. 7 Jun 2018
Blockchain
Digital Economy: Development Phases
8
Social Networks
Intelligence
Deep Learning
Blockchain
Phase 1 Phase 2
Digitization
Payments
Apps
Digitizing existing
patterns of
interaction
Orchestrating new
ways of interacting
and doing business
Now

10. 7 Jun 2018
Blockchain
What is Intelligence?
9
Source: https://www.britannica.com/technology/artificial-intelligence
 Intelligence = “whatever we can’t do yet”
 Creeping frontier of Technology
 Achievements are quickly forgotten
Innovation Frontier

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Blockchain
Technological Unemployment
 Challenge: facilitate an orderly transition to
Automation Economy
 Half (47%) of employment is at risk of automation in the next
two decades – Carl Frey, Oxford, 2015
 China leads in industrial robotics (615,000 units 2018e)
10
Source: Swan, M. (2017). Is Technological Unemployment Real? Abundance Economics. In Surviving the Machine Age: Intelligent
Technology and the Transformation of Human Work. Hughes & LaGrandeur, Eds. London: Palgrave Macmillan. 19-33.
https://newint.org/features/2017/11/01/industrial-robots-china

12. 7 Jun 2018
Blockchain
Routine Tasks (physical and cognitive)
outsourced to Machines
11
Source: The Economist (2016) US Population Survey, Federal Reserve Bank of St. Louis,
https://www.ft.com/content/1dbd8c60-0cc6-11e6-ad80-67655613c2d6

13. 7 Jun 2018
Blockchain
Global Robotics Spending: $67 billion 2025e
12
Source: https://www.siemens.com/innovation/en/home/pictures-of-the-future/digitalization-and-software/autonomous-systems-facts-
and-forecasts.html

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Blockchain 13
Top disruptors: Deep Learning & Blockchain
Source: https://www.ipe.com/reports/special-reports/securities-services/securities-services-blockchain-a-beginners-
guide/10014058.article

15. 7 Jun 2018
Blockchain
Job Growth Skills in Demand
1. Robotics/automation/data science/deep learning
2. Blockchain/Bitcoin
14
Source: https://www.computerworld.com/article/3235972/financial-it/blockchains-explosive-growth-pushes-job-
skills-demand-to-no-2-spot.html

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Blockchain
Future of the Digital Economy
15
Deep LearningBlockchain

17. 7 Jun 2018
Blockchain
Agenda
 Digital Economy
 Blockchain Technology
 Deep Learning Algorithms
 Future of the Digital Economy
16

18. 7 Jun 2018
Blockchain
Blockchain
17
Source: http://www.amazon.com/Bitcoin-Blueprint-New-World-Currency/dp/1491920491
 To inspire us to
build this world
Disclaimer: no substantial
cryptocurrency, ICO, or smart
contract ownership or advising
Free educational materials:

19. 7 Jun 2018
Blockchain
internet content.
18
information.
email.
voice.
video.
money.

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Blockchain 19
Conceptual Definition:
Blockchain is a software protocol;
just as SMTP is a protocol for
sending email, blockchain is a
protocol for sending money
Source: http://www.amazon.com/Bitcoin-Blueprint-New-World-Currency/dp/1491920491
What is Blockchain/Distributed Ledger Tech?

21. 7 Jun 2018
Blockchain
Blockchain Technology: What is it?
20
 Blockchain technology is the secure distributed ledger
software that underlies cryptocurrencies like Bitcoin
 “Internet of Money” leapfrog technology; Skype is an app allowing
phone calls via Internet without POTS; Bitcoin is an app allowing
money transfer via Internet without banks; ‘decentralized Paypal’
Internet
(decentralized network)
Blockchain
Bitcoin
Source: http://www.amazon.com/Bitcoin-Blueprint-New-World-Currency/dp/1491920491
Application
Layer
Protocol
Layer
Infrastructure
Layer
SMTP
Email
VoIP
Phone
calls
OSI Protocol Stack:

22. 7 Jun 2018
Blockchain
blockchain.
21
software.
secure cryptographic transfer.
internet.

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Blockchain
killer apps.
22
secure transfer of value, of…
money & securities.
property.
contracts.
identity credentials.

