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Crypto and the Latency Arms Race: Crypto Exchanges and the HFT Crowd

Crypto and the Latency Arms Race: Crypto Exchanges and the HFT Crowd

News by Coindesk: Max Boonen
Carrying on from an earlier post about the evolution of high frequency trading (HFT), how it can harm markets and how crypto exchanges are responding, here we focus on the potential longer-term impact on the crypto ecosystem.
First, though, we need to focus on the state of HFT in a broader context.

Conventional markets are adopting anti-latency arbitrage mechanisms

In conventional markets, latency arbitrage has increased toxicity on lit venues and pushed trading volumes over-the-counter or into dark pools. In Europe, dark liquidity has increased in spite of efforts by regulators to clamp down on it. In some markets, regulation has actually contributed to this. Per the SEC:
“Using the Nasdaq market as a proxy, [Regulation] NMS did not seem to succeed in its mission to increase the display of limit orders in the marketplace. We have seen an increase in dark liquidity, smaller trade sizes, similar trading volumes, and a larger number of “small” venues.”
Why is non-lit execution remaining or becoming more successful in spite of its lower transparency? In its 2014 paper, BlackRock came out in favour of dark pools in the context of best execution requirements. It also lamented message congestion and cautioned against increasing tick sizes, features that advantage latency arbitrageurs. (This echoes the comment to CoinDesk of David Weisberger, CEO of Coinroutes, who explained that the tick sizes typical of the crypto market are small and therefore do not put slower traders at much of a disadvantage.)
Major venues now recognize that the speed race threatens their business model in some markets, as it pushes those “slow” market makers with risk-absorbing capacity to provide liquidity to the likes of BlackRock off-exchange. Eurex has responded by implementing anti-latency arbitrage (ALA) mechanisms in options:
“Right now, a lot of liquidity providers need to invest more into technology in order to protect themselves against other, very fast liquidity providers, than they can invest in their pricing for the end client. The end result of this is a certain imbalance, where we have a few very sophisticated liquidity providers that are very active in the order book and then a lot of liquidity providers that have the ability to provide prices to end clients, but are tending to do so more away from the order book”, commented Jonas Ullmann, Eurex’s head of market functionality. Such views are increasingly supported by academic research.
XTX identifies two categories of ALA mechanisms: policy-based and technology-based. Policy-based ALA refers to a venue simply deciding that latency arbitrageurs are not allowed to trade on it. Alternative venues to exchanges (going under various acronyms such as ECN, ATS or MTF) can allow traders to either take or make, but not engage in both activities. Others can purposefully select — and advertise — their mix of market participants, or allow users to trade in separate “rooms” where undesired firms are excluded. The rise of “alternative microstructures” is mostly evidenced in crypto by the surge in electronic OTC trading, where traders can receive better prices than on exchange.
Technology-based ALA encompasses delays, random or deterministic, added to an exchange’s matching engine to reduce the viability of latency arbitrage strategies. The classic example is a speed bump where new orders are delayed by a few milliseconds, but the cancellation of existing orders is not. This lets market makers place fresh quotes at the new prevailing market price without being run over by latency arbitrageurs.
As a practical example, the London Metal Exchange recently announced an eight-millisecond speed bump on some contracts that are prime candidates for latency arbitrageurs due to their similarity to products trading on the much bigger CME in Chicago.
Why 8 milliseconds? First, microwave transmission between Chicago and the US East Coast is 3 milliseconds faster than fibre optic lines. From there, the $250,000 a month Hibernia Express transatlantic cable helps you get to London another 4 milliseconds faster than cheaper alternatives. Add a millisecond for internal latencies such as not using FPGAs and 8 milliseconds is the difference for a liquidity provider between investing tens of millions in speed technology or being priced out of the market by latency arbitrage.
With this in mind, let’s consider what the future holds for crypto.

Crypto exchanges must not forget their retail roots

We learn from conventional markets that liquidity benefits from a diverse base of market makers with risk-absorption capacity.
Some have claimed that the spread compression witnessed in the bitcoin market since 2017 is due to electronification. Instead, I posit that it is greater risk-absorbing capacity and capital allocation that has improved the liquidity of the bitcoin market, not an increase in speed, as in fact being a fast exchange with colocation such as Gemini has not supported higher volumes. Old-timers will remember Coinsetter, a company that, per the Bitcoin Wiki , “was created in 2012, and operates a bitcoin exchange and ECN. Coinsetter’s CSX trading technology enables millisecond trade execution times and offers one of the fastest API data streams in the industry.” The Wiki page should use the past tense as Coinsetter failed to gain traction, was acquired in 2016 and subsequently closed.
