A library of snippets
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Disinformation is difficult to wrangle when it’s created manually by humans. Researchers predict that generative technology could make disinformation cheaper and easier to produce for an even larger number of conspiracy theorists and spreaders of disinformation.
From Disinformation Researchers Raise Alarms About A.I. Chatbots – The New York Times:
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The discussions around digital currency continue. I had an interesting sort-of-argument with someone about this recently, and I mentioned in passing the dynamics of the shift from specie to token money during the industrial revolution. I think it’s worth expanding on this here, as to my mind it informs the debates about central bank digital currency vs. private digital money, an important debate for our times. There’s lots more about this on the blog and there’s a podcast about it too if you are interested in learning more.
Forum friend George Selgin gave an excellent talk on this at [Consult Hyperion’s 2010 Forum], exploring the transition to industrial-age money.
The essence of George’s talk was that industrialing Britain saw unexpected changes in the way that money worked as it strove to re-invent money for its new economy. As the nature of that economy had changed, so the nature of money had needed to change too, but there is a lag and a tension between the needs of the economy and the money that the economy has inherited from an earlier age. At the time, it was not clear exactly what needed doing. People could see that there were problems, but not what do to about them.
Naturally I refer to this time because the Internet, mobile phones and online commerce are creating a vortex that is sucking in monetary innovation at an accelerating rate. My point is that we have been there before and can learn from those distant times. Consider the relationship between private and public provision of small change (coins, essentially) that has been brought back into focus by discussions about micropayments in an online world before. When that industrial revolution caused an explosion in population and commerce in Georgian England, the lack of small change shifted from being an annoyance to being a major national problem, holding back growth and development. Factories had no coins to pay their workers, workers had no coins buy their essentials and the economy was suffering. Josset’s description from “Money in Britain” (1962) is lovely:
Rarely was any transaction made without an argument. No trader would sell goods without stipulating the weight of the coins in which he was to be paid. Quarrels over money values were continuous; market days and fairs were regularly scenes of brawls. Wages paid by employers to their workers were the cause of many Saturday night disputes regarding the value of their money. Such was the result of the apathy and ignorance of the government in so neglecting the currency.
Essentially, as I wrote before, it was Main Street vs. Wall Street as usual (there you go brining class into it again):
What happened in that case was that there was money for the wealthy (bank notes and gold and silver coins) but there was no money for the masses. You couldn’t by a loaf of bread or pint of beer with the banknote or a silver coin, so private industry stepped in to mint copper token money, and this money circulated particularly in industrial centres in order to (very successfully) facilitate wage payments and retail spending.
[From
Up a gum tree | Consult Hyperion ]
By the end of the eighteenth century, most of the coins in circulation in the Britain were counterfeits. Gresham’s Law meant that there was widespread acceptance of counterfeits because there were no legal coins in circulation and that the good counterfeits served a useful economic purpose. A shopkeeper might have four copper trays in his till: pennies, ha’pennies, good counterfeits of same and “raps”, or counterfeits that could not easily be passed on.
The government did nothing about it. The people who did do something about were technologists: those at the centre of the industrialisation storm, largely from Birmingham, which was the Georgian Silicon Valley. The nascent metal-bashing industry there, the emergence of organised production (Matthew Boulton’s factory) and the expanding skill base meant that the skills, techniques and supply chain for medals, buttons (and the machines to make them) could be readily adapted to coins. The industrialists used the latest technology of steam presses whereas the government did not. At the same time, the supply of copper (the world’s largest copper mine was in Anglesey in those days) meant that the right raw material was in the right place at the right time.
What was the result of this technological change? It was that coins changed from commodity money (ie, gold and silver to the face value) to token money (ie, base metals and alloys worth a fraction of the face value). And it was, crucially, the private sector that caused the shift, with the public happy to accept the token money that, presumably, no-one in the government would. (As an aside, George Selgin asks in his splendid book why the private mints put so much effort and invention into creating such good quality tokens and suggests that part of it was marketing: good-quality tokens were good publicity and advert for the skills of the companies.)
These tokens gained rapid acceptance and by the end of the 18th century the problem of small change was almost solved with the official (or “Tower”) coins trading at a discount against the private alternatives. What happened then? Well around two decades later, the official government mint adopted token currency and began issuing modern coins. This is, I think, a marker for our age and one of the reasons why I am so certain that, at some point in the future, the government will adopt a digital money that is in widespread use in the private sector (let us set aside exactly which technology for the time being) as a national digital currency and make the final shift of cash from atoms to bits.
