Nathaniel Popper

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There are a lot of smart people on Wall Street, but the promise of giant payoffs often makes them behave stupidly, sloppily. Will automation in the financial sector instill discipline or will it lead to cascading mistakes that can make past meltdowns seem minor? Maybe both, at different times?

Regardless, machine intelligence may displace innumerable finance workers in the near-term, as the biz grows increasingly bullish on technology. In “The Robots Are Coming for Wall Street,” Nathaniel Popper’s excellent NYT Magazine article, the writer examines the new evolution through the person of Daniel Nadler, whose Kensho machine-learning software can execute in minutes tasks that required carbon-based beings days to complete. No one will likely shed a tear for Goldman Sachs workers losing salary and status, but their dwindling may presage the disruption of other industries built on sophisticated analysis.

An excerpt:

Within a decade, he said, between a third and a half of the current employees in finance will lose their jobs to Kensho and other automation software. It began with the lower-paid clerks, many of whom became unnecessary when stock tickers and trading tickets went electronic. It has moved on to research and analysis, as software like Kensho has become capable of parsing enormous data sets far more quickly and reliably than humans ever could. The next ‘‘tranche,’’ as Nadler puts it, will come from the employees who deal with clients: Soon, sophisticated interfaces will mean that clients no longer feel they need or even want to work through a human being.

‘‘I’m assuming that the majority of those people over a five-to-10-year horizon are not going to be replaced by other people,’’ he said, getting into the flow of his thoughts, which, for Nadler, meant closing his eyes and gesticulating as though he were preaching or playing the piano. ‘‘In 10 years Goldman Sachs will be significantly smaller by head count than it is today.’’

Goldman executives are reluctant to discuss the plight of their displaced financial analysts. Several managers I spoke to insisted that Kensho has not yet caused any layoffs, nor is it likely to soon. Nadler had warned me that I would hear something like that. ‘‘When you start talking about automating jobs,’’ he said, ‘‘everybody all of a sudden gets really quiet.’’

Goldman employees who lose their jobs to machines are not likely to evoke much pity. But it is exactly Goldman’s privileged status that makes the threat to its workers so interesting. If jobs can be displaced at Goldman, they can probably be displaced even more quickly at other, less sophisticated companies, within the financial industry as well as without.

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The instability of the Argentine banking system (and the expense of dealing with it) has led a growing number of citizens to embark on a bold experiment using Bitcoin to sidestep institutions, a gambit which would probably not be attempted with the same zest in countries with relative financial stability. But if the service proves to be a large-scale success in Argentina, will it influence practices in nations heretofore resistant to cryptocurrency? And will a massive failure doom the decentralized system?

In a New York Times Magazine article adapted from Nathaniel Popper’s forthcoming Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money, the author writes of this new dynamic in the South American republic, which is enabled by itinerant digital money-changers like Dante Castiglione. An excerpt:

That afternoon, a plump 48-year-old musician was one of several customers to drop by the rented room. A German customer had paid the musician in Bitcoin for some freelance compositions, and the musician needed to turn them into dollars. Castiglione joked about the corruption of Argentine politics as he peeled off five $100 bills, which he was trading for a little more than 1.5 Bitcoins, and gave them to his client. The musician did not hand over anything in return; before showing up, he had transferred the Bitcoins — in essence, digital tokens that exist only as entries in a digital ledger — from his Bitcoin address to Castiglione’s. Had the German client instead sent euros to a bank in Argentina, the musician would have been required to fill out a form to receive payment and, as a result of the country’s currency controls, sacrificed roughly 30 percent of his earnings to change his euros into pesos. Bitcoin makes it easier to move money the other way too. The day before, the owner of a small manufacturing company bought $20,000 worth of Bitcoin from Castiglione in order to get his money to the United States, where he needed to pay a vendor, a transaction far easier and less expensive than moving funds through Argentine banks.

The last client to visit the office that Friday was Alberto Vega, a stout 37-year-old in a neatly cut suit who heads the Argentine offices of the American Bitcoin company BitPay, whose technology enables merchants to accept Bitcoin payments. Like other BitPay employees — there is a staff of six in Buenos Aires — Vega receives his entire salary in Bitcoin and lives outside the traditional financial system. He orders what he can from websites that accept Bitcoin and goes to Castiglione when he needs cash. On this occasion, he needed 10,000 pesos to pay a roofer who was working on his house.

Commerce of this sort has proved useful enough to Argentines that Castiglione has made a living buying and selling Bitcoin for the last year and a half. “We are trying to give a service,” he said.

That mundane service — harnessing Bitcoin’s workaday utility — is what so excites some investors and entrepreneurs about Argentina. Banks everywhere hold money and move it around; they help make it possible for money to function as both a store of value and a medium of exchange. But thanks in large part to their country’s history of financial instability, a small yet growing number of Argentines are now using Bitcoin instead to fill those roles. They keep the currency in their Bitcoin “wallets,” digital accounts they access with a password, and use its network when they need to send or spend money, because even with Castiglione or one of his competitors serving as middlemen between the traditional economy and the Bitcoin marketplace, Bitcoin can be cheaper and more convenient than Argentina’s financial establishment. In effect, Argentines are conducting an ambitious experiment, one that threatens ultimately to spread to the United States and disrupt some of the most basic services its banks have to offer.

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