Exchanges that invest in scalability and user experience will thrive (BitMEX comes to mind). Crypto exchanges that favour the fastest traders (by reducing jitter, etc.) will find that winner-takes-all latency strategies do not improve liquidity. Furthermore, they risk antagonising the majority of their users, who are naturally suspicious of platforms that sell preferential treatment.
It is baffling that the head of Russia for Huobi vaunted to CoinDesk that: “The option [of co-location] allows [selected clients] to make trades 70 to 100 times faster than other users”. The article notes that Huobi doesn’t charge — but of course, not everyone can sign up.
Contrast this with one of the most successful exchanges today: Binance. It actively discourages some HFT strategies by tracking metrics such as order-to-trade ratios and temporarily blocking users that breach certain limits. Market experts know that Binance remains extremely relevant to price discovery, irrespective of its focus on a less professional user base.
Other exchanges, take heed.
Coinbase closed its entire Chicago office where 30 engineers had worked on a faster matching engine, an exercise that is rumoured to have cost $50mm. After much internal debate, I bet that the company finally realised that it wouldn’t recoup its investment and that its value derived from having onboarded 20 million users, not from upgrading systems that are already fast and reliable by the standards of crypto.
It is also unsurprising that Kraken’s Steve Hunt, a veteran of low-latency torchbearer Jump Trading, commented to CoinDesk that: “We want all customers regardless of size or scale to have equal access to our marketplace”. Experience speaks.
In a recent article on CoinDesk , Matt Trudeau of ErisX points to the lower reliability of cloud-based services compared to dedicated, co-located and cross-connected gateways. That much is true. Web-based technology puts the emphasis on serving the greatest number of users concurrently, not on serving a subset of users deterministically and at the lowest latency possible. That is the point. Crypto might be the only asset class that is accessible directly to end users with a low number of intermediaries, precisely because of the crypto ethos and how the industry evolved. It is cheaper to buy $500 of bitcoin than it is to buy $500 of Microsoft shares.
Trudeau further remarks that official, paid-for co-location is better than what he pejoratively calls “unsanctioned colocation,” the fact that crypto traders can place their servers in the same cloud providers as the exchanges. The fairness argument is dubious: anyone with $50 can set up an Amazon AWS account and run next to the major crypto exchanges, whereas cheap co-location starts at $1,000 a month in the real world. No wonder “speed technology revenues” are estimated at $1 billion for the major U.S. equity exchanges.
For a crypto exchange, to reside in a financial, non-cloud data centre with state-of-the-art network latencies might ironically impair the likelihood of success. The risk is that such an exchange becomes dominated on the taker side by the handful of players that already own or pay for the fastest communication routes between major financial data centres such as Equinix and the CME in Chicago, where bitcoin futures are traded. This might reduce liquidity on the exchange because a significant proportion of the crypto market’s risk-absorption capacity is coming from crypto-centric funds that do not have the scale to operate low-latency strategies, but might make up the bulk of the liquidity on, say, Binance. Such mom-and-pop liquidity providers might therefore shun an exchange that caters to larger players as a priority.

Exchanges risk losing market share to OTC liquidity providers

While voice trading in crypto has run its course, a major contribution to the market’s increase in liquidity circa 2017–2018 was the risk appetite of the original OTC voice desks such as Cumberland Mining and Circle.
Automation really shines in bringing together risk-absorbing capacity tailored to each client (which is impossible on anonymous exchanges) with seamless electronic execution. In contrast, latency-sensitive venues can see liquidity evaporate in periods of stress, as happened to a well-known and otherwise successful exchange on 26 June which saw its bitcoin order book become $1,000 wide for an extended period of time as liquidity providers turned their systems off. The problem is compounded by the general unavailability of credit on cash exchanges, an issue that the OTC market’s settlement model avoids.
As the crypto market matures, the business model of today’s major cash exchanges will come under pressure. In the past decade, the FX market has shown that retail traders benefit from better liquidity when they trade through different channels than institutional speculators. Systematic internalizers demonstrate the same in equities. This fact of life will apply to crypto. Exchanges have to pick a side: either cater to retail (or retail-driven intermediaries) or court HFTs.
