It is no surprise that blockchain technology is managing to be adopted by individuals and businesses from all walks of life. What once had a taboo associated with it is now being viewed as a revolutionary platform to base businesses around. Massachusetts Institute of Technology (MIT) Professor Alex Pentland, has had some very positive things to say about the technology behind the blockchain and what the future holds.
Who is Alex Pentland?
Alex Pentland is an MIT Professor who was recently named one of the most powerful data scientists by Forbes. He is the co-founder of Endor and a founding member of Google’s advisory board. If that was not impressive enough he is also a noted leader and speaker at the World Economic Forum.
Pentland specializes predictive analytics among many other things. Two of his more recent published books include Social Physics and Honest Signals. Social Physics highlights how Pentland is assisting Endor in proven “deep learning techniques” to the “predictive analytics” and cryptocurrency markets. The goal is very simple, to better predict the markets increasing one’s likelihood to be profitable.
What are Predictive Analytics?
Predicting Analytics can be summarized as the ability to foresee what a user’s behavior is likely to entail. This is essential in the business world and the finance world as it allows trends to be monitored in such a way where future pricing can be predicted with a much higher degree of accuracy. The current environment of the business landscape worldwide is a very fast paced and data-driven one. Merchants across the globe are spending billions analyzing and acquiring transaction details to better predict future buying trends. The absolute most beneficial aspect of analyzing the transactional trends is to better anticipate consumer behavior.
The world of cryptocurrency is so new that predictive analytics have yet to be applied the same way they are used in other business realms. This results in a huge opportunity to employ predictive analytic monitoring and begin anticipating future actions of market participants. Many believe one of the reasons cryptocurrency markets are so volatile is because no future predictive methods are being applied on a mass scale. This provides huge opportunities to begin standard predictive analytics to monitor market movements. Alex Pentland and his company Endor believe they have a solution.
Alex Pentland was recently interviewed by Forbes where he was asked a series of questions regarding who he was, what is social physics, what is predictive analytics, how does any of it apply to the blockchain and many more intriguing questions. Unlike most naysayers and doubters, Pentland strongly supported where he thought blockchain technology would go and the ability to better predict future movements of cryptocurrency prices.
Q1. How is Endor using Social Physics, and What is It?
Pentland went on to discuss how Social Physics was the science of using statistics to finds laws or universals in human crowd behavior. By doing so, the behavior of the masses should theoretically become easier and easier to predict. This science is not new as the term was coined in the 1800s with the first implementation being country’s census reports. These census reports tracked migration, population, and especially economic movements. Today the immense amount of data and ability to analyze it efficiently makes it, so that this 200-year old science can be revived.
Q2. What Was the Evolution of Predictive Analytics and What Challenges/Opportunities Persist?
Pentland was quick to highlight that change is one of the most difficult things to deal with in Predictive Analytics. With how quickly human society is evolving, their behaviors, the supply chain, the trade data you collect may not be useful by the time one can analyze it. Social Physics provides insight that regardless of change specific universals and laws will always apply.
Q3. Is the Future Predictable? Does Endor Make this Claim?
Pentland highlighted how all data analytics were attempting predicting the future. Specifically, this is how Walmart stocks up on snow shovels before a storm, or how Amazon gets products to you on the next day. Predictive Analytics demonstrated to these major retailers the need for snow shovels, and buyer’s tendencies, immediately before a storm. It also demonstrated the importance of fast delivery when a consumer is debating a purchase. Financial behavior is much harder to predict because using normal data analytics. This is where Social Physics adds knowledge about statistical regularities in human behavior to improve predictive abilities of the masses. Pentland did not say Endor could “predict the future” but he clearly eluded to Social Physics aiding data analytics in predicting consumer behavior.
Q4. Why did Endor Base Their Next Phase of Tech on the Blockchain?
Endor can easily operate on encrypted data as it is solely looking for patterns. The values are much less necessary. This leads to the perfect ability for Endor to analyze the history of blockchains using predictive methods.
Q5. Please Provide Scenarios Where Blockchain’s Potential for Predictive Analytics is Clear?
The main goal of applying Predicting Analytics to the blockchain according to Pentland, “Is predicting movements of cryptocurrencies. Big movements are usually due to crowd behavior.” The entire population either all gets excited at once or disappointed at once. Endor’s core strength is being able to track the building and dissipating momentum to predict future market moves. Pentland continued on to focus on supply chain logistics, which has been written about previously regarding how the blockchain can benefit the industry. As more and more companies transfer their ledgers to the blockchain; the same companies paying Endor for their predictions currently will maintain paying for blockchain based predictions.
Q6. Discuss How AI and Predictive Analytics Can Assist Financial Traders?
Pentland stated how big investors spend enormous amounts of money solely attempting to predict financial trends. This results in those same investors having higher yielding percentages than the average investor not using any trend predictions. Endor allows the average investor to compete with the institutional money that has been using predictive methods for much longer. Endor is trying to do for predictive analytics, what Google did for information. Accessing information online used to be an expensive ordeal and now is available to the masses at no cost to the user. Endor intends to open the gate to using Predictive Analytics to the small investor while maintaining their larger investor clients.
Q7. Why go the ICO Avenue Instead of The Venture Capital Route?
Pentland mentions how Venture Capitalists have the goal of getting the highest percentage out of the company, returning the most profits in the shortest amount of time. Instead, investors should be focused on building the ecology of the crypto capabilities. Those that believe in the crypto space believe building a healthy ecosystem is in the best interest of the crowd. Holding an ICO allows for investors with small and large amounts to be able to partake in the initial funding.
Q8. How can Blockchain Best Be Harnessed to Serve the Financial Community?
The same huge benefits of blockchain technology that apply to most businesses also apply to the financial community. Pentland mentions how the blockchain can, “allow accurate and reliable records in domains where all stakeholders have different goals and agendas. This includes having good records even when there are fraudsters in the mix.” Secure records and ease of transferability regardless of the honesty of the users is why the blockchain will provide benefits and security to the financial community.
Q9. How do you Define Predictive Behavior?
Pentland highlighted a few unique points. Most human behavior is learned from other humans. This result of peers socializing produces what society would label as fads and trends. When seismic shifts occur, significant amounts of money can be made if one was predicting the shift correctly. Even with the constant state of change of society the field of Predictive Analytics is demonstrated significant potential in retail investment and cryptocurrency. By determining which patterns exist in a volatile market, the market will likely become more predictable. Endor looks to provide the average trader the same market predictability the institutions have access too while giving the cryptocurrency industry an added sense of legitimacy.
Conclusion: Advancing Predictive Analytics in the Crypto Market
Mr. Pentland is one of the most impressive characters in the technology space and the fact that he is releasing his own cryptocurrency to serve as a means to predict the crypto markets is a very good thing. What Endor is trying to do should stabilize cryptocurrency markets while providing an edge to the small trader that has been gobbled up by whales many times over.
Endor and Mr. Pentland are helping blockchain technology advance while incorporating predictive strategies at a previously unforeseen level.
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