Coursework in the discipline Theory of Organization
Completed by a student of group 33-16, 3rd year of full-time study Pribytkov Stepan Nikolaevich
Non-state educational institution "Moscow International Higher Business School "MIRBIS" (Institute)
Moscow 2005
Introduction
“It may seem strange that in order to make an important decision in strategy, much more willpower is required than in tactics... In tactics, the moment itself carries you away with uncontrollable force... In strategy, where everything proceeds much more slowly, there is much more room for one’s own and others’ doubts , objections, ideas, and therefore also for untimely regrets about the past. And since in strategy you don’t have to see at least half of everything with your own eyes, as in tactics, but only guess and assume, then views can be less stable. As a result, the majority of commanders, where they should have acted, are marking time amid imaginary difficulties and hesitations” 1
“The mere duplication of control centers and elements, inherent in 20th-century engineering, led to an absurdity in design: if an automatic spaceship sent to a distant planet was created according to this principle, that is, duplicating the computers that control it, then, due to the enormous duration of its flight, it would have to be to provide not four or five, but fifty computers, no longer operating according to the laws of “linear logic”, but according to the laws of “democratic voting”. That is, if individual computers ceased to act uniformly and the results of their calculations diverged, then the results that the majority arrived at would be considered correct. The consequence of such “engineering parliamentarism” would be the construction of giants endowed with all the flaws of parliamentary democracy, such as mutually exclusive points of view, projects, plans and actions. An engineer would call the democratic pluralism built into the system its flexibility, which must still have limits. This means, the designers of the 21st century decided, they should have studied biological evolution much earlier, because the billion-year age of its creations is evidence of an optimal engineering strategy. A living organism is governed not according to the principle of “totalitarian centralism” and not according to the principle of “democratic pluralism”, but through a much more sophisticated strategy; greatly simplifying the problem, this strategy can be called a compromise between the concentration and dispersal of regulatory centers.” 2
The problem of centralization and decentralization of power in management structures, in my opinion, was especially exposed in the USSR - the most centralized management of such a huge “colossus” often failed (the results of the work of many substructures were adjusted to the plan, technical breakthroughs were achieved at the expense of the standard of living of the population, many bright minds were expelled from the country, and even more were shot or isolated from society), which ultimately led to the collapse of the organization. Having begun my work with memories of such a dramatic period of our life, I do not set out to convince the reader of the insolvency of centralized structures, or of their inferiority. It's all about the right balance.
1 K. Clausewitz. About war. M.: Gosvoenizdat, 1934. P. 79.
2 S. Lem. Weapon systems of the twenty-first century. M.: Nauka, 1990. pp. 230-231.
Chapter 1. Centralization
Organizations in which top management retains most of the authority necessary to make critical decisions are called CENTRALIZED. DECENTRALIZED ORGANIZATIONS are those organizations in which powers are distributed among lower levels of management. In highly decentralized organizations, middle managers have very large powers in specific areas of activity.
Degree of centralization
In practice, however, there are no completely centralized or decentralized organizations. Such organizations represent only the extreme points of a certain continuum, between which lie all types of structures encountered in practice. The degree of centralization varies from an organization where most (if not all) of the authority needed to make critical decisions remains at the highest level of management, to an organization where most of such rights and authority are delegated to lower levels of management. The difference lies only in the relative degree of delegation of rights and powers. Therefore, any organization can be called centralized or decentralized only in comparison with other organizations or in comparison with itself, but in other periods. For example, IBM has a relatively centralized management structure, but is expanding the use of decentralized structures. In Europe, for example, IBM has divided all its subsidiaries into five economic centers. The heads of these centers are given very broad rights to make decisions that determine the most important economic indicators of the departments.
To understand how centralized a given organization is compared to others, you can determine the following characteristics.
The number of decisions made at lower levels of management. The greater the number of decisions made by lower-level managers, the greater the degree of decentralization.
The importance of decisions made at lower levels. In a decentralized organization, middle and lower level managers can make decisions related to the expenditure of significant material and labor resources or the direction of the organization's activities in a new direction. 3. Consequences of decisions made at lower levels. If lower and middle managers can make decisions that affect more than one function, then the organization appears to be decentralized.
