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Now I am reading The Universal History of Computing, an extremely complete and detailed account of every single computing advance in history. It is so complete that it starts with numbering systems, and the invention(!) of the number zero. Where would computers be without the zero?

ENIAC was short for Electronic Numerical Integrator and Computer, and it was designed in 1943 and completed in 1945. That was just 65 years ago. It was the first real computer because it was completely electronic, general-purpose, and analytical.

This thing was huge, as you can probably imagine. Much bigger than the computer (or mobile device!) that you are reading this on. In fact, it took up a space 18 ft. by 36 ft. So you needed a huge room just to put it in. Besides that, it weighed 27 tons!

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I wrote a post yesterday on the failure of wealth redistribution. Money ends up finding it’s way to the same hands.

But, wealth-building technology has a much better chance of succeeding if it finds its way to regular investors. We have reason to hope this will happen. With the amazing computing power available, it’s just a matter of time before the types of technology that drive hedge funds and private equity funds is available to self-directed investors.

Where’s the source of our optimism?

It relies a lot on our own experimentation, but the bulk of this expectation lies in the path of technological process and Moore’s law. It’s something we’ll explore in depth in our forthcoming eBook, the Wealth Singularity, but here’s an overview.

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Everyone knows that computers are getting cheaper and faster all the time. The Intel Core i7 Extreme 965EE has been clocked at 76,000 MIPS (million instructions per second) according to Wikipedia. When the home computer appeared in the form of the Apple II and Commodore 64 in 1982, they were running around 1 MIPS. The Apple II ran at 0.7 MIPS, to be exact.

So, that means between 1982 and 2008  computers went from 0.7 MIPS to 76,000 MIPS. Besides that, the price of computers has plummeted, when evaluated in real terms. In 26 years we have seen an increase of about 500,000 times. This translates to an increase of 66% per year on average.

But computers are actually getting faster more quickly than ever before. They are doubling in computing power every year now. That means that in 3 years we will have a computer ten times as powerful.

What does that mean for Automated Trading?

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According to this recent article, researchers have started to overcome the last challenge to unlimited Artificial Intelligence. They succeded in creating a very simple robot and use an evolutionary algorithm so that the robot can learn to walk (or jump, as the case may be) just like a human child learns. But then they added a little bit of magic:

MacLeod’s team took this idea a step further, however, and developed an incremental evolutionary algorithm (IEA) capable of adding new parts to its robot brain over time.

What this means is that when the robot’s performance and learning has stopped, then another system takes over and modifies the robot’s brain. This is an incredibly powerful and promising approach, and the challenge in the past has been limited computing power. The reason is that you need an exponentially faster processor to carry out this brain modification functionality.

Fortunately for us, accelerating technology will remove this challenge. Right now computer power is doubling approximately every year. The result is that in just three or four years we can buy a computer 10 times as powerful for the same money. The really exciting part is that it will make it possible to create artificial intelligence of unlimited power.

The researchers are working on creating a simple robot that moves along the tabletop. However, they will be able to apply the systems that control brain modification to all future robots that they create. It’s only a matter of time before this technology is applied to a more complex system such as vision recognition or stock trading. This will create a system that actually works better than the human counterpart.

Many of these ideas may sound silly today, but just 20 years ago our current level of technology could be imagined by only a few people. Anyone who is aware of the power of accelerating technology can visualize Artificial Intelligence systems that are more powerful and work much better than their human counterparts.

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