After a successful career in payments and digital identity. Philip is now focusing on enabling the ability to vote from our mobile phone.
What Next, You May ask. We shall See
An update of the website was in order and such is happening, and much must still until we satisfy my 2006 concern.
I looked around my site and saw https://www.bis.org/publ/bppdf/bispap114.pdf.
Updated perspective and brought forward truths. Blockchains and digital ledgers with smart contracts work and are fit for the right purpose. But please, memory and power are expensive.
Such big words. The idea something is once written can never be changed, altered, or deleted as well as elegant. Or that there is no need to worry about anything, what is presented simply is one instance of knowledge not until more than two can be found is there the possibility of trust. But if more than a few assemble and not sure then!
In a trustless environment, there is no single entity that has authority over the system, and consensus is achieved without participants having to know or trust anything but the system itself. A definition from one of the major institutions helping to establish this new. New what?
https://academy.binance.com/en/glossary/trustless
It is the removal of relationships so they can be replaced by something, no someone new that is bothersome. Words like usury invade reality, and a few get very wealthy as the mass spend to survive, always being driven to need more.
We have lost the ability to commune. We lost track if the responsibility to be good stewards of the garden we were given responsibility for .
https://modernconsensus.com/technology/building-digital-dollar-requires-private-sectors-help-fed-chairman/
Clearly, I am a bit behind.
Distributed autonomous organizations, a DAO.
When we think of governance and how we control society, we immediately must consider the realities of people in the tribes they belong to.
Recently the emergence of bitcoin, the understanding of the power of a distributed ledger, the use of a hash chain, the power of cryptographic processes, and the security of the devices we carry establishes a foundation for a brave new world.
What is governance? It is the method processes and mechanisms a society puts in place to establish order and ensure harmony?
The ancient Turks, Greeks, slave spoke of democracy, the idea that each member of the tribe, the town, the city, or the state could assemble and determine new laws, regulations, and best practices. We then evolved into Republican governments the concept of a group of people representing a larger number of citizens.
Influence and power define what shall evolve. In my lifetime, the idea of being able to plug the handset of your telephone into the back of a terminal and establish a connection to a computer somewhere out there was a novelty. For my father it is Time in Geneva when Aryanism stood out as a challenge, opportunity or threat. Telephones were just emerging and radios were available. TV was still not present. Paper books and libraries surrounded the environment we will call Geneva.
City on the Lake, what is this thing place in his history his is as relevant as your or mine.
One question why anonymity at the profound process of engagement. When you are something called anonymous I am not sure I want to play. If your anonymous is mandatory; I don’t want to play.
The innovative spiritual and the. Nurturing essence of life.. How this evolves involves countless engagements.
Each sublime note to the fabric of the virtual environment we present to the public is.
And, all of us form the fabric of the public.
He answered them, “And why do you break the commandment of God for the sake of your tradition? 4 For God said,* ‘Honor your father and your mother,’ and, ‘Whoever speaks evil of father or mother must surely die.’ 5 But you say that whoever tells father or mother, ‘Whatever support you might have had from me is given to God,’* then that person need not honor the father.* 6 So, for the sake of your tradition, you make void the word* of God. 7 You hypocrites! Isaiah prophesied rightly about you when he said:
8 ‘This people honors me with their lips,
but their hearts are far from me;
9 in vain do they worship me,
teaching human precepts as doctrines
“Listen and understand: 11 it is not what goes into the mouth that defiles a person, but it is what comes out of the mouth that defiles.”
What shall we do? Simple honor the one Jesus answered, “The first is, ‘Hear, O Israel: the Lord our God, the Lord is one; 30 you shall love the Lord your God with all your heart, and with all your soul, and with all your mind, and with all your strength.’ 31
You commit to what you believe in with a robust desire to adhere to the moral imperatives. The one God is the same God written about in so many different ancient lore.
Anyone you engage in an event. An event is is anything we all seek to record. By the way any unit of one can record as long as all parties are aware. It is our contracts and promises. Those such as payment, voting, identity and influence.
See you next time.
When we think of governance and how we control society, we immediately must consider the realities of the people and the tribes to which they belong. Without understanding their history and the context of the culture, we gamble with knowing the truth as we try to understand their focus, purpose, and future.
