Snippings

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“The Bretton Woods arrangements also seemed highly unlikely until they were in place. They involved a complicated system of exchange rate pegs, capital controls and a ‘gold pool’ (and other methods) to control gold prices and redemption ratios. What’s more, the whole thing was dependent on America’s role as global hegemon, both politically and economically. The dollar still was tied to gold, and the other major currencies tied to the dollar, but as the system evolved it required that no one was too keen to redeem dollars for gold (the French unwillingness to abide by this stricture was one proximate cause of the collapse of Bretton Woods).

I don’t think a monetary economist from, say, 1890 could have imagined that such an arrangement would prove possible, much less successful.”

From “Bretton Woods 75th Anniversary: Expect the Unexpected – Bloomberg”.

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“Enter local currencies. From BerkShares in western Massachusetts in the US to the Brixton Pound in the UK and the Chiemgauer in Germany, these currencies are designed to be spent in a specific community. There are more than 100 operating worldwide, and they’re all fuelled by a common sentiment: They want to support local businesses and the people who frequent them.”

From “Why your city should have its own currency |”.

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“For bargoers, however, these systems create an uncomfortable new paradigm for partying, one in which data-sharing is a norm and technological tools can multiply the consequences of a single bad night. And once a bar adopts an ID scanning system, even innocent patrons may never know where their ID data will end up, or how it will be used.”

From “This ID Scanner Company is Collecting Sensitive Data on Millions of Bargoers”.

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“Recent figures show that last year the fraud prevention service Cifas reported 189,000 incidents of identity theft in the UK. As well as reducing the need to upload copies of passports online, the scheme aims to stop people having to take passports into bank branches. Government figures estimate that around 400,000 UK passports are lost or stolen every year.”

From “Warning over uploading copies of passport online as Government launches trial scheme to reduce identify theft”.

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“Digital ID could be a solution to the gig economy’s marketplace problems. Unlike a paper-based IDs such as most driver’s licenses and passports, a digital ID can be authenticated remotely over digital channels. That means platforms like Uber, Task Rabbit, and Fiverr could verify their drivers, handymen, and independent workers with one click—and both you and the platform could trust them.”

From “How digital ID could fix Uber, Lyft, and Fiverr — Quartz”.

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Online trust is a pretty serious issue, but it’s not alway easy to quantify. I mean, we all understand that it is important, but what exactly is the value in pounds, shillings and pence (or whatever we will be using after Brexit) and how can we use that value to bound some business cases? It’s one thing to say (as I often hear at conferences) that some technology or other can increase trust, but how do I know whether that means it is worth spending the money on it? At Consult Hyperion we have a very well-developed methodology, known as Structured Risk Analysis (SRA), for managing risk and directing countermeasure expenditures, but we need reasonable, informed estimates to make it work.

The specific case of online reviews might be one area where trust technologies can be assessed in a practical way. In the UK, the Competition and Markets Authority (CMA) estimates that a staggering £23bn a year of UK consumer spending is now influenced by online customer reviews and the consumer organisation Which has begun a campaign to stop fake reviews from misdirecting this spending. According to their press office, with “97% of shoppers relying on online customer reviews to help make a purchase“, fake reviews are a very serious problem.

(Of course, there are some circumstances where fake reviews might be in society’s interests! It has long been understood that fake reviews are a good way to disrupt online markets for illegal drugs, because these are markets that are wholly-based on online reviews and reputation.)

Unscrupulous businesses undoubtedly do find fake reviews an incredibly useful tool. I could have chosen any one from millions of cases, but here is just one example.”Asad Malik, 38, used fake reviews and photographs of secure car parks hundreds of miles away to trick customers into leaving their vehicles with him when they flew from Gatwick [Airport parking boss jailed for dumping cars in muddy fields].

So how could we use technology to make a difference here? When you read a review of an airport parking service, or a restaurant or a Bluetooth speaker, how can you even be sure (to choose the simplest example) that the reviewer purchased the product? Well, one possibility might be to co-opt the payment system: and this can be done in a privacy-enhancing way. Suppose when you pay the bill at a restaurant, and you have told your credit card provider that you are happy to be a reviewer, your credit card company sends you an unforgeable cryptographic token that proves you ate at the restaurant. Then, when you go to Tripadvisor or wherever, if you want to post a review of the restaurant, you have to provide such a token. The token would be cryptographically-blinded so that the restaurant and review-readers would not know who you are, so you could be honest, but they could be sure that you’ve eaten there.

Such “review” are an obvious thing to store in digital wallets. You could easily imagine Calibra, to choose an obvious case study, storing these tokens and automatically presenting them on log in to review sites. This would be a simple first step toward a reputation economy that would benefit consumers and honest service providers alike.

This is one of the cross-overs between payments and identity that I expect to be much discussed at Money2020 in Las Vegas this week I’ll be there with the rest of the Consult Hyperion team.

The leader of the Facebook initiative, David Marcus, said in his testimony to Congress that “if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different”. When he says “others” he does not mean Amazon or Google. This might actually be Facebook’s strongest card. They are saying, I paraphrase, that you (ie, the US government) can allow people’s money to be controlled by us or by the Chinese Communisty Party.

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Facebook has rejected US lawmaker demands to halt its plans to launch a digital currency, despite two days of bruising hearings in Washington where the scheme was attacked as a threat to users’ privacy, the banking system and national security.

David Marcus, the co-creator of the Libra cryptocurrency, told members of the House financial services committee on Wednesday that Facebook would not launch the project until it had sign-off from the necessary regulators. But he would not agree to stop working on the plans, as demanded by several senior members of Congress, or to launch it in a limited pilot project first.

From Facebook rejects lawmaker demands to halt cryptocurrency | Financial Times.

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The acting Managing Director at the International Monetary Fund (IMF) and therefore the man in charge of money, David Lipton, gave a recent speech in which he touched on digital currencies and noted that while he saw benefits (ease of use, lower costs and global reach) there are also a wide range of risks to be considered. He listed “the potential emergence of new monopolies, with implications for how personal data is monetized; the impact on weaker currencies and the expansion of dollarization; the opportunities for illicit activities; threats to financial stability” and went to specifically mention “the challenges of corporates issuing and thus earning large sums of money — previously the realm of central banks”.

This is a reference to seigniorage

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“In response, the OBIE is planning to create ‘Premium APIs’ that sit above the mandatory ‘Regulatory APIs’, providing a commercial incentive for banks to up their game and address some of the gaps in implementation.”

From “PSD2’s narrow focus limiting the potential of Open Banking – report”.

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