Snippings

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European Central Bank (ECB) executive board member Piero Cipollone has called for changes to tech firm Apple’s payments system.

Cipollone said Apple must change its approach in a letter sent to Thierry Breton, the European Commissioner for the internal market, on April 19. He warned that its current approach could be incompatible with making offline payments in any future European central bank digital currency.

“Apple’s proposed commitments would not give third parties full access to the secure element (SE), but only allow for the usage of the host card emulation (HCE),” Cipollone said. He added this would not be “at par with the user experience offered by Apple Pay when it comes to authentication and transaction speed”.

HCE-based payment solutions allow banks to build their own apps which could compete with Apple Pay. But they would be at a fundamental disadvantage with Apple Pay, as they would be unable to hold the card’s details in the secure element.

Most importantly, the current solution would be incompatible with plans to create a possible European central bank digital currency (CBDC). “Access to the SE is vital for mobile device based offline digital euro payments,” Cipollone added.

From: ECB says iPhone is currently incompatible with digital euro – Central Banking.

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(One bright note on that front is that the injection of AI into the smart glasses, a metaverse-related project, has suddenly made that product much more viable.)

From: Meta’s Big AI Spending Turns Off Investors — The Information.

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“payment transactions whose sole apparent purpose is to obtain award miles” are also prohibited.

From: How the “mile carousel” from DKB and Revolut worked – and who paid for it.

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For example, an account screenshot of a Revolut customer who had accumulated more than 3 million “award miles” within six months – through dozens of “top-ups” and simple transfers – was circulating in relevant forums over the weekend. In the frequent flyer scene there was the term “miles carousel” for such practices (especially since money was probably transferred back and forth).

From: How the “mile carousel” from DKB and Revolut worked – and who paid for it.

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Four dangerous contactless scams

Skimming Devices
Fraudsters install skimming devices on legitimate payment terminals to capture card information when users make transactions. Trevor said: “These devices can covertly steal card details, including the card number and expiration date, enabling criminals to clone cards or make unauthorised purchases.”

Shoulder Surfing

Trevor explained that this tactic involves criminals lurking near individuals making contactless payments and secretly observing or recording their card details. With this information, fraudsters can easily access the victim’s accounts or make fraudulent transactions.

Card Cloning

Criminals utilise sophisticated techniques to clone contactless cards, replicating the data stored on the card’s chip. Once cloned, these cards can be used for unauthorised transactions, posing a significant threat to users’ financial security.

RFID Readers

Trevor explained that RFID (Radio Frequency Identification) is a technology that uses electromagnetic fields to automatically identify and track tags attached to objects. He continued: “These tags contain electronically stored information that can be read remotely using RFID readers or scanners.

“In the realm of contactless payment scams, criminals may exploit RFID technology by using illegal RFID readers or scanners to intercept data from unsuspecting individuals’ contactless cards or devices without their knowledge.”

From: New contactless card warning to every person paying this way at any type of checkout – Daily Record.

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Although wearables are commercially focused on health monitoring, researchers have long envisioned capturing other kinds of data on a user. A computer that could collect useful information related to a person’s brain activity, heart and skin function, or their movement patterns would be able to understand a huge amount about the user.

But it’s AI that could prove a game changer. Smaller wearables combined with AI algorithms to process the data could produce tools that amplify and augment our goals and performance in life. But there are also downsides to all this information gathering.

From: A new wave of wearable devices will collect a mountain on information on us – we need to get wise about the privacy implications.

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Brian Rommele, who is a consistently interesting observer of such things, suggested that the only way to obtain privacy in the future will be to keep all data on device and have it processed locally, but I am not so sure. For one thing, I might want my devices to share data with one another. Generally speaking, privacy is about control: That is, it is not about where the data is stored but about who it is shared with. 

If rather than keeping the data on the devices we stored the data in the cloud but kept it encrypted using keys that are on the devices then we can get a much better outcome.

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The UK government has published its Smart Data Roadmap laying out its plans for smart data schemes across seven sectors, including banking and finance.

The Data Protection and Digital Information Bill will provide the government with the powers it would need to implement these plans. The bill is currently going through the committee stage in the House of Lords.

The seven sectors the roadmap looks at are energy, banking, finance, retail, home-buying, transport and telecoms.

From: UK Smart Data Roadmap unveiled.

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Kevin Hollinrake, UK Minister of State for Enterprise, Markets, and Small Business, said: “The data economy is a large and growing part of the economy. Smart Data unlocks data for individuals and businesses that is currently held and underutilised in a small number of existing companies. It allows businesses to easily access this data, with consumers consent, to provide new services that drive investment, productivity, competitive outcomes and ultimately economic growth.”

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CityCoins are ostensibly customized to benefit specific municipalities like New York City.

But in reality, CityCoins simply apportions an arbitrary percentage of token sale proceeds to the city for marketing purposes and to justify claims of “giving back to the community.”

