The Algorithms That Shape the World

By Tiffany Trader

October 14, 2013

In this provocative talk from TEDGlobal, MIT Media Lab professor Kevin Slavin paints a picture of a world that is increasingly being shaped by algorithms. Slavin explores how these complex computer programs evolved from their espionage roots to become the dominant mechanism for financial services. But as the 2008 financial crash exemplified, allowing algorithms to replace human-based decision-making can have unintended and even dire consequences.

Slavin’s tale is one of contemporary math, not just financial math. He calls on the audience to rethink the role of math as it transitions from being something that we extract and derive from the world to something that actually starts to shape it. Consider that there are some 2,000 physicists working on Wall Street. Algorithmic trading evolved in part because institutional traders needed to move a million shares of something through the market, so they sought to find a way to break up that big thing into a million little transactions, and they use algorithms to do this.

“The magic and the horror of that,” says Slavin, “is that the same math that is used to break up the big thing into a million little things can be used to find a million little things and sew them back together to figure out what’s actually happening in the market.”

The less mathematically-inclined can imaging this scenario as a bunch of algorithms that are programmed to hide and a bunch of algorithms that are programmed to go find them and act. “This represents 70 of the United States stock market, 70 percent of the operating system formerly known as your pension, your mortgage,” says Slavin, drawing pained chuckles from the audience.

What could go wrong?

What could go wrong is that on May 6, 2010, 9 percent of the stock market disappeared in five minutes. This was the flash crash of 2:45, and it was the biggest one-day point decline in the history of the stock market. To this day, no one can agree on what caused this to occur. No one ordered it. They just saw the results of something they did not ask for.

“We’re writing these things that we can no longer read…and we’ve lost the sense of what’s actually happening in this world that we’ve made,” cautions Slavin.

When trying to make sense of uncharted territory, or new environs, scientists will start with a name and description of the new thing or place. A company called Nanex has begun this work for the 21st century stock market. It’s identified some of these algorithms and given them names like the Knife, Twilight, the Carnival, and the Boston Shuffler.

These kinds of algorithms aren’t just operating in the stock market, they are being used to set prices in online marketplaces, like eBay and Amazon. Algorithms locked in loops without human supervision caused a hundred dollar book about fly genetics to climb to $23.6 million (plus shipping and handling) on Amazon.

Netflix is using algorithms, like “pragmatic chaos,” to power its recommendation algorithms. This particular code was responsible for 60 percent of movies rented. Another company uses “story algorithms” to predict which kinds of movies will be successful before they are written. Slavin terms this process as the physics of culture.

Algorithms are even affecting architecture. There is a new style of elevator called destination control elevators that employ a bin-packing algorithm to optimize elevator traffic. The buttons for these systems are pressed before stepping onto the platform. The initial data show that people are not comfortable riding in an elevator where the only internal button option is “stop.”

Algorithmic trading, aka high-frequency trading, is also responsible for the repurposing of building space near major financial centers, where algorithms have become VIP tenants. The big traders want to be as close to the action as possible because in high-frequency trading milliseconds matter. Buildings near the stock exchange – like the Carrier Hotel in Manhattan – are being hallowed out to make room for datacenters.

Telecommunications provider Spread Networks dynamited through mountains to create a 825 mile trench in order to run a fiber-optic cable between Chicago and New York City to be able to traffic one signal nearly 40 times faster than the click of a mouse. Spread’s flagship Ultra Low Latency Chicago-New York Dark Fiber service is now operating with a roundtrip latency of 12.98 milliseconds.

“When you think about this, that we’re running through the United States with dynamite and rock saws so that an algorithm can close the deal 3 microseconds faster all for a communications framework that no human will ever know, that’s a kind of manifest destiny – and we’ll always look for a new frontier,” observes Slavin.

The acceleration and automation go hand and hand, but there is danger in making decisions solely based on computational insight. When an algorithm on Amazon goes out of bounds, it leads to a humorous tale about an overpriced biology text book, but when the market crashes, lives are affected around the world. The flash crash could have served as a warning, but little has changed since that time. The vast majority of stock trades are executed in less than a half a millionth of a second – more than a million times faster than the human mind can make a decision.

As Slavin says: “It’s a bright future if you’re an algorithm.”

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industy updates delivered to you every week!