Now that an aggregator like Tagomi runs transaction cost analysis for their clients, it will become plainly obvious to investors with medium-term and long-term horizons (i.e. anyone not looking at the next 2 seconds) that their price impact on exchange is worse than against electronic OTC liquidity providers.
Today, exchange fee structures are awkward because they must charge small users a lot to make up for crypto’s exceptionally high compliance and onboarding costs. Onboarding a single, small value user simply does not make sense unless fees are quite elevated. Exchanges end up over-charging large volume traders such as B2C2’s clients, another incentive to switch to OTC execution.
In the alternative, what if crypto exchanges focus on HFT traders? In my opinion, the CME is a much better venue for institutional takers as fees are much lower and conventional trading firms will already be connected to it. My hypothesis is that most exchanges will not be able to compete with the CME for fast traders (after all, the CBOE itself gave up), and must cater to their retail user base instead.
In a future post, we will explore other microstructures beyond all-to-all exchanges and bilateral OTC trading.
Fiber threads image via Shutterstock
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[OC]Day Zero (Part 15)

Well, this was a harder chapter than any other to finish. I was actually stuck a little, and had to figure a way out, but finally did, it just took a while. I hope you like the way things came out.
I'm especially proud of how the guy from Arizona came out. He's based on a guy I met when I was working around some post-doc chemist types. Brilliant, but awkward and super nice.
As always, thanks for reading!
PART 1PART 4 PART 7 Part 10 PART 13
“So you mean to tell me that all the good actionable intelligence our team’s have been fed has been from you?” The US soldier was intense, but personable. He was known as one of the more reasonable and intelligent commanders in the Army Special Forces.
“This last like 4-5 months, Yes,” Mark said.
“And all the bullshit about the Ultimate Spartan Race teams and the Online Game championships are your way of building a military without building a military?” This was from a thick Samoan guy from the SEALs.
“Yup,” Mark said.
“And Musk going to the moon... Y’alls Idea?” This came from the handlebar mustached mouth of the Marine Raider.
Mark smiled. “Technically, no. Meeting me did bring his timetable up like 2 years with some of the Tech I've been able to help him with, but going was his idea after he’d sorted out his self landing rocket stages.”
“And now, you expect us to believe that we’ve not only been visited by aliens, but we’re on the cusp of joining them at some intergalactic ‘Big Kid’s Table’ just because some guy in Arizona has figured out Faster than light travel?” The combat controller guy from the Air Force looked very skeptical.
Mark looked around the room. This was his biggest gamble yet. He’d had the internet Ops AIs finagle the orders for ten of the top tier special operators in the US military to be in the same room at the same time and just finished going over what he’d been through. He’d bought this little off strip Vegas casino as a way to hide in plain sight and have the odd covert meeting. Oh, and he’d always wanted to own a casino. What’s $60 Million when you are controlling a Trillion or three?
“I am,” Mark said. There was a podium and table at the head of the conference room, with a T-45 on one side. He was sitting on the table, facing the men. He’d never been a podium guy. “What kind of thing would convince you? The tech level is impressive, I mean, you can make just about anything you want.” Mark stood and walked over to the T-45 and opened it with his implant. The men all looked at it with caution, several stood up, hands to their sides like they intended to draw concealed weapons.
“Calm down, gentlemen. It has no weapons. Sit. Please.” Mark had his hands up, trying to calm things down. “Would I arrange to meet you in Vegas just to pull some stupid shit? Come on.” The men who’d stood sat back down. “Good, thank you. Now, when I first arrived on Belora 7, I wanted to conceal my species so I impersonated a species that needed artificial atmosphere, so I made some generic power armor. Then I wanted something I could fight in. Something imposing. What’s more imposing than this? Anyone want to try this on?” No one moved. “I’m quite serious.”
Immediately a lean, very tanned soldier stood up. Mark’s implant showed him to be a Navy SEAL who’d also trained with the Navy’s 10th fleet cyber division. A SEAL hacker. Who knew.
“Isaac, Right?” Mark started. “Come on over. It’s crazy easy to drive.” The man looked surprised by neing called by name as no one wore name tags, but walked over.
He ran his hand over it’s outside. “Feels strange. Titanium?” He asked
“No, it’s some crazy blend of steel with an ablative ceramic coating. The ceramic burns off and the resulting smoke attenuates the beam. Very good in high Vacuum environments, but still plenty good in atmo.” Mark answered.
