Will HFT Lead to Machine Self-Awareness?
Finance is no longer a field dominated by MBA's. Hacked decades ago by computer scientists, theoretical physicists, and mathematicians specializing in string theory, the market now resembles something more along the lines of a gargantuan cybernetic experiment.
If you think that sounds a little too crazy you simply haven't been paying attention.
Algorithms are quickly proliferating throughout the global financial system—buying and selling at speeds faster than humans can perceive, think, or react. What's more? By machines—high frequency trading (HFT) algorithms to be exact—quickly adapting to their environment and, most importantly, to other machines, which are in turn adapting to them, they are accumulating a basic level of self-awareness through a positive feedback loop. Given the exponential rate of technological advancement—often cited as Moore's Law—there's a strong chance we'll see the watermark of this self-awareness rise to the point where it is indistinguishable from human.
If you do not buy this line of thought, then consider the following: A machine designed to play chess does not merely play without any regard to its competition. On the other hand, every move is a continuous re-evaluation of the opposite player's position, strategy, and particular style. As the game goes on, the machine begins to learn its opponent's tricks and personality, not-to-mention, of course, how they respond to its every move—learning both how to react to its environment and how its environment reacts to it. This is basic self-awareness. Eventually, the machine gets quicker and smarter until human grandmasters of chess, i.e. Gary Kasparov, no longer stand a chance.
Perhaps though, it will not be a single machine or algorithm that gains "true" self-awareness, but machines collectively. As HFT "algos" spread throughout the electronic neural network of our global financial system, the positive feedback loop created by rapid adaptations to their collective influence may just converge into a complex self-organizing intelligence. Sound far-fetched? In all honesty, this is the closest description of how consciousness, self-awareness, or human intelligence emerges from the trillions of interconnected neurons within a brain. Ironically, if such a thing were to occur, it appears the most likely place would not be in some scientific laboratory but, instead, within the same industry that "makes the world go 'round"—that is, the world of money, finance, and banking.
Without a doubt, machines are beginning to reflect more and more an image of what it means to be human. As Norbert Wiener, the founder of cybernetics at MIT, wrote in God and Golem, Inc., "Man makes man in his own image. This seems to be the echo or the prototype of the act of creation, by which God is supposed to have made man in His image. Can something similar occur in...nonliving systems that we call machines?" His definitive answer: "Yes".
It should be pointed out that the subtitle accompanying his farewell to the world, written a year before his death, is appropriately titled, A Comment on Certain Points where Cybernetics Impinges on Religion. Yes, that's right, religion. As a well recognized genius and scientific expert felt it necessary to warn the world of not only the physical dangers of technology to which he was well accustomed, but also the philosophical and religious, I take my cues from such a great and highly awarded individual by presenting to you an extension of his reasoning as follows:
Step 1: God creates man in His own image
Step 2: Man becomes self-aware
Step 3: Man rebels against God
Step 4: Man creates machine in his own image
Step 5: Machine becomes self-aware
Step 6: Machine rebels against man
Just a little food for thought.
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