The amount of control over the work of subordinates. In a highly decentralized organization, senior management rarely reviews the day-to-day decisions of the managers under them, based on the assumption that all those decisions are correct. Management's actions are evaluated based on the total results achieved, especially the level of profitability and growth of the organization.
Within the same organization, some departments may be more centralized than others. Store managers and preferred tenants (for example, in the McDonald's restaurant chain) have almost unlimited decision-making power over their personnel and some discretion in choosing the products purchased. At this firm, decisions about the location of new restaurants and stores are made by middle management, while decisions regarding price levels and new product launches are made only by top management. In ordinary hospitals, administrative functions have a high degree of centralization, but the medical staff themselves and, first of all, the attending physicians are almost completely autonomous and independent in their actions. IN
In large universities, the degree to which a teacher has the right to change the content of the course he teaches can vary greatly across departments.
Speaking about one or another degree of centralization or decentralization of an organization, we actually determine the degree to which top management delegates to lower levels of management their authority to make critical decisions in areas such as pricing, product development, marketing and issues related to the efficiency of individual structural units . Even in highly decentralized organizations, top management reserves the right to make decisions on such issues as defining the overall goals and objectives of the organization, strategic planning, formulating firm policies in various areas, collective bargaining agreements with trade unions, and developing the firm's financial and accounting systems. Clearly, it would be foolish to allow the management of any one department to dictate how the organization as a whole should operate. For similar reasons, senior management should retain control over the costs and strategic plans of their critical departments. General Dynamics suffered huge losses due to the fact that, during a major decentralization of the management structure, the authority to resolve these issues was not left to senior management. One of the reasons that Bank of America lost nearly $1 billion in 1986 was because of excessive decentralization of lending decisions. According to one study, “Bank of America is now sharply reducing the number of branches that can provide loans and assigning senior officials at the bank's central branch the responsibility of regularly reviewing their operations.
Although in organizations with highly decentralized structures decision-making authority should be delegated to middle management, the most important decisions in large firms are still made only by employees occupying fairly senior positions at least at the level of department management. This form of decentralization in large firms is called federal decentralization.
Factors determining the degree of centralization
Shortly after World War I, firms such as General Motors and Standard of New Jersey realized the potential problems inherent in functional, centralized structures. Although functional organization and centralized decision-making have proven effective in the past, as these firms expanded their product lines, entered new areas of business, and entered international markets, senior management realized that the number and complexity of decisions they had to make exceeds their capabilities. The management of these firms came to the conclusion that in order to ensure further growth and development of the organization, as well as the effectiveness of decisions made on key issues, it was necessary to delegate some important powers to lower hierarchical levels of management. Thus, these organizations began to move to a decentralized management structure, in which top management remains in charge of deciding issues of long-term planning, distribution of company resources among departments, coordination and evaluation of department activities. Branch managers have been delegated the authority to make decisions in areas directly related to the products and services for which they are responsible.
The number of Ukrainians who today need social assistance is constantly growing. In response to such a challenge, it is the decentralization of social policy that can radically change the quality and quantity of social services.
Power to communities or new rules
Today in Ukraine there are 13 million pensioners, 2.6 million people with disabilities, 2 million Chernobyl survivors, 1.6 million World War II veterans and other segments of the population who depend on social protection and government support.
In accordance with the amendments to the Constitution, the draft of which was prepared by the Cabinet of Ministers of Ukraine, the regions will receive significantly expanded powers in almost all areas - from the housing and communal services system to the healthcare sector.
Now very clear and understandable templates are being formed according to which the distribution of power will be carried out. Each level of management will receive its own powers. Local power will be concentrated at three levels. The smallest is a community (community), the largest is a region. A community can unite a dozen settlements. If there is a regional center, that is, a city of regional significance, and around it there are a dozen small villages, then the community will unite this city and villages. At the community level there will be an elected council (rada), its executive committee and a chairman, who is elected by local residents. In total, there are about 1.5 thousand communities in Ukraine.
The current districts will become large: from 490 districts there will be about 120. Each district will have its own council, which will form an executive committee.
At the regional level, regional councils with executive committees will operate.
The latter will deal with issues within their competence - roads, schools, hospitals, and so on.
They will find “government” at the Regional State Administration
The current regional state administrations will change both their functions and name. But if we want to preserve the state, we need to leave the central authority in the localities. In any state, the executive branch must be represented locally. In France these are prefects, in Poland they are voivodes, in Italy they are commissars. Now there is a discussion about what name to give to the Ukrainian governing bodies.
