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!

The EU Human Brain Project Reboots but Supercomputing Still Needed

June 26, 2017

The often contentious, EU-funded Human Brain Project whose initial aim was fixed firmly on full-brain simulation is now in the midst of a reboot targeting a more modest goal – development of informatics tools and data/ Read more…

By John Russell

DoE Launches Chicago Quantum Exchange

June 26, 2017

While many of us were preoccupied with ISC 2017 last week, the launch of the Chicago Quantum Exchange went largely unnoticed. So what is such a thing? It is a Department of Energy sponsored collaboration between the Univ Read more…

By John Russell

UMass Dartmouth Reports on HPC Day 2017 Activities

June 26, 2017

UMass Dartmouth's Center for Scientific Computing & Visualization Research (CSCVR) organized and hosted the third annual "HPC Day 2017" on May 25th. This annual event showcases on-going scientific research in Massach Read more…

By Gaurav Khanna

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “pre-exascale” award), parsed out additional information ab Read more…

By Tiffany Trader

HPE Extreme Performance Solutions

Creating a Roadmap for HPC Innovation at ISC 2017

In an era where technological advancements are driving innovation to every sector, and powering major economic and scientific breakthroughs, high performance computing (HPC) is crucial to tackle the challenges of today and tomorrow. Read more…

Tsinghua Crowned Eight-Time Student Cluster Champions at ISC

June 22, 2017

Always a hard-fought competition, the Student Cluster Competition awards were announced Wednesday, June 21, at the ISC High Performance Conference 2017. Amid whoops and hollers from the crowd, Thomas Sterling presented t Read more…

By Kim McMahon

GPUs, Power9, Figure Prominently in IBM’s Bet on Weather Forecasting

June 22, 2017

IBM jumped into the weather forecasting business roughly a year and a half ago by purchasing The Weather Company. This week at ISC 2017, Big Blue rolled out plans to push deeper into climate science and develop more gran Read more…

By John Russell

Intersect 360 at ISC: HPC Industry at $44B by 2021

June 22, 2017

The care, feeding and sustained growth of the HPC industry increasingly is in the hands of the commercial market sector – in particular, it’s the hyperscale companies and their embrace of AI and deep learning – tha Read more…

By Doug Black

At ISC – Goh on Go: Humans Can’t Scale, the Data-Centric Learning Machine Can

June 22, 2017

I've seen the future this week at ISC, it’s on display in prototype or Powerpoint form, and it’s going to dumbfound you. The future is an AI neural network designed to emulate and compete with the human brain. In thi Read more…

By Doug Black

How ‘Knights Mill’ Gets Its Deep Learning Flops

June 22, 2017

Intel, the subject of much speculation regarding the delayed, rewritten or potentially canceled “Aurora” contract (the Argonne Lab part of the CORAL “ Read more…

By Tiffany Trader

Tsinghua Crowned Eight-Time Student Cluster Champions at ISC

June 22, 2017

Always a hard-fought competition, the Student Cluster Competition awards were announced Wednesday, June 21, at the ISC High Performance Conference 2017. Amid wh Read more…

By Kim McMahon

GPUs, Power9, Figure Prominently in IBM’s Bet on Weather Forecasting

June 22, 2017

IBM jumped into the weather forecasting business roughly a year and a half ago by purchasing The Weather Company. This week at ISC 2017, Big Blue rolled out pla Read more…

By John Russell

Intersect 360 at ISC: HPC Industry at $44B by 2021

June 22, 2017

The care, feeding and sustained growth of the HPC industry increasingly is in the hands of the commercial market sector – in particular, it’s the hyperscale Read more…

By Doug Black

At ISC – Goh on Go: Humans Can’t Scale, the Data-Centric Learning Machine Can

June 22, 2017

I've seen the future this week at ISC, it’s on display in prototype or Powerpoint form, and it’s going to dumbfound you. The future is an AI neural network Read more…