Scalable Informatics Ceases Operations

March 23, 2017

On the same day we reported on the uncertain future for HPC compiler company PathScale, we are sad to learn that another HPC vendor, Scalable Informatics, is closing its doors. Read more…

By Tiffany Trader

‘Strategies in Biomedical Data Science’ Advances IT-Research Synergies

March 23, 2017

“Strategies in Biomedical Data Science: Driving Force for Innovation” by Jay A. Etchings is both an introductory text and a field guide for anyone working with biomedical data. Read more…

By Tiffany Trader

HPC Compiler Company PathScale Seeks Life Raft

March 23, 2017

HPCwire has learned that HPC compiler company PathScale has fallen on difficult times and is asking the community for help or actively seeking a buyer for its assets. Read more…

By Tiffany Trader

Google Launches New Machine Learning Journal

March 22, 2017

On Monday, Google announced plans to launch a new peer review journal and “ecosystem” Read more…

By John Russell

HPE Extreme Performance Solutions

HFT Firms Turn to Co-Location to Gain Competitive Advantage

High-frequency trading (HFT) is a high-speed, high-stakes world where every millisecond matters. Finding ways to execute trades faster than the competition translates directly to greater revenue for firms, brokerages, and exchanges. Read more…

Swiss Researchers Peer Inside Chips with Improved X-Ray Imaging

March 22, 2017

Peering inside semiconductor chips using x-ray imaging isn’t new, but the technique hasn’t been especially good or easy to accomplish. Read more…

By John Russell

LANL Simulation Shows Massive Black Holes Break ‘Speed Limit’

March 21, 2017

A new computer simulation based on codes developed at Los Alamos National Laboratory (LANL) is shedding light on how supermassive black holes could have formed in the early universe contrary to most prior models which impose a limit on how fast these massive ‘objects’ can form. Read more…

Quantum Bits: D-Wave and VW; Google Quantum Lab; IBM Expands Access

March 21, 2017

For a technology that’s usually characterized as far off and in a distant galaxy, quantum computing has been steadily picking up steam. Read more…

By John Russell

Intel Ships Drives Based on 3D XPoint Non-volatile Memory

March 20, 2017

Intel Corp. has begun shipping new storage drives based on its 3D XPoint non-volatile memory technology as it targets data-driven workloads. Intel’s new Optane solid-state drives, designated P4800X, seek to combine the attributes of memory and storage in the same device. Read more…

By George Leopold

HPC Compiler Company PathScale Seeks Life Raft

March 23, 2017

HPCwire has learned that HPC compiler company PathScale has fallen on difficult times and is asking the community for help or actively seeking a buyer for its assets. Read more…

By Tiffany Trader

Quantum Bits: D-Wave and VW; Google Quantum Lab; IBM Expands Access

March 21, 2017

For a technology that’s usually characterized as far off and in a distant galaxy, quantum computing has been steadily picking up steam. Read more…

By John Russell

Trump Budget Targets NIH, DOE, and EPA; No Mention of NSF

March 16, 2017

President Trump’s proposed U.S. fiscal 2018 budget issued today sharply cuts science spending while bolstering military spending as he promised during the campaign. Read more…

By John Russell

CPU-based Visualization Positions for Exascale Supercomputing

March 16, 2017

In this contributed perspective piece, Intel’s Jim Jeffers makes the case that CPU-based visualization is now widely adopted and as such is no longer a contrarian view, but is rather an exascale requirement. Read more…

By Jim Jeffers, Principal Engineer and Engineering Leader, Intel

US Supercomputing Leaders Tackle the China Question

March 15, 2017

Joint DOE-NSA report responds to the increased global pressures impacting the competitiveness of U.S. supercomputing. Read more…

By Tiffany Trader

New Japanese Supercomputing Project Targets Exascale

March 14, 2017

Another Japanese supercomputing project was revealed this week, this one from emerging supercomputer maker, ExaScaler Inc., and Keio University. The partners are working on an original supercomputer design with exascale aspirations. Read more…

By Tiffany Trader

Nvidia Debuts HGX-1 for Cloud; Announces Fujitsu AI Deal

March 9, 2017

On Monday Nvidia announced a major deal with Fujitsu to help build an AI supercomputer for RIKEN using 24 DGX-1 servers. Read more…

By John Russell

HPC4Mfg Advances State-of-the-Art for American Manufacturing

March 9, 2017

Last Friday (March 3, 2017), the High Performance Computing for Manufacturing (HPC4Mfg) program held an industry engagement day workshop in San Diego, bringing together members of the US manufacturing community, national laboratories and universities to discuss the role of high-performance computing as an innovation engine for American manufacturing. Read more…

By Tiffany Trader

For IBM/OpenPOWER: Success in 2017 = (Volume) Sales

January 11, 2017

To a large degree IBM and the OpenPOWER Foundation have done what they said they would – assembling a substantial and growing ecosystem and bringing Power-based products to market, all in about three years. Read more…

By John Russell

TSUBAME3.0 Points to Future HPE Pascal-NVLink-OPA Server

February 17, 2017

Since our initial coverage of the TSUBAME3.0 supercomputer yesterday, more details have come to light on this innovative project. Of particular interest is a new board design for NVLink-equipped Pascal P100 GPUs that will create another entrant to the space currently occupied by Nvidia's DGX-1 system, IBM's "Minsky" platform and the Supermicro SuperServer (1028GQ-TXR). Read more…