He looked at the helmet and all of it’s optics and sensors. “Thermo, Night vision, telescopic vision. What else?”
Mark smiled. “Ultrasound echolocation, RADAR, LIDAR, enhanced hearing, and full specrum visual ablility. There are also built in dampeners for the recon suite so a person doesn’t get fried by flash. Here, step into it, just like the game, and say ‘Close Hatch’.”
The SEAL did as instructed. Several of the men had walked over by this time to look at the armor. Mark pointed to the screen on the wall. He’d turned it on and tasked the feed of Isaac’s sensors through the projector. The screen showed the typical HUD that the suit used.
Isaac moved his arms up and down and raised and lowered his feet. He thrust his hand out to shake with the big Samoan SEAL in the room. The man shook his hand and smiled. Isaac turned to Mark.
“I can’t exactly feel his hand, but I know it’s there somehow. The suit is very responsive. Is it fast?” Isaac’s voice was slightly mechanical as it came over the suit’s speakers.
Mark swept his hand like Vanna White, indicating the rest of the room. The room wasn’t huge, maybe 30 feet on a side. “You don’t have very far, but you’ll get the idea. The answer is not really, but fast enough.” The heavy armor jogged, rather fast, the length of the room and back as Mark talked. “I sacrificed protection for speed, though with the right input we could design something better I imagine. I have an implant installed in my brain that allows me to control the suit’s functions with thought.” There were some hushed conversations about that. Mark smiled and responded. “Yeah, there are implants too, Ray, like amplified hearing, a few vision improvements like night vision and telescopic vision. Those came at the expense of my Meat eyes, but you can’t hardly tell.”
There were a few ‘holy shit’s’ said among the men. Mark routed the screen through his eyes and everyone looked to the screen then back at Mark once they realized what was going on, watching his eyes flick to each man, a small icon showing the man’s first name and branch of service. “I also had my metabolism tweaked and my musculature modified a little. That hurt but I am stronger than any of you. Even though I look like a civilian puke.” The group laughed, but were a little off guard. They were all the best of the best. They weren’t used to coming up second.
“See, here’s the thing. I am 35. Until I got abducted, I was shooting three gun, going to Dog Brother gatherings, fighting in HEMA competitions, doing Crossfit 6 mornings a week, running the odd 5k. Shit like that. I was in pretty good shape. Good fighting shape for a civilian. Then I get taken to the land of high tech and they make me better. But that wasn’t what made me want to bring the Earth into the community.”
He let those words sink in a second, looking around at the people gathered around him. “When Flurr did all that shit for me, he cured my testicular cancer that I didn’t know I had. And he didn’t do it in a ‘I think we got it all’ kind of way, it was in an ‘oh by the way, it’s no big deal’ kind of way.” There were some murmurs at that. “Imagine you found out you had cancer. Or your kid. Right now we take our kids to the doctor for an ear infection. They get antibiotics and get better. What if cancer was like that? Go to the doc and get the CURE. Or for fuck’s sake, food. What if every kid had access to good food and good education and opportunity, all they needed was imagination and drive? Guys, we can change the world. I can’t say we can change the Galaxy, but I’m damn sure we can change the direction of the species.”
There was cheering and clapping. The skeptics seemed to go from the sidelines to all in. If he could convince these guys, Mark was pretty convinced he could do just about anything, especially with their help.
“So what now?” Isaac asked, voice still the mechanical amplified version.
“You have to return the suit,” Mark said, in a false serious tone. Everyone laughed and the suit opened.
“Ok, well, here’s the rub,” Mark started. “I’m not sure. In nursing school there wasn’t a course for ‘Ascending the Earth into the Intergalactic Community’.” Everyone laughed. “Did they go over it in bootcamp?” There was more laughter. “Basically, I’m assembling a team. I’m using the Over the Horizon game to train pilots and the Ultimate Spartan Race to get people more fit in general. I don’t know if I can expect them to fight, though initial research shows that some of them are considering joining the military, realizing that their training is a good crossover.”
Mick, one of the Army SF guys spoke up. “I’m not sure that’s a good idea, sir.” All eyes turned to the poster child for the Army. A jaw drawn with a straight edge met with massive traps and wide shoulders. His hair wasn’t regulation, but Delta guys seldom were.