What is governance? It is the methods, processes, and mechanisms a society puts in place to establish order and ensure harmony? The ancient Greeks spoke of democracy, the idea that each member of the tribe, the town, the city, or the state could assemble and determine new laws, regulations, and best practices. We then evolved into representative structures where appointed, elected, or heredity groups of people came together to represent many citizens.
Long ago, yet, in my lifetime, the idea of plugging the
handset of your telephone into the back of a terminal and dial into a computer somewhere out there was a novelty.
Last decade, in response to the financial crisis brought on by those who sought to profit from the creation of financial instruments derived from the derivate of another financial derived instruction, we read Bitcoin: A Peer-to-peer Electronic Cash System. This seminal piece of work drove us to understand the immutable and trustless power of a distributed ledger.
When bitcoin emerged, Satoshi’s whitepaper described a new world order. A world built on mathematics, founded in a meritocracy, and governed by software. It makes one wonder about the written into science fiction novels. They expressed concern and worry about computers and pure logic taking over the world. Sometimes humanity became technology’s servant.
While learning, I remembered a series of conversations with David Chaum as he explained the concept of a hash chain, the power of cryptography, digital signatures, and certificates as I explored the security of the devices we carry. This journey drove me to explore relationships, artifacts, cards, and credentials.
After 45 years serving the financial community with a technical orientation, I came to understand the power of identity, the fallacy of software, and the integrity of people. At the same time, history was rewritten, curriculums were changed over and over again. Disinformation, trust, fake news, and propaganda meld into this cacophony. A collage of perspectives linked to our identity and flavor soured by the relationships and encounters we have had during our limited existence. Today I wonder about elections, opinion polls, proxy votes, and the selectio
n of representative government.
Today it is time to embrace a citizen-centric view of technology. If we do not stop and think, the brave to a new world we may construct could look like 1984 or a world under the watchful eye of Skynet. If we reflect on what we, the citizen, want and direct what we do to achieve that collective vision. We can work as one together and establish the foundation of that brave new world we all seek.
A distributed autonomous organization seeks to address a myriad of challenges. As peers in a decentralized structure, the participants deliberate, vote, and reach
consensus.
Like in any organization, people are attracted to thoughts and ideas that meld well with their own. But what makes this so new? Long ago, when representative governments or councils were created, the community decided to allow a few to manage the needs of the many.
What is so different? Our interfaces have changed. The way we engage has expanded and no longer restructured to verbal or hand-delivered written communication. In written communication, there is a thought. I stare at my computer screens; my pen is poised over a tablet as I use script to write notes or the keyboard to chat across multiple instant messaging applications. While staring at a word processor, PowerPoint presentation, or spreadsheet, I can engage and share with people spread across the planet using my cameras, speakers, and microphones.
A distributed Autonomous Organization is simply the grouping of people using technology to widen the breadth of participation. No longer restricted to location, we can continue to expand networks and engage with our peers.
As is my habit each morning I run through a serious of Google Alerts scanning and reading those that tweak my interest. One of these alerts helps me to stay abreast of what is happening in the crypto market. Most often times the articles present the hype and expectation of those enamored with Bitcoin and the excitement the last ten years of cryptocurrency excitement has wrought.
One article’s conclusion deserves a bit more thought.
There’s a lot of money to be made in cryptocurrency, but it belongs to those who can avoid making ruinous mistakes.
Whether you’re trading or mining, it is important to treat your endeavor with the utmost care and diligence.
As a crypto newcomer, you will go much farther and enjoy success if you note these tech-mistakes and steer clear of them.
This middle sentence once again reinforces my skepticism.
What is behind these immaterial assets?
Is the price of a bitcoin simply the result of the actions of crypto believers, speculators, and gamblers?
Is a cryptocurrencies price driven by the value of the reward required by miners to cover their cost for electric, space and computer resources?
Unlike the US dollar, the British pound, Swiss Franc or other stable country issued currency built on “trust” in the future of the USA, UK or Switzerland; these new currencies are built on peoples’ belief in a speculative and trustless cryptographic universe.
Behind all of this is the cost of supporting these cryptocurrencies. Costs measured in electric bills and the investment in racks of mining resources “computers”. Is it the ever-increasing need for computation power that drives the ever-increasing need for higher rewards set against the process of halving, apparently designed to address inflation.
This mystery of “inflation” leaves me wondering if inflation of the price a built-in part of a scheme to assure the original and still invested success of the few?
