DATA, DEBT & DAEMONS Systemic Asymmetries on Spaceship Earth by Wesley Chu A thesis presented to the University of Waterloo in the fulfilment of the thesis requirement for the degree of Master of Architecture Waterloo, Ontario, Canada, 2019 © Wesley Chu 2019 AUTHOR’S DECLARATION I hereby declare that I am the sole author of this thesis. This is a true copy of the thesis, including any required final revisions, as accepted by my examiners. I understand that my thesis may be made electronically available to the public. iii ABSTRACT Day by day, the rate at which we create new data increases exponentially. Our capacity to learn cannot keep up. We are tiny members of a vast universal network, incapable of discerning cause and effect. Instead, we develop simplified narratives, leaving ourselves misguided yet complacent. The information management trade of both physical and intellectual property has become more vital to global economies than ever, replacing physical resources and manufacturing. Through our deepening reliance on specialization, we forfeit agency over our own homes while accruing unprecedented debt. Housing costs have risen dramatically compared to wages, despite reportedly successful economies. Citizens were supposed to have the ability to participate in financial markets using their property as collateral. This seduced many into the ideologies of unregulated capitalism. However, by the 21st century, these systems had become unrecognizable mutilations of their intended designs. The momentum we have gathered in the past century has thrust us on an unsustainable trajectory we have little hope of predicting. We laid the foundation for Western economic dominance with technology, monetary policy, and globalization, but we did so using incentive structures that exacerbated wealth inequality. These systems integrate digital technology into both our physical and virtual spaces, operating on invisible planes that bypass our senses. The radical novelty of computers has entangled us in niche engineered concepts that few understand. They create a lack of accountability in Big Tech that policy-makers are ill-prepared for. We cannot ensure an equitable distribution of the leverage or stakes when we entrust brokers, politicians, traders, and captains of industry to make complex decisions for us without bearing the risks of their consequences. Our long-term welfare, including our future habitation on this planet, is not visceral enough to force effective reform. Both our physical and our digital spaces are designed, built, evaluated, and monitored on asymmetric principles, causing disasters that future generations and the least fortunate always pay for. How did we normalize this moral hazard? How can digital systems born out of frustration with modern policy combat these issues, without disrupting the benefits of a techno-utopia? How can they promote efficiency, security, and transparency in the spaces we call home? v ACKNOWLEDGEMENTS To Donald McKay, for your endless patience and wisdom. Thank you for the enlightening conversations and sage advice, they have kept me sane. I have learned so much under your guidance and wouldn’t have made it without your unwavering support. To my thesis committee, Robert Jan van Pelt, Valerio Rynnimeri, and Douglas Birkenshaw, for guiding this project into fruition. Thank you for dedicating your time and effort to such a chaotic project. To Amina Lalor, for being there every step of the way. You pulled me out of my deepest doubts and lifted me when I needed it the most. Thank you for everything, I couldn’t have done this without you. To Paniz Moayeri, Danielle Rosen, Thomas Yuan, and all my friends for your insight, enthusiasm, and company. I’d have nothing to write about if you weren’t around to inspire me. Thank you for believing in me. To my family, for all your love and support. Thank you for not being too pushy about how any of this relates to architecture. To Google, for being the first one to read this book — even before its author. vii TABLE OF CONTENTS Abstract v List of Figures ix Prologue 5 PART I: INEQUITY IN EQUITY Daemons & Determinism 11 Automata & Altruism 21 Systems on Spaceship Earth 33 Radical Novelties 45 PART II: UNSECURED & != Techno-Topias 57 Digitization & Data 65 Pen Test PAL 75 Privacy & Policy 85 Smart Cities & The Singularity 93 A Daemonstration 103 PART III: INSECURITIES IN SECURITIES Land & Loans 123 Real Estate & Realpolitik 135 Mind & Mortgage 143 Corporate Bodies & Corporeal Bodies 151 Speed Daemons 161 PART IV: INCENTIVES IN CERTAINTY Uncertainty 173 Full System Reboot 185 Epilogue 191 Bibliography 193 ix LIST OF FIGURES Page 19 Fig 01-01 Standard Model of Particle Physics W. N. Cottingham and