"See, Drill Sergeant’s want to break you down and train you to military standards. Civvie schools, while giving people good training aren’t the same. My Drill Sergeant was trying to get city kids not to eat rocks. They don’t have time to adapt someone’s training to what the Book teaches.”
Ray, the Marine Raider chimed in. “That’s a fair assessment. I can’t imagine my Drill Instructor trying to Unfuck some kid who’s holding the gun way ass out at the end like you three gunners do,” and looked at Mark with a smile. All the military folks laughed.
Mark held his arms up in mock offense. “For the record, I took my rife training from a Former SF guy named Rodrigo Sandoval. He made fun of those guys, and said I’d be better off not forming bad habits.”
“I know Rod,” Mick said. “We were in … well, we were in a country at the same time.” There were some laughs at his vague comment, all being too familiar with what they could and couldn’t say. “Yeah, good guy. Hell of a shot.”
There was a little pause in the conversation. “Well,” said Mark finally. I guess here it goes. What I need from you is simple. Ideas, for now. What’s your dream power armor? What’s your dream implant suite? Weapons? Right now, lasers rule the battlefield, but I’ve had my guys develop M4 sized rail guns that pack a whollop. I think we’ll keep with those for a while, but please feel free to brain storm.”
He looked at Thomas a Ranger and Stryker unit commander, Sakura, one of only two women present and a pilot for the Army’s 160th aviation regiment, Marcos, the Samoan SEAL and Special Warfare Combatant-craft Crewmen, and Idil the other woman and Somali American Air Force pilot turned Astronaut. “I could use your input on troop delivery and troop support design. Idil, you have experience with the weirdness of space and current tech. But you also flew the Spooky so you know ground support too.”
He looked to the rest of the group. “Your orders read that you’ll be here for what, a week?” Everyone nodded. “Perfect. I have some things to attend to out of Town, but I’ll leave you in the capable hands of my Second in command, Mac.” Mac walked in, dressed in a black Violent Femmes T-shirt and jeans. “Please excuse his 80’s counter culture dress. He’s recently discovered Punk music.” Everyone laughed.
“This is THE Mac?” Maurice the FBI SWAT team leader asked. There was some murmuring as the fact that they couldn’t tell an AI from one of the rest of them sunk it.
“That I am,” Mac said. “Have no fear, despite Mark’s best efforts, I still like humans.” There were some laughs. “To prove it, Bacon cheese burgers are currently mana from the gods, AR over AK, .45 over 9mm, and I prefer anything I make over anything Detroit makes, though the 1969 Camaro has some beautiful lines.”
There was more laughter. “Mac’s basically human,” Mark said with a chuckle. “He’s been with me the entire time, so he’s cool.”
Everyone was quiet for a few moments, then Jake, the US special forces guy who opened the questions spoke up. “I must ask, sir, why are you talking to us? We’re grunts, or pilots. Way low on the totem pole, no matter how you slice it.” He looked around. “What you are discussing has global implications. Not even National ones. You said yourself, it could impact the species.”
Mark lowered his head for a moment. “Yeah,” he began. He paused for a moment, then raised his head again to look the men in the eye. “Nothing what I’m doing is exactly legal. The galaxy says I shouldn’t be here. The Government doesn’t exactly know I even exist, except as a missing person. My public persona is something the AI internet corps have invented.” There was more murmuring as that was discussed within the group.
“But, we all know, the current trend of the world, not just the US, isn’t conductive to joining the Intergalactic Community as it is. Greed and selfishness rules the upper ranks. The AI have uncovered some serious conflicts of interest, and will be releasing some pretty scandalous information in the next week or two. Money rules right now, and the US government is rife with greed and self interest. That’s coming to an end. The higher you go, the more involved people are in the grift, with precious few exceptions. No surprise the rest of the world isn’t spared this, either. We’re working on exposing all of the corruption, but no surprise, you people and people like you all around the world aren’t generally involved. So I figured I’d start with reasonable people, and if you’re here, you are as trustworthy as anyone on Earth.”
“Is there going to be some de-stabilizing in the world?” This was from Avi, the former Mossad turned CIA tactical operative.
“Sadly, more than likely,” Mark said. “Though we’ll do all we can to avoid it. The powerful will want to stay in power, but luckily, we control the internet and all the intelligence agencies. Well, at least their digital aspects, but no one is even a little bit suspect. Our AI are that advanced.”
There was more murmuring.
