How Algorithms Shape our World


In simple terms, an algorithm is a set of instructions formulated to perform a specific task. The task of an algorithm can be as simple as adding two numbers or it can be something as complex as merging two software together. Undoubtedly, algorithms have the potential more than any human can ever have.   Earlier, it was only humans and nature that were shaping the world, but now it’s the algorithm that has taken the lead. However, before we state any facts, let’s find out how exactly do these algorithms work and what makes them substantial enough to be able to reshape the world.

Let’s say that algorithms are the type of math that computers use to make decisions. The results of a Google search is the most accessible example. It’s apparent that the results are not hand-selected by a human and that there’s some kind of math laying the foundation for it. Smart users are aware that it’s Google’s PageRank algorithm that performs this job. Not many must be aware that, over time these algorithms acquire the sensibility of truth by the simple force of repetition and human exposure. Thus becoming naturalised and strengthening themselves on their own. They insert themselves into reality, and shape it appropriately. Therefore, one must not misunderstand their domain as being confined to a computer screen.

The work of an algorithm can be found in every domain, right from determining search information to the pricing information for sites like Amazon or Flipkart. It’s an algorithm that decides that a book might cost $10, and can also guide it up and down in response to variable demand. If an algorithm goes wrong, a book might end up costing $1.7 million dollars. The striking part here is that many algorithms are no longer concerned with human input. They are designed to interact with other algorithms, making it a reason for the spiked up price of books on Amazon in the first place.

If we talk about speed, there’s are algorithms waiting to answer yes faster than a human can read the question. High Frequency Trading Algorithms (HFTs) have turned out to be best out of all. However, there is a criteria that determines the success or failure of HFTs. First, they have to be brilliant. Second, they need to be responsive to all the other algorithms that are around them. To have a better understanding, let’s have a look at an example. Imagine a million monkeys trying to get a bite from a single banana. In this situation, knowing where the banana is, is not enough. The monkeys that succeed also need to know where the other monkeys are. Thus, third and perhaps foremost is the potential to uncover and act on information just a little faster than others because speed is a weapon in any field. But it’s undoubtedly impossible for humans to imagine the temporal scale at which market algorithms operate. And that’s exactly where they become superior to humans. Algorithms don’t operate on indices like hours, minutes or seconds. HFTs live in a world of milliseconds, microsecond and nanoseconds. To put things according to the human perspective, it takes 500,000 microseconds for a human to click a mouse. On the contrary, HFT can process and act on more information in that single interval than a human is capable of reading, their entire life.

The science historian George Dyson brings to notice that computers have a series of operations that they are seeking to complete as rapidly as possible, within any borderline of regulated speed. Where humans are still constrained by mouse clicks of 500,000 microseconds, any algorithm can get information three microseconds quicker and can have enormous market advantages. Data travels over pipes, in existing fiber composites which is about 800 million kilometers per hour. That’s fast enough for anything a human can possibly imagine. HFTs have to consider the distribution of the network. This is scarcely detectable to human senses. For humans, the internet is everywhere – or at least wherever we hang out – and within the landscape of networked architecture, it is more or less evenly distributed. The internet has the capability to compress the distance to zero. We can make a skype call to any part of the world. This is the story of our networked world.

The cables distribute all of us to all of us, concurrently, all the time. However, it isn’t distributed evenly. There is still a huge distance between points A and B. Even if information travels at 800 million kilometers per hour, there are still places that it has to travel to, and there’s still the distance that it takes to get there. All this works like a real nervous system, it has its own connecting points and a central point where it’s easier for all the tiny branches to connect, after crossing deep oceans and tunnels.

This is the real power of an algorithm, math written by human but can no longer be won over by them. It’s the kind of math that is no longer derived from nature, but rather one that rewrites nature.

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