What is Artificial Intelligence
There is currently a lot in the media about Artificial Intelligence (AI), it is being presented as the panacea solution for almost anything!
But what exactly is AI, can we believe the hype, will it make a meaningful difference to our lives, can it be used to improve Trading and what's all this talk of Hallucinations?
Computing Power
Computing power has been increasing rapidly for many years now. The amount of computing power that sits in your mobile phone is huge compared to the recent past. You've probably read that there is more computing power in your phone than the systems used to put Apollo 11 on the moon. Well that's true, but it's actually way more than that. Your phone has more than 5,000 times the processing power of supercomputers built in the late 1980s. It's not uncommon now for desktop PCs and laptops to have billions of transistors on them. Yes, you read that correctly, billions. Who counts them?
But for all these advances in processing power, computers have essentially been getting faster at doing whatever we tell them to do. A human programming a computer defines what function it needs to perform and within what parameters.
Artificial Intelligence
According to the Dictionary AI is defined as:
"the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages"
Which effectively means the simulation of human intelligence processes by machines. This means computers starts to develop human like skills, hence massively multiplying their capability and usefulness leading to more advanced levels of problem solving. There are many disaster depictions of where sentient (self-aware) AI takes over from humans e.g. Skynet in Terminator 2 or Hal in 2001 AD, but let's focus here on the positives of AI to society and human development.
For AI to work, a computer has to learn and it does this through something called a neural network. A neural network is a method in artificial intelligence that teaches computers to process data similar to how the human brain does. It is a type of machine learning process, called deep learning, that uses interconnected nodes or neurons in a layered structure that resemble a brain. Data is fed into the system that enable it to learn. Sometimes a human intervention is also involved, a so called human in the loop, so that the system can also learn from specific human actions.
In complicated systems, let's say a flight control deck on a plane, there is a huge amount of data being collected and calculated by multiple computers to keep the plane in the air, enable it to take off and land, make corrections to keep it on course to the right destination, control the climate for the crew and passengers etc. etc. Some of the data is acted upon by computers through programs but a lot is presented to the pilots, via cockpit displays, for them to act on. That means a human process is required to interpret data and make decisions. If the computers can act more like a human, then in theory a plane could ultimately be pilotless, that's the potential power of AI. OK, a plane is quite an advanced scenario and maybe we'll never be comfortable with a pilotless plane but there are a lot of scenarios where replacing the human decision process could make our lives better. Think of a system that stops customer service issues before they happen, one that can interpret complicated weather patterns to predict the path or storms or the use in screening and early identification of diseases such as cancer.
Is it Hype?
AI has been talked about for many years but only with the recent launches of ChatGPT (in partnership with Microsoft) and Google Bard has it really entered the consumer domain. And now that the media has got hold of it, AI is being presented as a panacea solution for pretty much everything. Which is they way things tend to go in a technology hype cycle (see diagram below). There are sky high expectations for any new technology in the early days, when it's realised these can be met then disillusionment takes hold before the technology settles down and starts producing meaningful results.
AI Hallucinations
Something called AI Hallucinations has also been spreading around the media. A hallucination (occasionally called a delusion) is a response from an AI system that doesn't seem to correspond to its training data i.e. it looks like it has made something up. There have been a few high profile examples of this recently but these are likely to get fewer over time. AI will invoke huge conversations around public trust and this is where the debate will start.
AI and Trading
AI is great at following highly specific scenarios, waiting and being very patient. These are the exact skillsets required by trades but ironically the two things that many humans can't do when they trade. Used well, AI has the potential to improve trading consistency, performance and profitability. Watch this space for future updates on the Inteligex Artificial Intelligence capability.
Take a Look
If you haven't used either ChatGPT or Google Bard then I encourage you to do so. You will see some of AI's current capabilities and limitations. The bottom line here is that going forward AI should affect your everyday life positively, and if it's done well you won't even notice it. Where will it ultimately take us? Nobody knows. But for now it's worth thinking about the words of the genius theoretical physicist Stephen Hawking who said
“Success in creating effective AI, could be the biggest event in the history of our civilization. Or the worst. We just don’t know. So, we cannot know if we will be infinitely helped by AI, or ignored by it and side-lined, or conceivably destroyed by it.”
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