This morning hash rates, degrees of difficulty and the creating of derivatives to moderate the risk of Bitcoin mining drew me in. Several years ago I was asked to participate in a fireside chat on Crypto-currencies at the Federal Reserve in Atlanta.
One of my concerns then and still today is the exponential growth in the cost of mining. These charts offer a perspective on a concept called the Hash Rate, a measure of the work necessary to create a block.
Clearly, as time marches forward, the work to earn the reward gets harder. Thus creating a need to increase the fees charged to add a transaction within a block to the chain.
When people speak to the justification of Bitcoin they would speak to the reduction in cost. Is this statement still valid?
While considering the potential of Bitcoin; the working of our government rambles on, as we consider the fate of the American President. Lies, bribes, abuse, and obstruction seems to be the order of the day.
The division between political parties; drives division within families, cities, and two people sitting together over lunch creates animosity.
We are now a world driven to speculate or better said gamble while not wanting to find a gentle and graceful road to mutual satisfaction.
We need to reflect consider and potential restore faith in what is real, what is just and what is fair for all.
Spending money on machines of war instead of investing in education and our environment makes no sense to this lone individual. We need to once again seek peace and justice.
As a member of a committee responsible to develop the agenda for Payment Summit this February in St Lake City, we’ve been discussing a panel on Cryptocurrency. The initial conversation spoke of blockchain and cryptocurrencies and how these two topics, while related, need to be independent of each other.
With an agreement to focus on Cryptocurrency, I began to ask myself, “What is a cryptocurrency”?
Off to the Internet. My computer instantly offered a definition.
A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank
The interesting challenge in this definition is the words “operating independently of a central bank”.
In September 2017 the Bank of International Settlement BIS published a report on Cryptocurrencies. This report spoke to the idea of CBCC or Central Bank Cryptocurrency. The authors offered a diagram known as the Money Flower. The flower positions this idea of CBCC within the world of money and argues a Central Bank could easily create a sovereign cryptocurrency. 
The article then goes on to describe a series of examples. As I moved through the document I was drawn to the idea of Digital Currency and once again was compelled to search for clarity. At the same time I noted the recent announcement by China and how the European Union recently suggested the European Central Bank consider just such an investment.
During my research, I was reminded of the work of David Chaum and remembered how early in the growth of Bitcoin someone suggested David could be Satoshi Nakamoto. I am also reminded of my time at Europay and how we explored the use of Chip Cards, given their hardware and cryptographic capabilities, to create a Cash Replacement, Mondex. In parallel with our efforts Visa Cash emerged, Proton, Chip Knip, Chipper and, others emerged. This led me to a BIS report on Electronic Money.
Looking back in history to the early discussions of Electronic Money and read the early views of the European Union and the US Treasury, it reminded me of some of the original concepts and issues. I’m reminded of words like anonymity, traceability, origination, and sovereignty.
Anonymity and the lack of traceability are what criminals and Silk Road Market Place saw as the benefit of Bitcoin. The concepts of origination and sovereignty clearly are key to the thinking of Governments and Central Bankers and critical elements of the origin of Bitcoin, as expressed in the original white paper.
What these cryptographers have created is amazing, yet one worries about who is responsible for and benefits from the origination of Bitcoins, forks of Bitcoins and the multiple cryptocurrencies now in existence.
If we look inside Bitcoin its architecture promotes the idea of mining and allows the successful miner to originate new bitcoins. They argue this is the incentive driving participation. I then wonder about the cost of Bitcoin mining or the cost of Ethereum mining. Does the cost of supporting Bitcoin justify its continued existence? Does the supposed benefit of cryptocurrencies justify the profit earned by the miners who support the work to assure consensus?
As my research progressed I ran into a speech given at a conference and the Bundesbank Money in the digital age: what role for central banks? The article attempts to address three questions:
The author’s arguments are worthy of consideration. Especially the questions of efficiency and trust.
The question we all must consider
What is money?
Especially in the global and emerging digital market place.
In the end, I remain confused and concerned. Digital Money, Electronic Money, Digital Currencies, Cryptocurrencies, Feit Money, stablecoins and the potential of the distributed ledger clearly are set to disrupt much.
Today.
How many passwords are you trying to manage! Does your LinkedIn contact list connecting you to more than 4,000 individuals? Does Facebook, Instagram, and other social media websites inundating you with news and stories about your friends, colleagues and interesting people?
