Snippings

We’ve just had an important anniversary. I’m sure you are all thinking of July 4th and, of course, who can forget it! It’s a date that is very important to many people because it is the anniversary of the birth of The Clash, who played their first live gig on 4th July 1976. But for me, there is a much more important and personal anniversary. Here is the front page of the Swindon Evening Advertiser from 4th July 1995, the day I finally made the front page of my home town newspaper. Got to see my picture on the cover, got to buy five copies for my mother…

 

Yes, I was there on 3rd July 1995 in Swindon town centre when the Swindon Evening Advertiser vendor Mr. Don Stanley (then 72) made the first ever live Mondex sale. And here is the photographic evidence of same — in case you don’t happen to have copy of that Swindon Evening Advertiser (which I had delivered as a boy, buy the way) — as I emerge Zelig-style from the crowd to watch Don take the e-cash. It was a very exciting day because by the time this launch came, my colleagues at Consult Hyperion had been working on the project for some years (and for the first three or four years it was entirely in secret).

So for those of you who don’t remember what all of the fuss was about:
Mondex was an electronic purse, a pre-paid payment instrument based on a tamper-resistant chip. This chip could be integrated into all sorts of things, one of them being a smart card for consumers. Somewhat ahead of its time, Mondex was a peer-to-peer proposition. The value was transferred directly from one chip to another with no intermediary and therefore no cost. In other words, people could pay each other without going through a third party and without paying a charge. It was true cash replacement, invented at National Westminster Bank (NatWest) in 1990 by Tim Jones and Graham Higgins. Swindon had been chosen for the launch because, essentially, it was the most average place in Britain. Since I’d grown up there, I was rather excited about this, and while my colleagues carried out important work for Mondex (e.g., risk analysis, specification for secure transfer, multi-application OS design and such like) I watched as the fever grew out in the West Country.

 

Many of the retailers were quite enthusiastic because there was no transaction charge and for some of them the costs of cash handling and management were high. I can remember talking to a hairdresser who was keen to get rid of cash because it was dirty and she had to keep washing her hands, a baker who was worried about staff “shrinkage” and so on. The retailers were OK about it. For example here’s a quote from news-stand manager Richard Jackson: “From a retailer’s point of view it’s very good but less than one per cent of my actual customers use it. Lots of people get confused about what it actually is, they think it’s a Switch card or a credit card”. That’s if they thought about it all.

It just never worked for consumers. It was a pain to get hold of, for one thing. I can remember the first time I walked into a bank to get a Mondex card. I wandered in with 50 quid and had expected to wander out with a card with 50 quid loaded onto it but it didn’t work like that. I had to set up an account and fill out some forms and then wait for the card to be posted to me. Most normal people couldn’t be bothered to do any of this so ultimately only around 14,000 cards were issued.

So, why I am wallowing in this nostalgia again? Why do I think more people should be celebrating the Mondex Silver Jubilee? Well, look East, where the first reports have appeared concerning the Digital Currency/Electronic Payment (DC/EP) system being tested in four cities: Shenzen, Chengdu, Suzhou and Xiong’an. DC/EP is the Chinese Central Bank Digital Currency (CBDC).

with the kind permission of Matthew Graham @mattysino

The implementation follows the trajectory that I talk about in my book The Currency Cold War, with the digital currency being delivered to customers via commercial banks. The Deputy Governor of the People’s Bank of China, Fan Yifei, recently gave an interview to Central Banking magazine in which he expanded on the “two tier” approach to central bank digital currency (CBDC). His main points were that this approach, in which the central bank controls the digital currency but it is the commercial banks that distribute it, is that is allow “more effective exploitation of existing business resources, human resources and technologies” and that “a two-tier model could also boost the public’s acceptance of a CBDC”. 

He went on to say that the circulation of the digital Yuan should be “based on ‘loosely coupled account links’ so that transactional reliance on accounts could be significantly reduced”. What he means by this is that the currency can be transferred wallet-to-wallet without going through bank accounts. Why? Well, so that the electronic cash “could attain a similar function of currency to cash… The public could use it directly for various purchases, and it would prove conducive to the yuan’s circulation”. How will this work? Well, you could have the central bank provide commercial banks with some sort of cryptographic doodah that would allow them swap electronic money for digital currency under the control of the central bank. Wait a moment, that reminds me of something because… yep, that’s how Mondex worked.

 

That was the big difference between Mondex and other electronic money schemes of the time, which was that Mondex would allow offline transfers, chip to chip, without bank (or central bank) intermediation. Offline person to person transfers. Just like cash. That’s huge. Libra can’t do it, and never will be able to because, like Bitcoin, it needs to be online to check for “double spending”.

Mondex was a window into the future of money.

That’s why this week’s special Tomorrow’s Transactions Webinar is a Mondex reunion! Tim Jones, one of the co-inventors, will be joining us along with Debbie Gamble who was head of Mondex North America and a couple of other friends to reminisce and have a bit of fun but much more importantly, to talk about the lessons learned from that incredible experiment and to share ideas for the coming generation of digital currency regulators, innovators and entrepreneurs.

Those who cannot learn from history are doomed to repeat it!

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Per the report, Stefani discovered Rossdale had been carrying on an affair for over three years with the family’s nanny (including during her most recent pregnancy) upon seeing “explicit texts between Rossdale and the nanny—including nude photos of [the hired hand] and their plans to meet up for sex—on the family’s iPad.”