The reason that I am so interested in this particular case study is that I think it has tremendous resonance in the current day. We are living through the post-industrial revolution but we are still using the money of a different age. Just as people in the early 17th century couldn’t have imagined the Bank of England, paper money and the Gold Standard that were just around the corner, so we can’t imagine the money of the near future.
Somewhere out there, private enterprise (a student in a garage or a researcher in a regtech) is working on the money for the post-industrial age but we don’t yet know what it is. I’m pretty sure it’s not Bitcoin, and I’m pretty sure it will have something more to do with the communities that it serves than the fiat currencies of the nation-state do, but I don’t know what it is any more than anyone else does. However, it is interesting to speculate that the trajectory might replay. There will be competition to produce the money that the new economy needs and then when that competition means it’s no longer possible to make a living from the means of exchange because the transactions fees are driven down to zero, it will become some form of public good (even if the definition of public is more limited to “public within multiple overlapping communities”).
In which case, the world’s central banks might at well starting providing digital money as a public good now! Seriously, how much would it cost to set up Bank of England PESA? They might even look at some form of shared ledger solution, where copies of the “national ledger” are maintain by regulated financial institutions (e.g., banks – whereby taking part in the consensus-forming process would be a condition of a banking licence) and the entries in those ledgers related to transfers between pseudonymous accounts (i.e., your bank would know who you are but the central bank, other banks and auditors would not). I think this is just the sort of topic that we should explore at the twentieth annual Consult Hyperion “
Tomorrow’s Transactions Forum ” in London on the 26th and 27th April 2017, so you should probably block those days out in your diary right now…
Note that this problem has little to do with “banning” anonymity or pseudonymity online: both serve important purposes in protecting vulnerable voices and enabling them to participate in critical conversations.14 Banning anonymity/pseudonymity would prevent such participation while doing little to prevent sophisticated and well-funded actors from exploiting this vector. The deceptive actors we are concerned with here are well-funded military and intelligence apparatus or campaign apparatus
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Birch offers an important overview of the various digital forms of digital currencies, of which cryptos are only one. Whether it is blockchain-issued fiat money or private money: those are all developments you must be aware of, even though they might receive less media attention than the current price swings of bitcoin and Ether. After reading The Currency Cold War you will understand how the future of digital currencies is also the future of geopolitical hegemony. Hence, I recommend this book particularly to leaders in the public and private sector so that they better understand the significance of projects such as Chinas digital Yuan and learn how to respond.
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[Dave Birch] A few months ago I raised the issue of the impact of changing technology on the choices available to those wanting to redesign money. A key impact is surely that the cost of creating new currencies should fall dramatically because of the internet, mobile phones and smart chips everywhere.
Greece could pull out of the Euro and create a “hard e-drachma”. There is no need for physical currency. It’s badge of national vanity
[From
]
Having always been on the slightly euro-sceptic side of the fence, I don’t really see the end of the euro as a catastrophe but as an opportunity. But what will come next? I can’t help feeling that you need to understand the past in order to have a reasonable guess at the future so I am always keen to learn more on the history of monetary union as well the future of national fiat currency and such like. Anyway. I was loafing in bed with a cup of tea a couple of weekends ago, listening to Radio 4 with half an ear, when “A Point of View” came on. I listened, spellbound, to the historian Sir David Cannadine talking about the history of currency unions in Europe. In ten minutes, David gave one of the most interesting talks I have ever heard on BBC Radio 4 (and believe me, that’s a pretty high bar). David’s description of the Latin Monetary Union (LMU) was concise and brilliant. The highlights are, essentially, that the Europeans formed a monetary union in 1866, Britain refused to join, Greece got chucked out and eventually the whole thing collapsed. There really is nothing new under the sun.
So will history repeat itself? Keith Hart, author of “The Memory Bank“, a book about money from an anthropological perspective, wrote this about the European monetary union project : “The big mistake was to replace national currencies with the euro. An alternative proposal, the hard ecu, would have floated politically managed national currencies alongside a low-inflation European central bank currency. Countries that didn’t join the euro, like Britain and Switzerland, have in practice enjoyed the privilege of this plural option.”
I couldn’t agree with Keith more. The hard ecu, or as I used to like calling it, the e-ecu (since it would never exist in physical form) was always a better idea than the euro. When John Major proposed this extremely sensible alternative to the euro he was ignored.
British Chancellor John Major is proposing a new European currency which would circulate alongside existing national currencies… The Conservative Government is sceptical about full monetary union and regards this new proposal as a way of putting forward a genuine alternative… It is envisaged that the currency, which Mr Major calls the “hard Ecu”, would be used initially by businesses and tourists, and managed by a new European monetary fund.