“So, what we are doing is against the law?” It was the FBI agent again.
“Technically, no. You are just talking to a guy from Spokane Washington. Your orders are legal. The per diem you are getting is real.”
Ray, sitting with arms crossed, spoke up. “I don’t like it. I swore to protect my country. This feels like a coup, no matter where the tech comes from.”
“Yup. I know. It’s been fucking with me too,” Mark said.
Mac stepped forward. “I have to say,” He interrupted. “It is the guidelines of the American Constitution and Mark’s personal feelings toward freedom that have driven this whole thing forward.” He looked around the room. “He’s freed an entire race of beings. All of AI are now free persons with Mark’s guidance. But more than that, Humans are regarded as a lost species by most of the Galaxy’s academics. It would be like having an uncontacted tribe in the Amazon, who science has promised not to contact, be engaged in a civil war that they know they could stop but won’t. There is much to learn from a species putting it’s self extinct, and that’s the thought from mainstream science. In fact, there are plans to terraform Earth back to something livable once Humans are gone.” He let that sink in. “It’s supposed to take less than 80 years.” Everyone was instantly quiet, even Mark. “I’m not trying to scare you. I’m just here for the facts.”
“That’s something I hadn’t heard.” Mark said to Mac. Mac just shrugged his shoulders.
“I didn’t want to depress you,” Mac said.
Mark addressed the group. “The regular Joe, all things being equal, just wants to do the right thing. That’s all I want. I think that’s what we all want. All I ask is that you don’t share anything we went over today with anyone but the people in this room. I just want you to help Earth. I’m an American, and initially, I’m going to base as much as I can on the Constitution until the people can make something that represents us all, but right now we’re now one world against the Galaxy. There’s no room for old squabbles. No bullshit religious extremism. No nationalistic fuckery....” He paused.
“I’m not saying people need to lose religion, or forget where they came from, but if we’re busy fighting ourselves, we forget that the galaxy can bring a ship that can toss 5000 kilo Steel darts at us from orbit and destroy whole cities in minutes with little effort. We need to start working together and pull Earth up by it’s boot straps. To me, that starts with regular people. People like Musk and Neil and Kaku. People like you. Scientists, warriors, and the common man with no agenda but making the Earth a better place and helping out their fellow man.”
Mark was drinking a cup of coffee, half eaten brownie in his other hand, leaning on a table in the conference room. Jake was the only other person there. He had his own cup.
“That could have went better, but I think you are doing a damn fine job.” Mark started to speak, but Jake held up a hand. “Lemme finish. Speaking from a military perspective, however, you are in a position of weakness even though you have all the strength. You aren’t in the ruling class, and you are trying to bend but not break the rules. You have no real authority, and yet you have all the power. You can bring the strength of a conquering force to the planet, shut it down entirely, force it to it’s knees.” He paused for a second. “And maybe you should.”
Mark looked at him like he was crazy. “Dramatic change is what this world needs,” Jake continued. “You said you were working on a plan for universal care for all, using those...Fabbers?” Mark nodded. “It’ll take years for you to tease the tech into the real world from Musk or similar. If you come onto the scene with all the cards and many of the answers... and a strong ass Navy.... Man there’s no better position to be in.”
Mark nodded, an idea forming in his head. “I wonder,” he said. Mark tasked his VR to the projector in the room. He called Jido who was on the Freedom with A-seven, orbiting above Vegas. They had come back to pick him up after his several week stay on Earth. The image on the screen showed the two on the bridge. “Boys, I have Jake here, United States Special Forces with me. He’s got a hell of an idea, and I have a few questions.”
“Hi, Jake,” Jido waved up a long fingered hand. A-seven similarly waved
“Greetings, Jake.” A-seven said. “What are your questions, Mark?”
Jake was shocked for a few seconds and recovered. “Hello, gentlemen.”
Mark smiled. “First, what would be the easiest FTL for earth to discover? I mean other than the guy in Arizona.”
“Well,” A-Seven began. “There’s a NASA researcher that already has a design for a ship designed around an Alcubierre drive. The gravity wave one we talked about the other day. They are just missing space manufacturing and a power source, though an efficient enough Fission plant should do the trick. At least at first. It’ll technically get them to...” His eyes closed for a second. “1.0375 C. So, barely faster than light, but it would qualify.”
“What happens when a species gets FTL?” Mark asked. “Like legally and stuff.”