By Tiffany Trader

Tokyo Tech’s TSUBAME3.0 Will Be First HPE-SGI Super

February 16, 2017

In a press event Friday afternoon local time in Japan, Tokyo Institute of Technology (Tokyo Tech) announced its plans for the TSUBAME3.0 supercomputer, which will be Japan’s “fastest AI supercomputer,” Read more…

By Tiffany Trader

IBM Wants to be “Red Hat” of Deep Learning

January 26, 2017

IBM today announced the addition of TensorFlow and Chainer deep learning frameworks to its PowerAI suite of deep learning tools, which already includes popular offerings such as Caffe, Theano, and Torch. Read more…

By John Russell

Lighting up Aurora: Behind the Scenes at the Creation of the DOE’s Upcoming 200 Petaflops Supercomputer

December 1, 2016

In April 2015, U.S. Department of Energy Undersecretary Franklin Orr announced that Intel would be the prime contractor for Aurora: Read more…

By Jan Rowell

Is Liquid Cooling Ready to Go Mainstream?

February 13, 2017

Lost in the frenzy of SC16 was a substantial rise in the number of vendors showing server oriented liquid cooling technologies. Three decades ago liquid cooling was pretty much the exclusive realm of the Cray-2 and IBM mainframe class products. That’s changing. We are now seeing an emergence of x86 class server products with exotic plumbing technology ranging from Direct-to-Chip to servers and storage completely immersed in a dielectric fluid. Read more…

By Steve Campbell

Enlisting Deep Learning in the War on Cancer

December 7, 2016

Sometime in Q2 2017 the first ‘results’ of the Joint Design of Advanced Computing Solutions for Cancer (JDACS4C) will become publicly available according to Rick Stevens. He leads one of three JDACS4C pilot projects pressing deep learning (DL) into service in the War on Cancer. Read more…

By John Russell

BioTeam’s Berman Charts 2017 HPC Trends in Life Sciences

January 4, 2017

Twenty years ago high performance computing was nearly absent from life sciences. Today it’s used throughout life sciences and biomedical research. Genomics and the data deluge from modern lab instruments are the main drivers, but so is the longer-term desire to perform predictive simulation in support of Precision Medicine (PM). There’s even a specialized life sciences supercomputer, ‘Anton’ from D.E. Shaw Research, and the Pittsburgh Supercomputing Center is standing up its second Anton 2 and actively soliciting project proposals. There’s a lot going on. Read more…

By John Russell

Leading Solution Providers

HPC Startup Advances Auto-Parallelization’s Promise

January 23, 2017

The shift from single core to multicore hardware has made finding parallelism in codes more important than ever, but that hasn’t made the task of parallel programming any easier. Read more…

By Tiffany Trader

HPC Technique Propels Deep Learning at Scale

February 21, 2017

Researchers from Baidu’s Silicon Valley AI Lab (SVAIL) have adapted a well-known HPC communication technique to boost the speed and scale of their neural network training and now they are sharing their implementation with the larger deep learning community. Read more…

By Tiffany Trader

CPU Benchmarking: Haswell Versus POWER8

June 2, 2015

With OpenPOWER activity ramping up and IBM’s prominent role in the upcoming DOE machines Summit and Sierra, it’s a good time to look at how the IBM POWER CPU stacks up against the x86 Xeon Haswell CPU from Intel. Read more…

By Tiffany Trader

Trump Budget Targets NIH, DOE, and EPA; No Mention of NSF

March 16, 2017

President Trump’s proposed U.S. fiscal 2018 budget issued today sharply cuts science spending while bolstering military spending as he promised during the campaign. Read more…

By John Russell

IDG to Be Bought by Chinese Investors; IDC to Spin Out HPC Group

January 19, 2017

US-based publishing and investment firm International Data Group, Inc. (IDG) will be acquired by a pair of Chinese investors, China Oceanwide Holdings Group Co., Ltd. Read more…

By Tiffany Trader

US Supercomputing Leaders Tackle the China Question

March 15, 2017

Joint DOE-NSA report responds to the increased global pressures impacting the competitiveness of U.S. supercomputing. Read more…

By Tiffany Trader

Quantum Bits: D-Wave and VW; Google Quantum Lab; IBM Expands Access

March 21, 2017

For a technology that’s usually characterized as far off and in a distant galaxy, quantum computing has been steadily picking up steam. Read more…

By John Russell

Intel and Trump Announce $7B for Fab 42 Targeting 7nm

February 8, 2017

In what may be an attempt by President Trump to reset his turbulent relationship with the high tech industry, he and Intel CEO Brian Krzanich today announced plans to invest more than $7 billion to complete Fab 42. Read more…

By John Russell

  • arrow
  • Click Here for More Headlines
  • arrow
Share This