[From
BBC ON THIS DAY | 20 | 1990: Major proposes new Euro currency
]
The idea of the hard ECU was to have an electronic currency that would never exist in physical form but still be legal tender (put to one side what that actually means) in all EU member states. Thus, businesses could keep accounts in hard ECUs and trade them cross-border with minimal transaction costs, tourists could have hard ECU payment cards that they could use through the Union and so on. But each state would continue with its own national currency — you would still be able to use Sterling notes and coins and Sterling-denominated cheques and cards — and the cost of replacing them would have been saved. After writing about this last year, I subsequently discovered that the proposal goes back well into the early days of Margaret Thatcher’s government.
In fact, the origin of [the hard ecu] was seven years earlier in the 1983 report of the European Parliament on the European Monetary System… The parallel-currency proposal was supported across the political and national groups in the parliament, including by the Germans so long as the central bank only concerned itself with stability of the currency (as subsequently transpired). It was taken up by Margaret Thatcher as the acceptably cautious route towards a single currency for Europe, part of her much cherished drive for a single European market for Britain’s successful financial-services industry.
[From
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The idea of an electronic currency union to facilitate international trade has new resonance. While Bitcoin captures the media attention, there are a great many possibilities: new community currencies, brand-based plays, commodity baskets and goodness knows what else. All of these make it an exciting time to be in the electronic money business, but they also make it unpredictable, which is why it is fun.
If communities are the natural basis for currencies, then there are many communities (both “real” and virtual) that might incubate the successor to the euro (and, for that matter, the Dollar and the Yen). My review of Matthew Bishop and Michael Green’s “In Gold We Trust”, I said that
I support their observation that (as Hayek thought) we might reasonably expect many forms of private currency to develop in the post-fiat world and there is no reason to imagine that only a single alternative will emerge.
[From
In Gold We Trust – don’t we? | The Enlightened Economist
]
We’re not looking at a world in which some kind of new currency takes over, but a world in which a great many communities choose the currencies that are most efficient for themselves.
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The IMF’s former chief economist Olivier Blanchard needed just three words to respond to the news that Brazil and Argentina would begin preparatory work on creating a common currency. “This is insane,” he tweeted.
From Brazil and Argentina’s joint currency plan raises economic concerns | Financial Times:
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While the Cupertino-based company doesn’t expand on specific categories around services, it said that payments and cloud services brought in record revenue. Apple first launched tap-to-pay on iPhone last February with Stripe and later brought in Square, Venmo and PayPal as partners. The company previewed the Apple Pay Later solution at the Worldwide Developer Conference (WWDC) last year, and CEO Tim Cook in an interview with CNBC on Thursday said that it will launch soon.
From Apple says it now has 935 million paid subscriptions | TechCrunch.
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The American Bankers Association commissioned the management consultant Oliver Wyman to research the growing importance of digital identities on the U.S. Financial Services sector.
A previous paper Oliver Wyman developed with the International Banking Federation (IBFed)11 explored the role of banks in digital identity ecosystems and set out the business case for their doing so. Currently there is no such bank-led ecosystem in the U.S. Recently, the three largest U.S. wireless service providers (i.e., AT&T, Verizon and T-Mobile) withdrew their combined support for Zenkey, which was arguably a bid
towards creating a national, federated identity scheme that leveraged phone-centric ID information [11].
The bank-owned consortium, Early Warning Services (EWS), after successfully launching Zelle, now appears to be entering this space with a recently launched product Authentify, which currently represents a “single sign up” service that leverages the previously verified customer data of the banks that own EWS. The implication of this in the medium-term is that smaller banks might be able to rely on (and perhaps pay for) services provided by Authentify to verify, authenticate, or perhaps even authorize their customers, in the same way that the Zelle payments product has been integrated into many other banks’ native mobile banking apps.
There is not yet the equivalent of a ubiquitously recognized, granular consumer credit score for digital identities.
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Overall, illicit addresses sent nearly $23.8 billion worth of cryptocurrency in 2022, a 68.0% increase over 2021. As is usually the case, mainstream centralized exchanges were the biggest recipient of illicit cryptocurrency, taking in just under half of all funds sent from illicit addresses. That’s notable not just because those exchanges generally have compliance measures in place to report this activity and take action against the users in question, but also because those exchanges are fiat off-ramps, where the illicit cryptocurrency can be converted into cash.
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TSB is urging the public to remain vigilant on all platforms, and highlights Facebook and Instagram as the main offenders – as scammers create fake profiles with ease. TSB also recorded cases on Match, Plenty of Fish, Snapchat, Grindr and Tinder.
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Snippings