From: Don’t be fooled by NYC’s mayor praising Bitcoin — he’s just shilling an ICO.

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There is going to be an election for the Mayor of London soon. One of the candidates, Brian Rose, has put forward the idea of a new cryptocurrency for the city. Going by the unimaginative working title of “The London Token”, the proposal involves a one-off tax on the profits of London’s financial institutions to create a £1 billion fund to back the token followed by a distribution of £100 worth of the new token to every Londoner. This may sound absolutely mad, but it really isn’t.

Miami Coin was a cryptocurrency launched in August 2021, designed to support and benefit the city of Miami by generating revenue from its operation. It was created through the CityCoins protocol, which enables users to mine coins for specific cities and offers a novel financial stream for municipal funding. The concept behind Miami Coin was that when people mined the coin, 30% of the revenue generated would be donated to the city of Miami, potentially to fund civic projects.

Reasons for Failure:

 

Volatility and Lack of Utility: Miami Coin, like many cryptocurrencies, suffered from high volatility. Additionally, the coin struggled to find a substantial utility beyond being a speculative asset, which made it less appealing to both investors and everyday users.

Regulatory Concerns: Cryptocurrencies are still in a gray area in terms of regulation. Concerns about compliance with local and federal laws may have deterred broader adoption of Miami Coin.

Market Dynamics: The broader cryptocurrency market has faced several downturns, which likely influenced Miami Coin’s performance negatively. The decreases in the overall market sentiment and value can impact newer and smaller cryptocurrencies disproportionately.

Public Perception and Trust Issues: The success of a local government-backed cryptocurrency depends significantly on public trust and perception. Any fear, uncertainty, and doubt circulating about the cryptocurrency could reduce adoption and utility.

Lessons Learned:

 

Need for Clear Utility and Benefits: For a cryptocurrency, especially one associated with government or city projects, to be successful, it needs to offer clear and tangible benefits and utilities beyond just being a speculative asset. This might include integrating the currency into local economy transactions or services.

Importance of Stability: Stability is key in finance. Introducing mechanisms to reduce the inherent volatility of cryptocurrencies could make them more appealing for both investment and everyday use.

Engage Community Early and Often: Engaging the local community to get their input and buy-in can be crucial. Education about the benefits and potential risks of the cryptocurrency must be transparent and accessible.

Navigating Regulatory Waters: Collaboration with regulatory bodies from the ground up is necessary to ensure that the digital currency complies with all applicable laws and regulations, reducing the friction during its adoption phase.

Building Trust: Continuous efforts to build and maintain trust are essential, particularly when dealing with financial innovations involving public funds and benefits.

From Miami Coin’s journey, it becomes evident that while harnessing technology for municipal benefits is a promising avenue, it requires detailed planning, clear execution strategies, and robust risk management to ensure the benefits fully manifest and contribute positively to local development. This experience serves as a valuable case study for other cities considering similar initiatives in the future.

 

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Cuius Regio, Eius Pecunia
While Hayek and de Bono looked to economics to create their  narratives, there might be other factors that determine the kinds of  money we create. Values, for example. This leads me to think another  obvious category of currency issuer: the community that uses the  currency, especially with sentiments around anti-globalisation  abounding, adumbrating the link between decentralised digital money and  personal identity that I explored in my 2014 book Identity is the New Money.

Following that anti-globalisation chain of thought, one rather  obvious type of community that might want to issue its own currency is  the city. In the Long Finance exploration of the world of financial services in 2050, “In Safe Hands”,  Gill Rowland, sets out a scenario that has city-states replacing  nation-states as the basis of society and commerce. This appeals to my  long-held appreciation of Jane Jacobs’ work on the city as the basic economic unit.

From: Money is a technology (I).

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According to Rose’s campaign team, the plan is to make the new cryptocurrency accepted across London’s transport network and usable for paying council bills, parking charges and other expenses.

From: London mayoral candidate wants to give £100 in crypto to every resident | The Block.

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This is more of a reconnection with the past than it may seem at  first. If we look at the history of money management by ordinary people,  the relative use of the money instruments available is fascinating. In  Britain, for example, right up to the 19th century, there were normally  several currencies in circulation in addition to Sterling. This  situation, having been temporarily banished by state capitalism in the  post-Bretton Woods world, is likely to be restored as Hart argues  and I see no reason why people (aided and abetted by their mobile  phones and smart watches) could not adjust. This “new local” version of  money must sound as crazy to you as the idea of central bank and cheques  did to the inhabitants of Stuart England, but it really isn’t.

From: Money is a technology (I).

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Nearly half (49.6%) of all internet traffic came from bots in 2023—a 2% increase over the previous year, and the highest level Imperva has reported since it began monitoring automated traffic in 2013.
For the fifth consecutive year, the proportion of web traffic associated with bad bots grew to 32% in 2023, up from 30.2% in 2022, while traffic from human users decreased to 50.4%.

From: Bad bot report: Bots now 50% of all internet traffic.

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