By Doug Black

Cray Brings AI and HPC Together on Flagship Supers

June 20, 2017

Cray took one more step toward the convergence of big data and high performance computing (HPC) today when it announced that it’s adding a full suite of big d Read more…

By Alex Woodie

AMD Charges Back into the Datacenter and HPC Workflows with EPYC Processor

June 20, 2017

AMD is charging back into the enterprise datacenter and select HPC workflows with its new EPYC 7000 processor line, code-named Naples, announced today at a “g Read more…

By John Russell

Hyperion: Deep Learning, AI Helping Drive Healthy HPC Industry Growth

June 20, 2017

To be at the ISC conference in Frankfurt this week is to experience deep immersion in deep learning. Users want to learn about it, vendors want to talk about it Read more…

By Doug Black

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. Just how close real-wo 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 cam Read more…

By John Russell

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 a Read more…

By Tiffany Trader

Google Pulls Back the Covers on Its First Machine Learning Chip

April 6, 2017

This week Google released a report detailing the design and performance characteristics of the Tensor Processing Unit (TPU), its custom ASIC for the inference Read more…

By Tiffany Trader

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

Nvidia Responds to Google TPU Benchmarking

April 10, 2017

Nvidia highlights strengths of its newest GPU silicon in response to Google's report on the performance and energy advantages of its custom tensor processor. Read more…

By Tiffany Trader

Nvidia’s Mammoth Volta GPU Aims High for AI, HPC

May 10, 2017

At Nvidia's GPU Technology Conference (GTC17) in San Jose, Calif., this morning, CEO Jensen Huang announced the company's much-anticipated Volta architecture a Read more…

By Tiffany Trader

Facebook Open Sources Caffe2; Nvidia, Intel Rush to Optimize

April 18, 2017

From its F8 developer conference in San Jose, Calif., today, Facebook announced Caffe2, a new open-source, cross-platform framework for deep learning. Caffe2 is the successor to Caffe, the deep learning framework developed by Berkeley AI Research and community contributors. Read more…

By Tiffany Trader

Leading Solution Providers

MIT Mathematician Spins Up 220,000-Core Google Compute Cluster

April 21, 2017

On Thursday, Google announced that MIT math professor and computational number theorist Andrew V. Sutherland had set a record for the largest Google Compute Engine (GCE) job. Sutherland ran the massive mathematics workload on 220,000 GCE cores using preemptible virtual machine instances. Read more…

By Tiffany Trader

Google Debuts TPU v2 and will Add to Google Cloud

May 25, 2017

Not long after stirring attention in the deep learning/AI community by revealing the details of its Tensor Processing Unit (TPU), Google last week announced the Read more…

By John Russell

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

Russian Researchers Claim First Quantum-Safe Blockchain

May 25, 2017

The Russian Quantum Center today announced it has overcome the threat of quantum cryptography by creating the first quantum-safe blockchain, securing cryptocurrencies like Bitcoin, along with classified government communications and other sensitive digital transfers. Read more…

By Doug Black

Groq This: New AI Chips to Give GPUs a Run for Deep Learning Money

April 24, 2017

CPUs and GPUs, move over. Thanks to recent revelations surrounding Google’s new Tensor Processing Unit (TPU), the computing world appears to be on the cusp of Read more…

By Alex Woodie

DOE Supercomputer Achieves Record 45-Qubit Quantum Simulation

April 13, 2017

In order to simulate larger and larger quantum systems and usher in an age of “quantum supremacy,” researchers are stretching the limits of today’s most advanced supercomputers. Read more…

By Tiffany Trader

Messina Update: The US Path to Exascale in 16 Slides

April 26, 2017

Paul Messina, director of the U.S. Exascale Computing Project, provided a wide-ranging review of ECP’s evolving plans last week at the HPC User Forum. Read more…

By John Russell

Six Exascale PathForward Vendors Selected; DoE Providing $258M

June 15, 2017

The much-anticipated PathForward awards for hardware R&D in support of the Exascale Computing Project were announced today with six vendors selected – AMD Read more…

By John Russell

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