Local authorities will perform the following main functions:
Supervision of compliance with legislation by local governments; - coordination of territorial executive authorities. (For example, if education is transferred to local government, then the inspection for quality control of education is controlled by the state);
Coordination and implementation of government programs that are implemented using budget money.
In conditions of emergency or martial law - management of all bodies in the territory of the district or region.
In order for local governments to have the opportunity to develop the region, they want to leave much more tax funds locally than they currently do. It is tentatively proposed to leave up to 25% of the tax on personal income, and from 10 to 25% of the tax on corporate profits. It is also good that the unified and land taxes are proposed to be left in place in full.
It is also expected that 100% financial support will be provided for the powers delegated by the state to local governments.
At the same time, local governments will have the opportunity to introduce local taxes, determine their rates and establish benefits. Tax collection will be divided into two parts. There is a general state tax service. And local governments will have their own small structure, which will collect local taxes and fees established by local councils. These are small taxes, which will form part of the local budget.
"Ambulance" - for the community, cancer center - for the region
The powers of local governments and central authorities will be divided in all key areas.
It is proposed to transfer issues of development, maintenance of local infrastructure, landscaping, emergency and primary medical care, the operation of kindergartens and schools, housing and communal services, and passenger transportation to the community level.
The district authorities will manage the transport infrastructure at the district level, issues of secondary medical care, and maintain improvement facilities.
At the regional level, issues of regional roads, transport infrastructure, and specialized medical care will be resolved. For example, in the field of education, funding for preschool and secondary education will remain at the community level. Specialized school education (sports schools, boarding schools) - at the district level. Professional technical education, higher education of the first and second levels of accreditation - in the region. And higher education of the third and fourth levels of accreditation (institutes and universities) will be handled by the state.
In the field of medicine, functions will also be distributed. Prevention, emergency care and primary healthcare remain at the community level. Inpatient medicine is a district. Specialized medicine (oncology centers, cardiac centers) is a field. And the institutions that deal with very complex pathologies are the level of central government.
In terms of infrastructure, responsibility will be distributed as follows: communal infrastructure - city roads, water supply and gas networks - at the community level. Local roads between communities and bridges on these roads are a district. Internal regional infrastructure, with the exception of strategic infrastructure, for example, bridges across the Dnieper, is a region. And trans-Ukrainian highways, for example, the Kyiv-Chop road, are the state.
Law enforcement agencies will remain under the authority of the central government. But within the communities, a security police will be created, which will be fully staffed, financed and managed by the local government of the community. At the district and regional levels there will be no such district police officers or regional police officers.
Departments of the Ministry of Internal Affairs will also work together with the municipal police.
The central government deals with criminal cases. This is a 100% government function.
The security police draw up administrative protocols, deal with minor offenses - someone smokes in the wrong place, someone parks in the wrong place, violates the regime of silence and cleanliness. The police should be doing this, but in fact they are not doing this. There should be no investigative bodies of the municipal police.
Power in the country is in the hands of the people
If decentralization of power is carried out, the upcoming local elections will become a litmus test for the majority of Ukrainians, because over a long period of time people will indeed have a unique chance to get their own representatives in local authorities. Let's put it this way: local elections will allow the “third force” to manifest itself in defending the interests and rights of those who find it most difficult today. First of all, pensioners, war and labor veterans, and disabled people need help today. If these people receive their representatives in local government, then it can be argued that a high-quality update of services for these categories of the population is guaranteed. We, the Party of Pensioners of Ukraine, understand that it is our representatives in local authorities who will become reliable assistants for vulnerable categories of citizens, and therefore we will do everything to ensure that the barrier between officials and ordinary Ukrainians is forever overcome.
Summing up, it becomes obvious that the democratization of power is not a tribute to fashion, not a political situation, but a necessity to increase its effectiveness, one of the ways of which is decentralization. Democratization of power should be carried out, firstly, in the direction of redistribution of powers and resources between the center and local governments in the interests of territorial communities. Now the central government is overloaded with power, while there is very little real power in the localities. Secondly, territorial communities must have the opportunity to prove their ability to take on additional powers and, of course, additional burdens and responsibilities. This is real potential for the initiative of territorial communities and their leaders, one of the main ways to develop our country and improve the well-being of every person. With such an organization of power, when local self-government is not an appendage of the state, but its main and equal partner, the person, his rights and freedoms, health, honor and dignity are truly the highest value and the essence of the activities of all power structures.