How many cookies have your computers accumulated? How many databases have more information about you than they need? If we search the dark web, how valuable is your data?
Cando seeks to help you manage your data, identity, assets, and relationships.
Philip lives on Sea Island with his 93-year-old father, the Doctor. They pursue travel and Philip keeps his head into what is happening in financial services, blockchain, authentication, digital identity, and, whatever else people seeking to understand the transformation; particularly those in the identity and payments space.
What is happening means we can unlock our hotel rooms, cars, and homes from our phones. Our security system iwill be another app we have to find on our phone.
Instead, we need an intuitive assistant seeking to simplify our lives by taking on repetitive tasks like driving, working inside a data table or simply opening up the house for the season.
Normalizing data and performing the analysis capable of earning value is the name of the game. Management is about stimulating a team to work in the mutual interest of the organization. Executives define the strategy and articulate the vision in a manner conducive to success.
Cando seeks to help you manage your assets and relationships. Assets those places and things you use doing your daily life and those interactions you have with people and entities seeking to serve, sell and partner with you.
Then there are friends who we expect to be part of our lives and therefore have privileges and access capabilities.
All of this with a target of selling integration services to the top million and simply assuring each person has an identity thus serving the bottom billion. ultimately earning $1 per year per user to simply be there when it all breaks and you wish to restore your digital life.
At the core, your digital security will be based on the use of cryptography and sophisticated matching algorithms designed to assure anyone that you are that one individual in the populatations of the universe.
WTF is The Blockchain? The ultimate 3500-word guide in plain English to understand Blockchain.
This technology called the Blockchain is built on the desire to create a new model to assure “trust”.
To establish trust between ourselves, we depend on individual third-parties.
Could there be a system where we can still transfer money without needing the bank?
This statement begs the question, What is a Bank. Is it simply an institution for recording the value we deposit with them and then allow us to move/transfer some portion of that value to another. This then means the loans a bank makes, based on the sum of the deposits we trust them with, is not part of what a bank does.
If the only role of the intermediary is to maintain a ledger capable of recording and facilitating the transfer to electronic facsimiles of something, then, yes a distributed ledger removes the need for the middle man the trusted intermediary. Instead of trusting a third party we agree to a methodology “The Distributed Ledger” to record these intangible assets or rights of ownership of a tangible asset in a manner where each of us has a copy of the ledger. The beauty of this concept is for someone to attempt to change a record in the ledger, recording the disposition of a tangible or intangible asset; 51% of us would have to agree to that alteration.
In the above-linked article, all of what happens can be summaries with this quote
Earlier the third-party/middleman gave us the trust that whatever they have written in the register will never be altered. In a distributed and decentralized system like ours, this seal will provide the trust instead.
While reading the recent document produced by the IMF I am compelled to wonder.
What is the difference between what they call Bank Deposits and e-money. My first question, ignoring the words bank deposit. Both are electronic accounts of value, recorded in someone’s ledger. These two diagrams extracted from a BIS paper offer a perspective.
They then speak to four attributed to the “means of payment”
They then speak to the five ‘Means of payment”.
Object-Based
As we think of the evolution of these object-based means of payment, we need to reflect on a new term “Central Bank Digital Currency” CBDC.
As a historian, I then wonder where things like Digi-cash and Mondex fit into the classification. The value was originated and then distributed into a personal and secure storage device (Wallet). Redemption or better said the guarantee, was provided by a party. Maybe not a bank or the central bank, yet, easily embraced by such an institution. Somehow history seems to lose sight of the origins of money and assumes the existence of a central bank. Here in the USA, the formation of a Central bank was one of many areas of political discourse.
Claim-Based
The magic word behind all of these discussions is “Liquidity”. The bottom line does the receiver of the money appreciate the value of the unit of measure and is the receiver confident they will be able to convert that money into another form, of their preference
Let’s start at the beginning, the transaction, the distributed ledger entry. Think about the content of the transaction as the payload. Next think of the payload as land deed, cryptocurrency value, record of ownership, journal entry, smart contract … marriage contract. Either two or more people seek to exchange and record. Another way to think about all of this is as a block of data, code or other digital representation of something duplicated in every participant’s copy of the current ledger. No matter what happens, a secure system must be established for a smooth cryptocurrency transaction to take place. Maybe look for the best vpn for crypto trading? Could be an option, but only in the later stages when the initial nitty-gritty of the process is established.