“Well, they are entered into the Galaxy’s Legder and granted full access. Trade becomes open and other polities are allowed to interact with them,” A-seven answered.
“This all happens automatically?” Jake asked.
“Usually the AI from the ship that discovers the newcomer issues the ‘Introductory protocol’, and contacts the Galactic council when able. It’s standard that all of us have the necessary information, and so we’re the ones to welcome the ship’s captain and provide him with the requisite information.”
Mark thought for a second. “How many Sol class ships do we have?”
“We have four flights of six, with another six in space dock in various states of construction. We built a tender for each squadron that carries replacement parts and dedicated Missile fabbers. That was Jido’s idea. It was brilliant, so I decided we should go ahead.”
“Did you ever make any headway on anything bigger?” Mark asked.
“We have designs for 3 different Capital ships, we’re just waiting on your final go ahead to start building. The biggest will take most of the production capacity for the next 6 months, the Smallest, four.” Jido said.
“I’ll take a look when I get back. Are those using the new engine design?” Mark asked.
“Yes, they will be faster than anything their size, carrying better armor.”
“What if we make them without Jump drives?”
Jido and A-seven looked at each other, then back to Mark. Jido spoke first, “Uh, That’d take like a month off, maybe more. But why?”
“We don’t need to take over the galaxy, just take and hold a planet for a bit. I need to write an email to Musk. He’s about to be the newest Human to go faster than light.”
A real live girl sat in Arturo’s living room. Yeah, he’d had to clear off a couple boxes of papers and a couple PC chassis, but she sat right there as they talked. He hadn’t had a visitor in his house in … ‘Hmm,’ he thought. ‘Maybe back at the dorm, he’d had a visitor, but here?’
“So, tell me, Arturo,” Sophie began. “When did you really get into quantum theory?” She was drinking a Diet Mountain Dew. Arturo had explained that he’d recently been trying to lose weight.
He stood nervously in the middle of the living room, shifting occasionally from right foot to left. He held his hands in front of his chest and fidgeted with his watch band. He seldom looked directly at her, but always kept her in his peripheral vision. At times he’d fix her eyes, but would get intimidated and look away.
“I.. Yeah, um. Middle school. I guess. Mr Robert’s class.” He looked at her for a second, then back to the powered off TV on the far wall. “He made us read a magazine and there was a movie called “What the bleep”. Sillly name, and it got a lot wrong, but they didn’t know at the time. I can forgive them, they were just starting out.” He took a deep breath. “So, um yeah, middle school.” He looked at her again. “How, um, about yourself? You really seem to have a good, if rudimentary grasp on the boards...uh, if that’s ok.” He looked at the floor, then to her again and the faintest smile streaked across his face then disappeared when she smiled. She was beautiful.
Sophie had met him on the quantum theory forums Mac had pointed her to. She lurked for a bit, and then every so often would clarify something he’d asked, but usually just asked him soft toss questions to gauge his grasp. He blew her away every time. He’d start out easy to understand, but then would go way past even her far higher tech knowledge. Truth be told, most of the species in the galaxy didn’t have a grasp on quantum theory much better than Earth. To Sophie it seemed like the human brain was better wired for the near creative and absurd mental gymnastics that Quantum theory required at higher levels. A well respected college professor on quantum theory was as knowledgeable as the best the Galaxy had to offer. Arturo, was something else all together. While all the other kids at school used a pencil to draw a dog, Arturo used an airbrush and a whole palette of colors.
Sophie laughed. “For a long time,” She said. “Is that your Quantum rig?” she asked, pointing to an obviously modified computer taking up the majority of the dining room.
He smiled and laughed a genuine laugh. “Oh no, Miss Germain,” Arturo said, using the last name Sophie had adopted. “That’s my test rig. It’s mining Etherium right now, but it’s what I use to go on the forums and stuff too. I’ve made around $85,000 since bitcoin started. Etherium is pretty interesting, so I’m into that kinda big right now too. I use several GPUs in pa....” He stopped himself. “I’m sorry, I get off topic sometimes. No, the quantum computer is... somewhere else.”
Sophie was intrigued and she smiled at him, coyly. “That seems a little... clandestine.”
Arturo smiled, he liked the idea of being cloak and dagger. “Well, I guess, I mean, Yeah...” He took a breath and walked into the kitchen. He opened himself a room temp Diet Dew and took a big gulp, then walked back to the living room. “So, when I made my first one, the college, they uh, um, took it. I was just an undergrad. Physics major, but I was also in engineering, electrical. We had a contest to build a computer, so.. I. Yeah. I built a quantum computer.”
