Snippings

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“Bank of Ireland has defended its charges and fees where customers pay one cent per contactless card payment and ten cents for chip and PIN transactions.”

From “Bank of Ireland defends customer fees and charges”.

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“But there may be a solution to protect against fake drivers with criminal intent — or, for that matter, to protect the drivers against fake passengers.

Specifically, one of Josephson’s classmates, Sydney Ford, is lobbying for Uber and Lyft to add QR codes to their apps that would easily match a driver to a passenger as the passenger approached. So far, nearly 23,000 people have signed the petition on Change.org to add those QR codes, and it’s growing hourly.”

From “Classmate of woman who was found dead asks Uber, Lyft to add QR codes – Business Insider”.

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All drinks, snacks, and team merchandise at the Tottenham Hotspur Stadium have to be purchased by apps like Apple Pay or on a card.

From Scoring With Apple Pay: Tottenham Hotspur Prepare to Open Doors at First Fully Cashless Stadium – The Mac Observer.

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The Cabinet Thursday approved the promulgation of an Ordinance to allow voluntary use of Aadhaar as identity proof for opening bank account and procuring mobile phone connection

From Aadhaar: Cabinet approves Aadhaar Ordinance to allow its use as ID proof for bank accounts, SIM connection.

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This, I think, is the kind of architecture that Cambridge Blockchain explained to me when I bumped in them last year and it seems a reasonable starting point, congruent with our ideas about the kinds of transactions that might be entered into a shared ledger.

From Putting “identity” on the “blockchain”. Part 1: Find a problem | Consult Hyperion.

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“In Australia, the note of choice for hoarding and bulk cash smuggling is the A$100 note, known affectionately as ‘the Melba’ (the note features the face of operatic legend Dame Nellie Melba).

In Australia, there is A$76 billion in near-indestructible polymer banknotes in circulation. That equates to around A$3,000 for every man, woman and child in the country. This raises the question: where are Australia’s missing ‘Melbas’?”

From “Dark economy: Inside the $76 billion mystery of Australia’s missing ‘Melbas’​ | LinkedIn”.

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“The [HMRC Report] found widespread infiltration of government agencies, to obtain false identities and ‘sensitive information’. From one company investigators found ’20 potential internal fraud cases including [gang] members in government agencies’, one intelligence summary said. Another said two Post Office employees seemed to be helping falsify documents, concluding: ‘infiltration is widespread’.”

From “Gangsters with links to the 7/7 London bombings stole £8billion from British taxpayers | Daily Mail Online”.

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“Russian police are searching for a plastic surgeon with ‘fake qualifications’ who left her patients ‘disfigured,’ say reports.”

From “Russian police hunt ‘Frankenstein’ plastic surgeon who ‘left her patients disfigured’ | Daily Mail Online”.

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I notice that in the considerable press comment concerning the possible introduction of a Facebook payment system and perhaps even a Facebook currency of some kind, commentators continually refer to a Facebook “stablecoin”. I am certain that they are wrong to use this term, because it does not mean what they think it means. I may well be facing a losing battle about this, but I am stickler for correct currency terminology.

So. Stablecoin. What?

In the Bank of England’s excellent “Bank Underground” blog, there was a post on this topic that said “The chances of a stablecoin keeping a stable price depends on its design. There are generally two designs of stablecoin: those backed by assets, and those that are unbacked or ‘algorithmic’”. They are right, of course, but I have slightly more granular classification of designs:

1. Algorithmic Currencies, in which algorithms manage supply and demand to obtain stability of the digital currency. This is what a stable cryptocurrency is: since a cryptocurrency is backed by nothing other than mathematics, it is mathematics that manages the money supply to hold the value of the steady against some external benchmark. This is what is meant by stablecoin in the original crypto use of the term.

2. Asset-backed Currencies, in which an asset or basket of assets are used to back the digital currency. I don’t know why people refer to these a stablecoins, since they are stable only against the specific assets that back them. An asset that is backed by, say, crude oil is stable against crude oil but nothing else.

3. Fiat (aka Currency Boards), similar to a asset-backed currencies but where the assets backing the digital currency are fiat currencies only. There are mundane versions of these already: in Bulgaria, for example, where the local currency (the Lev) is backed by a 100% reserve of US dollars. 

As for that last category, this is effectively what is currently defined as electronic money under the existing EU directives, and therefore already regulated. Those coins backed by fiat currency, such as JPM Coin, simply provide a convenient way to transfer value around the internet without going through banking networks.

Predictions are of course difficult, but my general feeling is that it is the asset-backed currencies that are most interesting and most likely to succeed in causing an actual revolution in finance and banking. Algorithmic stablecoins and fiat “stablecoins” exist to serve a demand for value transfer, but this is increasingly served well by conventional means. I notice this week, for example, that Transferwise can now send money from the UK to Hong Kong in 11 seconds, a feat made possible by their direct connection to the payments networks of both countries. Why would I use a fiat token when I can send fiat money faster and cheaper?

Of course, you might argue that a digital currency board might allow people who are excluded from the global financial system to hold and transfer value but I am unconvinced. There plenty of ways to hold and transfer electronic value (eg, M-PESA) without using bank accounts. Generally speaking, people around the world are excluded because of regulation (eg, KYC) and if we want to do something about inclusion we should probably start here. If you are going to require KYC for the electronic wallet needed to hold your digital currency they customers may as well open a bank account, right?

(I’ve written before about how the need for an account hampered Mondex. When it was first launched, I went to a bank branch with £50 expecting to walk out with a Mondex card with £50 on it. What I actually walked out with was a multi-page form to open a bank account so that I could get a Mondex card which arrived some time later. And since I had to put my debit card into the ATM in order to load the Mondex card, I did what most other people did and drew out cash instead.)

I suppose there are some people who think that the anonymity and pseduonymity of cryptocurrencies might make them an attractive alternative to certain sectors, but this is probably a window. If cryptocurrencies were used for crime on a large scale then efforts would be made to police them. Bitcoin, in particular, is not a good choice for criminals since it leaves a public and immutable record of their actions but you can imagine a future in which the mere possession of an anonymous cryptocurrency becomes a prima facie cash of money laundering.

Looking at the “stable” stable, I’ll put my money on the middle way: there is a real marketplace logic to the trading of asset-backed currencies and I expect to see an explosion of different kinds.

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I have no idea why my debit card has either a magnetic stripe or embossing, and it’s not clear to me why it has my name and bank account number on it either, and I don’t know why it has a signature strip on the back when I don’t want to use it for signature transactions under any circumstances.

From Counterfeit card fraud in the US will fall, eventually | Consult Hyperion.

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