Centralization means the concentration of power at the top level of management of the organization.
Purpose of centralization— increasing synergy, improving coordination, preventing errors at lower management levels.
Advantages centralization of management is most fully manifested in solving global, strategic problems.
Flaws centralization of management: reduction in management efficiency; decreased ability to adapt to new working conditions;
Decentralization of management
Decentralization is the transfer or delegation of rights and responsibility for a number of key decisions to lower levels of management.
It facilitates processes, stimulates initiative, more fully reveals the potential capabilities of employees at lower levels of management and increases the efficiency of management and the organization’s adaptability to new conditions. The average worker performs a task with renewed vigor if he is given at least a minimal degree of actual control over the situation.
Decentralization is effective if informed and important decisions are made at the lower levels of the management hierarchy, and these decisions do not require coordination and approval by management. Decentralization of many management functions is inevitable when the structural divisions of an enterprise are territorially isolated (branches, departments of structural divisions) or when specialization is necessary (research institutes, design bureaus, central warehouse with a large volume of loading and unloading work, etc.). The negative aspects of decentralization are emergence, isolation of parts, which often leads to conflicts, weakening of control and unity in action. Decentralization of management has a dangerous tendency to drag the controlled process into anarchy and chaos.
Experienced managers often and justifiably fear losing control over the managed system, while weak ones fear that a competent informal leader will appear who can outshine his boss and undermine his authority. When delegating his executive powers during decentralization or speaking at a general meeting, the manager often cannot answer specific questions from his immediate superiors. For example, what is the turnover of personnel by specialty during the reporting period, how the production process is ensured by machine operators of various profiles, what spare parts are needed, what additional equipment is needed. Competent deputy managers know the answers to these questions very well. Should the manager himself know the answers to these and hundreds of other small production questions?
The problem of choosing between centralization and decentralization is very difficult, because the decision determines all structures of the organization. The following factors influence management decisions:
- size of the organization;
- type of business (entrepreneurship);
- quality of goods;
- degree of division of labor;
- the desire of parts of the organization for independence;
- equity distribution of capital and financial interests;
- organizational culture;
- state policy in the field of demonopolization, taxation, etc.
Management theory gives clear, unambiguous recommendations: the manager must take all organizational and administrative power into his own hands and delegate a significant part of his powers to experienced deputies, specialists in their field. And at the same time, do not interfere with their work with petty supervision or constant monitoring, if they generally successfully fulfill their official duties. And only if there is a clear threat of disruption to the planned work or an obvious discrepancy between the performer and the position held, the manager is obliged to intervene in the work of the lagging structural unit, using full power, even to the point of replacing the performer.
Rarely is such a situation possible when all structural units are working without failures, plans are being carried out, a clear system of material and technical supply has been established, the work of the team is reasonably motivated, and the manager remains without work.
In this case, the leader is a real talent, an excellent organizer. And still, he will not remain idle, since it is necessary to solve long-term, strategic problems, establish new production connections, work on further improvement of the production body, and issues of enterprise development. “Good management is based on the reconciliation of centralization and decentralization,” says General Motors CEO A. Sloan.
The organizational structure must reflect the long-term program and set of main goals of the organization, since achieving goals is the basis of joint activities.
An organizational structure is effective only when it contributes to the achievement of the goals set by the team with minimal expenditure of labor and resources. It is important to note that achieving goals is not only an effective solution to production problems and, as a result, fair wages, but also other methods of motivation: involvement in solving problems, prestige of work and confidence in career growth. The search for an optimal structure for a given time is often accompanied by serious mistakes: exceeding the controllability norms of management employees, an incorrectly chosen management style, attempts to achieve savings by merging structural divisions with similar work profiles (a single office or a united bureau of duplicating equipment, etc.).
Of great importance is the achievement and maintenance of a balance of power in the work team, determined by the basic law: the level of influence of person A on person B is equal to the degree of dependence of person B on person A.
