Thursday, February 20, 2014

How much is 14 000 000 000 €?

Facebook bought a messaging app for nearly 14 billion euros. That's a 14 with nine zeros. That's a lot of money. Facebook's revenue for 2013 was about 8 billion euros. Also a lot of money. Whatsapp's revenu for 2013 was only about 15 million euros.

Why do you want to pay a thousand times more than its yearly revenue for a company?

Probably because money is not worth anything anymore.

For 14 billion euros you can buy some countries, too. If the gross domestic product (GDP) is a value of a country, for the same amount of money you can get Botswana and Monaco together.

Botswana and Monaco at least have real value. Real land, real resources, real things.

How real is Whatsapp?

In the 17th century, tulip bulbs were rated higher than Amsterdam houses. Until someone asked himself how can it be that some little thing with hardly any intrinsic value can be worth more than a house with a large intrinsic value. Tulip mania, the world's first economic bubble was born.

Even though Whatsapp may at some point reach revenues of billions, it still has hardly any intrinsic value. The only conclusion must be that this is a new economic bubble.

If, tomorrow, a majority of Facebook users stop using it, the value of Facebook plunges.

The disturbing thing is that these kind of transactions are backed by large financial institutions that may very well run into trouble when these kind of transactions fail. And these financial institutions, we have seen over the past years, can have a devastating effect an the economy. How can it be that these disproportional transactions are possible?

Money isn't anything worth anymore. Tomorrow, all this money may be gone again.

Botswana and Monaco on the other hand will remain.

Sunday, February 16, 2014

Time measurement in speed skating

On Saturday 15 February 2014, during the Sochi Olympic games, Zbigniew Brodka of Poland won the 1500 meter speed skating race with 0.003 s ahead of Dutch skater Koen Verweij.

That's three thousandths of a second. Both skaters finished in the same time, and then the thousandths will decide.

Have we seen this before? Remember the Olympics from 1980 in Lake Placid? Swedish skier Thomas Wassberg won the 15 km cross country with 0.01 s over Finnish skier Juha Mieto:

After Lake Placid, it was decided to no longer measure times in hundredths of a second, because the start of the race cannot be measured with such accuracy.

Will the same happen now? Why has someone decided that time can be measured with an accuracy of one thousandths of a second in speed skating?

Of course, technically we can measure very accurately, but does it make sense? In speed skating on the 1500 meter distance, one rider starts in the inner lane, and one in the outer lane. The distance between the two riders is about 3 metres. The starter uses a starting pistol, which makes a sound. The riders start when they hear the sound, and the time starts running electronically. The starter is located at the outside of the track, closest to he rider in the outer lane.

The distance between the two riders means the inner lane hears the start sound about 0.01 seconds later than the outer lane. That's because sounds travels at a speed of about 300 metres per second, which is about 3 metres in 0.01 second.

in other words, the skater in the inner lane has a disadvantage of about 0.01 seconds. That's the intrinsic uncertainty of time measurement in speed skating. It does not make any sense to try to measure time more accurately, even though this is perfectly possible technically.

Also, if a rider starts too quickly, he risks a false start. Whether a start is false or not is the sole judgement of the starter, who visually judges the start. Can he judge accurately down to a thousandths of a second? I figure a hundredth of a second is already pretty tough to judge.

Interestingly, Brodka - who was declared the sole winner - started in the outer lane, whereas Verweij started in the inner lane.

Technology is clearly overused in this case. There is too much belief in technology, and normal physics of the real world where the speed of sound is not infinitely large is forgotten.

It is a pitty that riders like Mieto in 1980 and Verweij in 2014 are not rewarded with the gold medal, as the time differences measured are well within the intrinsic uncertainty of time measurement.

Here is the official time measurement explanation, where physics is totally forgotten:

And here a good explaining picture (in Dutch):