## Archive for April, 2014

### refutations of two Oxford philosophers

Recently I came across two treatises by Oxford philosophers belonging to the transhumanist milieu (e.g. Humanity+, Future of Humanity Institute). Both works are interesting in the incorporation of higher-level scientific and technological arguments into a field that, with the passing of time, increasingly sits in general neglect at the lowest level of thought much below which scientific inquiry and technological progress now take place. Transhumanism, whatever its actual content, at least updates philosophy to be relevant in the modern context.

The works, one by David Pearce on the Hedonistic Imperative and one by Nick Bostrom on the Simulation Argument are quite provocative and engaging to read. They will be briefly summarized and refuted in the sequel.

How many bits of secrecy does a typical person have in memory?

After thinking long and hard, I came to the conclusion that all security ends up being physical security. Currently we assume a person’s body is physically secure, with memory being the most secure part of all. Common security systems, such as passwords, try to extract as much of this secrecy out of us as possible and store it somewhere less secure like on a remote server. This is horrible. I don’t care that it’s stored in hashed form: if we only have a finite amount of secrecy to give, then once we reveal it in a form that can be brute-forced, Moore’s Law will ensure that at some point it will be brute-forced and will no longer be secret.

### latency arbitrage

Michael Lewis has been in the news for his new book, Flash Boys, decrying the problems brought about by a system ill equipped to deal with high frequency trading. The core problem can be stylistically summarized by this picture:

I place an order from the location of the red square to the green and purple exchanges on which trades occur. My communication capability on the gray “public” channel is slower than the communication capability of some competing agent on the blue “private” channel. Therefore, triangle inequality notwithstanding, the competing agent observes my actions at the green exchange and reacts at the purple exchange before my order arrives there. It appears to me exactly like I have been scooped by somebody acting anti-causally, so what happened?
I’m going to take a stab. Without loss of generality I’ll define liquidity availability for buying (selling is analogous), as a unitless function $$L(,s)$$ over transaction amount  and time limit $$s$$. Operationally, it means to take  amount of a tradable asset, convert into number of shares $$N$$ at the current price (assume it exists) and request to transact  using all possible algorithms that complete in $$s$$ seconds and find the one that got the most shares $$N^*$$, then $$L(,s) = N^*/N$$, a number between 0 and about 1 (for most cases). The larger it is, the more liquidity there is at the $$(,s)$$ pair. $$L$$ is monotonically decreasing in  and monotonically increasing in $$s$$.