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Will Algorithms Inherit the Earth? It’s Already Begun.

by Dave on August 3, 2011

google_algorithmWhat the heck is an algorithm? It’s a set of rules or instructions set up to help solve problems or make decisions. Today we program algorithms into computers so they can look at large quantities of data, hundreds or even thousands of variables, and make complex decisions in microseconds. That doesn’t sound too scary does it? Just wait…

I recently read several articles on algorithms. Then I saw the video I’ve linked to below. It seems algorithms are everywhere and beginning to control many aspects of our lives. Google uses an algorithm to decide what web pages to show us when we type in search terms. In a recent and interesting article, scholar Nicholas Carr wonders if Google is making us stupid (http://ow.ly/5Q3DT). (It’s not Google, it’s the algorithm.)

The video below talks about the algorithms now being used on the stock market. To verify that information I went to Wikipedia. They have a very interesting page on algorithmic trading (http://ow.ly/5Q3YM). Here’s a couple of quotes from that page:

A special class of algorithmic trading is “high-frequency trading” (HFT), in which computers make elaborate decisions to initiate orders based on information that is received electronically, before human traders are capable of processing the information they observe.”

A third of all EU and US stock trades in 2006 were driven by automatic programs, or algorithms, according to Boston-based financial services industry research and consulting firm Aite Group. As of 2009, HFT firms account for 73% of all US equity trading volume.”

Take a look at this TED video. You’re likely to come away saying “Wow!”
It’s called “Kevin Slavin: How algorithms shape our world”
http://www.youtube.com/watch?v=TDaFwnOiKVE

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