Increasing the manager's power is only possible if employees increase their dependence on the manager. Conversely, increasing the power of subordinates over the manager is possible only if the manager’s dependence on employees increases. If the power of the leader over his subordinates is greater than the power of the subordinates over the leader, the balance of power is upset, problems arise, and conflicts ripen.
The principle of optimization underlies any organizational structure, regardless of the applied optimality criteria and the current system of restrictions.
Liberator. Photo: Kamenev / Wikimedia Commons
Decentralization is not just a nice word. Decentralization is the future. It will bring revolutionary changes in finance, technology, and politics. What is decentralization? Who will she give more power to? Why should you, an individual, be interested in this?
The Merriam-Webster Dictionary defines decentralization as “the process of distributing or dispersing function, power, people, or things from a geographic center or center of power.” Through decentralization, the decision-making process changes from top-down to bottom-up, giving the individual more power to influence the system.
The theory of decentralization of systems, technologies and political structures has been discussed since the French Revolution. The 19th-century French politician Alexis de Tosqueville proposed that the transition from centralized control be seen as a way to prevent the enslavement of citizens and the attack on their freedoms by the bureaucratic state. He believed that those who strive to join forces to create the common good have much to gain through decentralization.
He was right. Today, breakthrough technologies make it possible to create decentralized structures on a global scale, allowing individuals and businesses to bring Torquil's ideas to life. The concept of decentralization often comes up when discussing cryptocurrencies, 3D printing, mesh networks and the sharing economy. How is decentralization used today?
Example one: banks that do not require trust
When we use dollars or euros to make payments, we trust centralized institutions such as the US Federal Reserve or the European Central Bank. We trust that they are pursuing sound monetary policies, regulating emissions, and effectively combating counterfeiting. The problem is that central bankers are not held accountable for poor fund management. For example, Ben Bernanke's notorious assurances from 2006 to early 2008 that there was no threat of a recession or bursting of the housing bubble. We had to find out the hard way that he was wrong. Was he fired or, perhaps, did he resign under public pressure? Nothing like this. He is being hailed as a hero for his trillion-dollar bailout programs, the riskiest monetary policy in US history. When there is a monopoly on a particular product or service, market forces are unable to provide consumers with the best quality product or service. We don't have the freedom to choose our central bank, and so overall welfare falls. The system is built around a narrow circle of those in power who take no risks.
Decentralized currencies like Bitcoin are built on a system where power and risk are distributed. Without trusting any one institution, users are confident that a pre-approved list of rules is followed by everyone. Bitcoin's source code is open, which means thousands of experts can analyze and improve it. If users become disillusioned with the rules or implementation of Bitcoin, they can choose an alternative from a variety of competing cryptocurrencies. The monetary revolution is happening before our eyes: anyone can create their own currency. As these currencies gain popularity, they provide an increasingly viable alternative to central banks, whose very design encourages corruption among those in power.
Example two: expensive intermediaries are not needed
When you use a debit or credit card, your bank partners with a company like Visa or Mastercard, which charges the merchant a fee on each transaction. The usual commission size is 3-4%. Each additional intermediary takes an additional share. The process involves not only the seller and buyer, but the acquiring bank, the payment network and the bank that issued the card. With a peer-to-peer cryptocurrency such as Bitcoin, you may pay a fee to speed up processing, but in any case the transaction is transmitted directly to other participants in the network. The fee is approximately 0.0001 bitcoin, or 2 cents per 1 kilobyte of data. The network doesn’t ask who you are, who you pay for what, or how much you pay.
This wave of decentralization could even affect large merchants such as eBay or Etsy, whose fees are 10% and 3.5% respectively. The services charge this fee to give sellers access to a large base of buyers, and maintain a rating and rating system, the costs of which are included in the price of the product. How can we decentralize this system?
OpenBazaar provides a marketplace that is independent of an expensive centralized service. Instead of logging into a website, users install the OpenBazaar client on their computer and connect directly to other users. OpenBazaar does not charge a commission and does not limit the range of products. Reputation and identification are provided by services like OneName. Disputes are resolved not by employees, as on eBay, but by users participating in the transaction, gaining reputation through fairly resolved conflicts.