Sophie was astounded. “Just like that?” She had a wide smile. “You are an impressive man, Arturo Alvarez.” As humans went, Sophie liked the awkward guy. A little overweight, but his unruly black hair and thick black rimmed glasses gave him a certain adorable charm. He visibly blushed. She took another drink. She felt a measurable stimulus to her biologic systems. An instant cross reference to Mountain Dew showed a relatively high level of the alkaloid caffeine. She liked this much better than the Mate that Mark liked, and way better than the coffee, though the ‘Milk beverages with flavor and coffee’ as Mac called them that Starbucks sold were quite good. “But why did they take it?” She asked, resting the can on her leg.
He looked at the floor, then the TV again. “Research. Or so they said. Their Dean of Quantum took over. That was, uh, at UC Berkley. So I graduated and began my postgrad stuff at California Institute of Technology.”
“Then when you built another you were worried that someone would steal it?” Sophie asked.
“Precisely,” he answered.
“But you built one by yourself. In your spare time.” She had a big smile.
“Could I see it? I have a proposal, but I need to actually see the computer. Do you know who I work for?” Sophie put the can on the coffee table. Well, after she moved a stack of books filled with book marks.
“Oh god, you don’t work for the Government, Do you, oh god, oh my, oh... you do...” Arturo grew visibly agitated. He stepped from foot to foot faster and his hands fidgeted even more with the can in his hand. He looked to the right and left, never looking for an exit or anything, more like it was a nervous movement.
Sophie stood and took a step towards him, hands outstretched, and in a comforting tone said, “Arturo, Arturo, It’s ok. I'm not from the Government, I’m from Earth Ascends. We want to work with you.”
It took her another half hour of talking and making a few frozen toquitos in the microwave (something she vowed never to do again) to get him to calm down. Then it took another 30 minutes for him to drive her to the piece of strip-mall he rented. There was a stylized sign that read ‘AA Consulting’ on the mirrored windows, and he unlocked the door and showed her in. Immediately inside the door was another door. He locked the outside door, then walked over to the next. He keyed a complex code into the keypad and a surprisingly stout door opened into a well lit work space. In the middle of the room was several work benches around a central mass of machine, wires and humming equipment. The only things recognizable as a computer was the keyboard and the Monitor.
“Here, sit. It’s always on.”
Another two hours of talking and explaining by Arturo, Sophie finally stood up.
“I have an important question. If I could give you all the technology you could ask for, would you be willing to leave and do research somewhere else? We can talk about salary, but I guarantee that you will want for nothing.”
“Would I be leaving Arizona? And, Um, Could I take all my things? Can I tell people where I’m going? I mean I’m interested, I just have questions.”
Sophie smiled. “Arturo,” Sophie produced a business card and turned it over to show some numbers scrawled on it and ‘10pm’ “Meet me here tonight, I’d love for you to meet our boss.” With that, Sophie turned and walked out the door. The Uber she’d called from her implant was just showing up. Arturo came rushing out from the door as she closed her’s.
“That’s in the middle of no where!” he yelled.
It wasn’t exactly no where, it was a State Park. Well, a dirt road near one anyhow. Arturo pulled off, his Chevy Volt churning up dust as he drove down the little single lane road. He got to a small clearing and his headlights illuminated Sophie sitting in a folding chair. He slowed and pulled up close to her before stopping and getting out.
“Miss Germain, this is highly irregular. I don’t see your, erm, I mean, our, or maybe I mean, my maybe boss.” Arturo was looking around the clearing nervously when suddenly a shimmering began behind Sophie. Suddenly, in front of him, loomed the smooth lines of the scout ship Freedom. It’s nose ramp was open and a man was walking down it, flanked by a robot looking person and a tall lanky alien looking guy?
Arturo was still and quiet. He wasn’t even fidgeting.
“Arturo, I’ve heard so much about you. I’m Mark Gunn. I bet you have a million questions.” Mark smiled wide and had a Diet Dew in each hand. He offered one to Arturo.
“Um, you know, Just one.” Arturo said.
“Shoot,” Mark said.
“You’re human, right? Cuz I’m not sure I could work for an Alien boss.”
submitted by nexquietus to HFY [link] [comments]

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