D. A. Greenwood. An Introduction to the Standard Model of Particle Physics, 2nd Edition, Cambridge University Press, Cambridge, 2007 Page 38 Fig. 03-01 World3 Model Forrester, Jay Wright. World3 Model. Accessed from https:// pure.tue.nl/ws/files/3428351/79372.pdf Page 70 Fig. 06-01 Backpropogation Algorithm Image created by author. Page 109 Fig. 10-01 Blockchain Example Image created by author. Page 110 Fig. 10-02 Merkle Tree Image created by author. Page 111 Fig. 10-03 Hex Codes Image created by author. Page 112 Fig. 10-04 Binary Digits Image created by author. Page 131 Fig. 11-01 Redlining in New York City Mapping Inequality. Accessed from https://dsl. richmond.edu/panorama/redlining/#loc=11/40.734/- 74.039&city=brooklyn-ny&area=D8&adview=full&adim age=3/74/-74 Page 179 Fig. 16-01 Markov Chain Image created by author. xi Daemon deɪ·​mən from Ancient Greek ‘daimon’ (δαίμων: “god”, “godlike”, “power”, “fate”) 1. A benevolent nature deity, as the genius of a place or a person's attendant spirit. 2. A computer program that runs as a hidden background process, rather than being under the direct control of an interactive user. xiii DATA, DEBT & DAEMONS Systemic Asymmetries on Spaceship Earth 1 Science is more than a body of knowledge; it is a way of thinking. I have a foreboding of an America in my children’s or grandchildren’s time — when the United States is a service and information economy; when nearly all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what’s true, we slide, almost without noticing, back into superstition and darkness. - Carl Sagan The Demon-Haunted World, 1995 3 In 2010, Tong Zou graduated from the University of Toronto with a software engineering degree and moved to Seoul, South Korea to begin his career. After a year of scrimping, he secured a job in Silicon Valley and settled down in San Francisco to earn a better salary. By 2018, he had nearly half a million US dollars in life savings and was ready to move back to Canada with his girlfriend. Though born and raised in Ontario, settling down in Vancouver had always been Zou’s dream. Like many others at the age of 30, he was also looking to buy his first house. Given how exorbitantly expensive Vancouver had become, Zou decided to settle for an apartment, which was still pushing his budget. So he researched methods on softening the bank commission fees his transfer would incur when bringing his life savings over the border to Canada. After seeing how successful his friends were at playing the digital foreign exchange market, he looked into cryptocurrency exchanges, which were largely unregulated but offered unbeatable transaction fees and convenience. One popular tactic was to take advantage of favourable foreign exchange rates, timing the conversion from dollar to cryptocurrency to pay as small of a fee as possible. Zou’s close friend even turned a profit using this method, using his Korean cryptocurrency account to move large sums of money without suspicion, fees, or taxes. Korean accounts had been banned from foreign ownership since 2016 to prevent money laundering and other financial schemes, but Zou’s friend was exempt because he had opened his account in 2015. “He was able to transfer from his US dollars to an offshore crypto account and make a forty percent profit just on arbitrage.” Zou said. “And I got jealous, because that’s what humans do, right?” Not long after, he discovered Quadriga CX, a Vancouver-based digital currency exchange founded by Canadian entrepreneurs Gerald Cotten and Michael Patryn. Cotten learned about cryptocurrency while studying at the Schulich School of Business in Toronto and saw a major opportunity in the market for a Canadian online exchange. The concept had seen success in other countries, but had a shaky status within Canada. “In the summer of 2013, there really weren’t many options in Canada.” Cotten said in an interview with De-Central Talk Live. “You couldn’t hook up your bank anywhere. It was really difficult to get anything done, and it was slow.” Competitors had struggled to create a smooth user experience for their growing client base due to their lack of acknowledgement from the major Canadian banks. Cotten met Patryn while travelling in Vancouver. They shared the same vision of creating an exchange that worked seamlessly with the existing financial system, and together they launched Quadriga Fintech Solutions in 2013. With enough funding and traction from investors to register Quadriga as a money services business with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), they quickly became Canada’s largest cryptocurrency exchange, taking their company public in 2015, and trading well over a billion dollars in cryptocurrency in 2017.