Example three: the path to energy independence
In most developed countries, electricity production is centralized. Companies spend billions of dollars on capital expenditures, building and maintaining infrastructure. As technology has advanced, methods for producing and distributing energy have improved. Although the spread of electricity in the 20th century helped lift billions of people out of poverty, centralized energy production comes with environmental and political costs and undesirable externalities. Burning fossil fuels contributes to climate change. 1.3 billion people still lack access to electricity.
A possible solution to the problem is decentralization.
Private energy production can reduce our dependence on centralized electricity grids. Solar panels have become 100 times cheaper per watt over the past 40 years. The total number of operating solar panels in the world is growing exponentially. Companies like SolarCity and SunRun are helping households, businesses and governments generate a significant portion of their own energy. Add in high-capacity batteries (Tesla Powerwall) and you get energy-self-sufficient societies that distribute energy through microgrids. This changes the outdated and unsustainable old model of energy production.
Example four: privacy after Snowden
From the revelations of Edward Snowden it follows that the privacy of private data, including financial data, is violated by the NSA and other secret services. All our data - transactions, calls, emails, SMS - is recorded and stored. Facebook, Google, Twitter and other popular social networks provide us with free services in exchange for data that they sell to advertisers. Authorities, such as the NSA, can obtain our data from companies without our consent. Cryptography will help combat privacy violations.
Gems and Syreno are creating a new type of decentralized social networks - with full encryption and without a centralized database. In the Gems and Syreno networks, advertisers pay for user attention with system tokens. Sharing information between friends is always free, but your attention is valuable to everyone. It is unlikely that the Internet giants will retreat in the near future, and new models need time to break in, but now users can choose a network that protects personal data.
Our financial data is also stored in large centralized databases, which are susceptible to attacks by cybercriminals. When using a credit card online, we provide your name, address, and card number. Attackers find vulnerabilities in data storage systems and steal this information. For example, at the end of 2013, the online retailer Target suffered from cyber attacks: this affected up to 110 million customers.
Financial systems without a central database are not as attractive to hackers: the risk is reduced. Decentralized systems such as Bitcoin do not require first-party data. To further protect your data, you can use special wallets (Samourai wallet), mixers, VPNs - this will not allow you to associate the IP address with the transaction.
Example five: print independence
Industrial production is a centralized process. Companies invest large sums in equipment and protect their investments by registering intellectual property rights to their designs. Patent laws can hinder innovation that would be enhanced if ideas were in the public domain. Trying to combat intellectual stagnation, Tesla published all of its patents, allowing independent engineers to use their work.
Open source CAD files and 3D printing are transforming the manufacturing of physical objects, from bridges to clothing and perhaps even organs. With a 3D printer and the necessary materials, anyone can download a CAD file and print anything. 3D printing decentralizes production: a private user can not only design a product, but also print it at home. If he uploads the original file to the torrent network, the data can be considered securely stored.
The ability to assemble complex devices from printed parts could weaken government control over guns. Thus, Defense Distributed has already released a working prototype of the 3D-printed pistol “The Liberator.” The US State Department has demanded that the project files be “removed from the Internet,” but such demands are no more effective than alcohol prohibition in the 1920s or the War on Drugs. Improving the manufacturing process will give rise to even more innovative businesses that change the way we balance freedom and security.
From the article you will learn:
Good day, dear friends. Today there are practically no people who do not know about cryptocurrencies. But it’s not even the digital assets themselves that are of particular importance, but the technology they popularize – blockchain.
Best broker
Blockchain itself is the epitome of decentralization and the possible financial revolution that is already approaching. Without a doubt, this technology has very serious potential, and in the future it will certainly show its best side.
Yes, so far everything is happening at the test level, but let’s make allowances for the fact that blockchain is a very young technology. The principle of decentralization, which is embedded in it, can change not only the financial sphere, but also our entire life in general.
In 2017, there was a lot of talk about blockchain and the principle of decentralization, but in 2018 there were significantly fewer of them. The cost of many cryptocurrencies continued to actively decline, and the voices of many supporters of digital assets gradually began to subside. Given such a large-scale information lull, one might think that the technology itself had lost its former glory.
The picture was aggravated by the fact that the governments of many countries spoke extremely negatively against cryptocurrencies, and various forums were full of themes that cryptocurrencies are a universal evil and a fraud on a large scale. The opinion began to spread that against the backdrop of all this chaos reigning in this area, blockchain technology began to lose relevance. If you share this opinion, then you are probably extremely far from the truth.