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Blockchain 23
public chains. private chains.
trustless. mined.
p2p software.
trusted. not-mined.
enterprise software.

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Blockchain
sample apps.
24

26. 7 Jun 2018
Blockchain
When to use Blockchain Technology
25
 Blockchain is enterprise
software
 Solid business use case
 How does a decentralized
solution improve over a
centralized one?
 Ideal use case:
 Many parties in the value
chain
 Intensity of information and
monetary exchange
Use Case Example:
Factom: Health insurance
claims billing
• Automated claims
billing, validation,
payment, and settlement
• Multi-party value chain:
patient, service provider,
billing agent, insurance
company, payor,
government, collections
adoption: hype vs. value-creation.

27. 7 Jun 2018
Blockchain 26
financial services.
quantified risk: 2.5 yr payback (securities
clearing 3-days to d-days).

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Blockchain 27
supply chain asset tracking.
 Private views and controlled-use credentials issued to
multiple parties in the value chain using single shared
blockchain

29. 7 Jun 2018
Blockchain
Agenda
 Digital Economy
 Blockchain Technology
 Deep Learning Algorithms
 Future of the Digital Economy
28

30. 7 Jun 2018
Blockchain
 Global Data Volume: 40 EB 2020e
 Scientific, governmental, corporate, and personal
Big Data ≠ Smart Data
Source: http://www.oyster-ims.com/media/resources/dealing-information-growth-dark-data-six-practical-steps/
29
29
Only 42% companies say
they know how to extract
meaningful insights from
the data available to them
(Oxford Economics Workforce 2020)

31. 7 Jun 2018
Blockchain
Big Data requires Deep Learning
30
 Older algorithms cannot keep up with the growth in
data, need new data science methods
Source: http://blog.algorithmia.com/introduction-to-deep-learning-2016

32. 7 Jun 2018
Blockchain
Global AI-specific Spending: $36 billion 2025e
31
Source: https://www.grandviewresearch.com/industry-analysis/artificial-intelligence-ai-market
 Artificial Intelligence market analysis by Technology
 Deep Learning, Machine Learning, Natural Language
Processing, Machine Vision

33. 7 Jun 2018
Blockchain
Broader Computer Science Context
32
Source: Machine Learning Guide, 9. Deep Learning
 Within the Computer Science discipline, in the field of
Artificial Intelligence, Deep Learning is a class of
Machine Learning algorithms, that are in the form of a
Neural Network

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Conceptual Definition:
Deep learning is a computer program that can
identify what something is
Technical Definition:
Deep learning is a class of machine learning
algorithms in the form of a neural network that
uses a cascade of layers (tiers) of processing
units to extract features from data and make
predictive guesses about new data
Source: Swan, M., (2017)., Philosophy of Deep Learning, https://www.slideshare.net/lablogga/deep-learning-explained
What is Deep Learning?

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Blockchain
Deep Learning & AI
 System is “dumb” (i.e. mechanical)
 “Learns” with big data (lots of input examples) and trial-and-error
guesses to adjust weights and bias to identify key features
 Creates a predictive system to identity new examples
 AI argument: big enough data is what makes a
difference (“simple” algorithms run over large data sets)
34
Input: Big Data (e.g.;
many examples)
Method: Trial-and-error
guesses to adjust node weights
Output: system identifies
new examples

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Blockchain
Sample task: is that a Car?
 Create an image recognition system that determines
which features are relevant (at increasingly higher levels
of abstraction) and correctly identifies new examples
35
Source: Jann LeCun, http://www.pamitc.org/cvpr15/files/lecun-20150610-cvpr-keynote.pdf

37. 7 Jun 2018
Blockchain
Supervised and Unsupervised Learning
 Supervised (classify
labeled data)
 Unsupervised (find
patterns in unlabeled
data)
36
Source: https://www.slideshare.net/ThomasDaSilvaPaula/an-introduction-to-machine-learning-and-a-little-bit-of-deep-learning

38. 7 Jun 2018
Blockchain
Early success in Supervised Learning (2011)
 YouTube: user-classified data
perfect for Supervised Learning
37
Source: Google Brain: Le, QV, Dean, Jeff, Ng, Andrew, et al. 2012. Building high-level features using large scale unsupervised
learning. https://arxiv.org/abs/1112.6209

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Blockchain
Machine learning: human threshold
38
Source: Mary Meeker, Internet Trends, 2017, http://www.kpcb.com/internet-trends
 All apps voice-activated and conversational?