Did Gwen Stefani’s Family iPad Alert Her to Gavin Rossdale’s Affair? | Vanity Fair:

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In an alert posted on its website on Saturday, Interpol warned healthcare organisations at the forefront of the global fight against the COVID-19 pandemic that it has detected a significant increase in the number of attempted ransomware attacks targeting healthcare organisations.

Interpol warns hospitals against crippling ransomware attacks:

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Travelex, known for its ubiquitous foreign-exchange kiosks in airports and tourist sites around the world, was shut down by a computer virus that infiltrated its networks early this year. It responded by paying the hackers the equivalent of $2.3 million, according to a person familiar with the transaction.

Travelex Paid Hackers Multimillion-Dollar Ransom Before Hitting New Obstacles – WSJ:

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The European Payments Initiative (EPI) aims to build a unified pan-European payment system, offering a card for consumers and merchants across Europe, a digital wallet and P2P payments.

The banks backing the project – BBVA, BNP Paribas, Groupe BPCE, CaixaBank, Commerzbank, Crédit Agricole, Crédit Mutuel, Deutsche Bank, Deutcher Sparkassen- und Giroverband, DZ BANK Group, ING, KBC Group, La Banque Postale, Banco Santander, Société Générale, UniCredit – have the full support of the European Central Bank, which has long-floated the idea of a home-grown cross-border scheme capable of taking on the big brands, but so far without success.

Eurozone banks to take on Visa and Mastercard with home-grown payments platform:

Now, my first thought was of course “why are they using a card?”.

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In response, the CMA has recommended that the government creates a “Digital Markets Unit” with the power to force competition where none currently exists, by, for instance:

Requiring Google to share data about user behaviour with competitors, in a way that avoids the transfer of personal data, so that they can improve their own algorithms;
Ordering Facebook to increase compatibility with competing social media platforms;

From Ministers urged to limit Facebook and Google’s power over ad market | Media | The Guardian:

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Making data available under the CDR may be a legal obligation but to treat it as a complex compliance exercise is to miss the true opportunity. What drives us – and where our future success as a bank lies – is a better understanding of what customers want from us.

From Australian banking opens up:

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I’ve said a few times that I think the Internet of Things is where mobile was a couple of decades back. Some of us had mobile phones, and we loved them, but we really didn’t see what they were going to turn in to. I mean, I was always bullish about mobile payments, but even so… the iPhone X that’s next to me right now playing “Get Out Of Denver” by Eddie & the Hot Rods out through a Bluetooth speaker is far beyond anything that I might have imagined when dreaming of texting a Coke machine to get a drink. We’re in the same position now: some of us have rudimentary Internet of Things bits and bobs, but the Internet of Things itself will be utterly beyond current comprehension.

Specialized elements of hardware and software, connected by wires, radio waves and infrared, will be so ubiquitous that no one will notice their presence

From The Computer for the 21st Century – Scientific American

That was Mark Weiser’s prediction of the Internet of Things from 1991. It seems pretty accurate, and a pretty good description of where we are headed. This is world in which computers and (and financial services) vanish from view and are instead part of  the warp and weft of everyday life. What I’m not sure Mark would have spent much time thinking about is what a total mess it is.

Whether it’s wireless kettles or children’s toys, it’s all being hacked.  We’ve gone mad connecting stuff up, just because we can, and we don’t seem concerned about the nightmare in the making. I gave a talk about this a couple of years ago at Cards & Payments Australia  making the point that I’m not sure how financial services can begin to exploit the new technology properly until something gets done about security.

There’s no security infrastructure there for us to build on, and until there is I can’t see how financial services organisations can do real business in this new space: allowing my car to buy its own fuel seems a long way away when hackers can p0wn cars through the interweb tubes. I finished my talk with some optimism about new solutions by touching on the world of shared ledgers. I’m not the only one who thinks that there may be a connection between these two categories of new, unexplored and yet to be fully understood technology.

Although I’m a little skeptical of the oft-cited connection between blockchains and the Internet of Things, I think this might be where a strong such synergy lies.

From Four genuine blockchain use cases | MultiChain

The reason for my suspicion that there may be a relationship here is that one of the characteristics of shared ledger technology is that in an interesting way it makes the virtual world more like the mundane world. In the mundane world, there is only one of something. There’s only one of the laptops that I’m writing this post on and there’s only one of the chairs that I’m sitting on and there is only one of the rooms that I’m sitting in. In the mundane world you can’t clone things. But in the virtual world, you can. If you have a virtual object, it’s just some data and you can make as many copies of it as you want.

A shared ledger technology, however, can make the virtual emulate the mundane in the sense that if there is a ledger entry recording that I have some data, then if I transfer the data to you, it’s now yours and no longer mine. The obvious example of this in practice is of course bitcoin where this issue of replication is the “double spending problem” well known to electronic money mavens.

I love Australia and I love Australians. Not only do they have inventive invective they have a drive to innovate around mechanisms to impart it. As you may have read earlier in the year, this urge was manifest in CBA’s discovery that more than 8000 of its customers were being harassed or intimidated through a series of low-value deposits to their accounts, with abusive messages in the transaction descriptions.

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(In the U.S., the prepaid debit card Green Dot, which is an option for people who don’t have bank accounts, charges up to $4.95 every time you reload it and will hit you with a monthly charge of $7.95 if your account balance gets too low.)

Why the inevitable end of cash won’t fulfill its egalitarian promise:

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