Now we will try to figure it out with you and find evidence that the principle of decentralization is alive and continues to improve. We will not go into philosophical speculation and reasoning, but will simply resort to consideration of dry facts. And, as you know, you can’t argue with facts.
MACHINES WILL BECOME INTELLIGENT
From the very beginnings of the global industrial revolution, people created machines, subsequently completely controlling their operation. Over time, machines have become full partners for humans, helping them solve a bunch of important issues. There are many things now in which machines are superior to us. Elementary, in order to calculate something, we resort to the help of a calculator. If something needs to be translated, we turn to online translators. And a great many such examples can be given. The fact remains that machines have become integral companions in human activity, making it easier for him to solve certain problems.
However, artificial intelligence technologies that excite our consciousness so much today can only be considered the tip of the iceberg. Now there are many organizations that themselves are developing platforms that operate on the basis of artificial intelligence. But the real breakthrough will come when organizations start to come together and create AI-powered platforms that are more technologically advanced when they come together in groups. This will become a global and perfect mechanism that will change our lives forever.
Let's look at absolutely real examples. Now many large banks already have platforms built on the basis of AI, and they help identify the likelihood of fraud in certain payments. Each bank develops its own model based on its own statistical data. Such banks can repel fraudsters more quickly and efficiently, and this is their main competitive advantage.
VIDEO
But despite this, fraudulent activities with various payments remain a problem in the modern financial model. But, let's be honest, any bank first of all strives to lobby for its own goals. The benefit for the bank is much more important than the benefit it can bring to society.
It is now very unlikely that banks around the world will create their own conglomerate, within which a single perfect AI model will be developed that prevents fraud. Banks, one way or another, compete with each other, and it is unlikely that they will form an alliance in the foreseeable future. If this does not happen, then the problems of fraud will remain open.
It is very interesting that within the framework of such a trend, the principle of decentralization will allow all financial structures not only to maintain their economic value, but also to bring significant benefits to society. How can this work? In theory, banks could create a single AI model that would be stored on the blockchain.
Any participant can freely obtain the latest copy of the model from the blockchain, train it according to his own principles, and place it back into the blockchain, confirming the fact that the training has taken place.
If the network recognizes that training has had a positive impact on the performance of the model, then this will automatically spread to other participants, which will maintain the high efficiency of the system and its constant modernization.
As an incentive, a participant who successfully trains the system can receive additional rewards in the form of tokens that will be generally accepted within the network. Thus, the model will be constantly improved, and each individual participant will be able to maintain the economic value of their own data, thereby acting in favor of both themselves and society as a whole.
MACHINES WILL START COMMUNICATING
A striking example here is self-driving cars, which is already becoming a kind of trend. If machines are self-driving, then they need a way in which they can communicate.
Direct and seamless communication simply cannot be achieved through centralized systems. The fact is that if at least one element of the centralized network fails, the entire system may collapse. If we talk specifically about cars, then such problems can provoke numerous accidents. If machines can communicate with each other, then depending on centralized networks can have certain dangers.
With the advent of self-driving cars, new economic models will appear that are of particular interest.
For example, on what basis will a car decide whether to give way to another vehicle?
I think it would be logical if cars could negotiate with each other based on the preferences of the passenger they are transporting. For example, if a passenger is in a hurry, he can pay a certain amount to other road users to let him pass.
Accordingly, those traffic participants who are not in a particular hurry let others pass and receive their reward. Perhaps, over time, within the framework of this issue, two options will become relevant, according to which the passenger will initially decide how to travel:
- Get to the desired point faster by paying a reward to other road users.
- Get to the point more slowly, allowing those in a hurry to pass, but getting rewarded at the same time.
Such communication must take place directly between vehicles. At the same time, it must function without interruption 24/7, which can only be ensured by a decentralized network.
HOW NOT TO MISS AN OPPORTUNITY
First of all, now we need to strive for new knowledge while others remain in the dark. The principle of decentralization is perfectly applicable not only on the stock exchange, but also in many sectors of our activity. It is not known what the fate of cryptocurrencies will be in the future, but the principles that blockchain imposes are truly valuable and can change our lives beyond recognition in the future.
(3 ratings, average: 5,00 out of 5)