40. 7 Jun 2018
Blockchain
2 main kinds of Deep Learning neural nets
39
Source: Yann LeCun, CVPR 2015 keynote (Computer Vision ), "What's wrong with Deep Learning" http://t.co/nPFlPZzMEJ
 Convolutional Neural Nets
 Image recognition
 Convolve: roll up to higher
levels of abstraction in feature
sets
 Recurrent Neural Nets
 Speech, text, audio recognition
 Recur: iterate over sequential
inputs with a memory function
 LSTM (Long Short-Term
Memory) remembers
sequences and avoids
gradient vanishing

41. 7 Jun 2018
Blockchain
3 Key Technical Principles of Deep Learning
40
Reduce combinatoric
dimensionality
Core computational unit
(input-processing-output)
Levers: weights and bias
Squash values into
Sigmoidal S-curve
-Binary values (Y/N, 0/1)
-Probability values (0 to 1)
-Tanh values 9(-1) to 1)
Loss FunctionPerceptron StructureSigmoid Function
“Dumb” system learns by
adjusting parameters and
checking against outcome
Loss function
optimizes efficiency
of solution
Non-linear formulation
as a logistic regression
problem means
greater mathematical
manipulation
What
Why

42. 7 Jun 2018
Blockchain
How does the neural net actually learn?
 System varies the
weights and biases
to see if a better
outcome is obtained
 Repeat until the net
correctly classifies
the data
41
Source: http://neuralnetworksanddeeplearning.com/chap2.html
 Structural system based on cascading layers of
neurons with variable parameters: weight and bias

43. 7 Jun 2018
Blockchain
Backpropagation
 Problem: Inefficient to test the combinatorial
explosion of all possible parameter variations
 Solution: Backpropagation (1986 Nature paper)
 Backpropagation of errors and gradient descent are
an optimization method used to calculate the error
contribution of each neuron after a batch of data is
processed
42
Source: http://neuralnetworksanddeeplearning.com/chap2.html

44. 7 Jun 2018
Blockchain
Agenda
 Digital Economy
 Blockchain Technology
 Deep Learning Algorithms
 Future of the Digital Economy
43

45. 7 Jun 2018
Blockchain
Digital Economy: Development Phases
44
Social Networks
Intelligence
Deep Learning
Blockchain
Phase 1 Phase 2
Digitization
Payments
Apps
Digitizing existing
patterns of
interaction
Orchestrating new
ways of interacting
and doing business
Now

46. 7 Jun 2018
Blockchain
digital economy.
45
intelligence technologies:
blockchain: secure automation.
deep learning: identify objects.

47. 7 Jun 2018
Blockchain
fleet management.
46
secure automated

48. 7 Jun 2018
Blockchain
scale.
47
Source: https://www.illumina.com/science/technology/next-generation-sequencing.html
Population:
7.5 bn people worldwide
big health data.

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Blockchain 48
technological unemployment.
ownership in means of production.
automation economy.

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Blockchain
inclusion.
49
banking & credit.
land registry.
identity.
electricity.
vaccines & medicine.
Source: https://www.unicef.org.au/blog/unicef-in-action/april-2017/photos-vaccines-reach-most-remote-places-earth
Digital health wallet

51. 7 Jun 2018
Blockchain 50
Digital Economy Opportunities for China
 Productivity gains
 Capital investment in technology
 Data centers
 Blockchain as a Service, Deep Learning nets
 Skilled work force development
 Train 1000 software developers
 Hyperledger, Ethereum, Corda
 Machine Learning, AI, Deep Learning
 Scale efficiencies
 Natural resources, regional strength, large companies
 Manage global trade supply chain with
blockchain/deep learning

52. Melanie Swan
Philosophy, Purdue University
melanie@BlockchainStudies.org
謝謝
Zhejiang Strategic Outlook
Hangzhou, June 7, 2018
Slides: http://slideshare.net/LaBlogga
The Future of the Digital Economy