What is essential, before anyone can do anything.
The parties seeking to exploit a distributed ledger must define how it will work.
It is what the community or parties seek to represent and manage, using distributed ledger technology, agree.
The whole process of defining the payload begins when the community agrees to and sets off to publish the processes, procedures, rules, functions, and purpose of their application. It is this act of governance we use to define how and what will be conveyed in the payload to be stored and recorded on a blockchain. Which blockchain, protocol, and cryptographic processes; obviously it is a decision of the community.
We need to be clear before we can do anything with the payload. Ourselves and ultimately others will have initially and subsequently defined the mechanics and processes designed to assure the integrity of the blockchain itself.
There are two parties to each event recorded within these transactions. The agreed events, transactions and smart contracts are ultimately included in a block and properly extended onto the chain for everyone to see and read. More about Confidentiality in another post.
Each party has an address and then addresses unique to each asset e.g. coin. The address, in most cases, is simply an asymmetric cryptographic public key.
When the two parties decide to record an event; the sale or transfer of the title to a car.
The transactions are broadcast to the network, buying and selling included. These transactions can take place through various methods; for instance, digital currencies could be purchased online, whereas to sell, you may have to use Bitcoin ATM and other ideas, which you can learn on Coin Cloud or similar company blogs.
The nodes or miners continuously work to assemble a defined number of transactions and create the next block.
The chain’s role is to record the providence of an asset and the immutability of all the associated transactions.
By being the first to calculate the cryptographic nonce
The winner receives a reward.
Around and around the game continues, as transactions are added and immutably recorded on the chain.
This whole process fundamentally assures history cannot be altered.
If the process is not elegantly managed in full sight of all the participants.
As I sat to write, I was drawn to the Wikipedia’ Bitcoin article. As I read the story of how it all happened memories and concerns once again flowed through the neurons of my mind. Silk Road and their involvement and the evolution of the value of a Bitcoin, struck me as a magical mystery tour through a world of mathematicians, anarchists, profiteers and speculators.
I then remember reading
an element of a report from the Bank of International Settlement on crypto currency. The picture above is intriguing for those of us who appreciate the complexity of payments. The article gets ever so intriguing when one continues to read and finds this interesting illustration of
the difference between what we all are familiar with and what those who understand DLT and Bitcoin appreciate. The central focus of this new technology is to address one and only one concern. Trust in the intermediary.
I must admit this particular article is not the one I originally intended to speak to. I do though recommend reading it.
The article I had intended to reflect on is Central Bank Cryptocurrencies. In this document they speak to the possibility of the banks issuing a stablecoin. The recent announcement of JPMorgan Chase is one example of such.
This then causes me to reflect on the various use cases and conversations with people about the potential of DLT. I wonder why, at least here in the USA with our judicial and regulatory framework and the rule of law; we would seek to replace the existing intermediaries with a permissionless distributed ledger and the associated consensus mechanisms of a public ledger. There is enormous and growing cost in consensus built on “Proof of Work” and massive duplication of the ledger or as most call it the chain. Be it the electrical cost, the cost of a data center or the specialized computers necessary. The people and companies, the nodes and miners, will expect a reward for their effort.
Which is cheaper, if a reasonable level of trust exists?
This is the question. There are those that believe Block-chain and all of the other distributed ledger technologies are the answer to everything. I would suggest one much consider:
This then begs the question of a permissioned or a permissionless ledger. Which then begs the question of governance and who is responsible to establish the rules.
It is clear there is value in the idea of a distributed ledger. I would suggest caution in deciding if it makes sense for your use case.
Helping you to understand the answers to these questions is what we do.
Transaction Costs and Tethers: Why I’m a Crypto Skeptic https://nyti.ms/2NYYSdw
As a technologist with an understanding of cryptography and very aware that in order to remain secure and tamper proof we increasingly increase the complexity of the work to assure the integrity of what we are using cryptography to protect. I wonder why so many people got so excited about Bit coin and Blockchain. As I have written before the cost to assure the integrity of the ledgar. Be it the original work to calculate the nonce or the subsequent work to confirm that the nonce the miner calculated was the right one, there is a need to spend money buying work specific computers, renting or building a facility to houses these work units and the power to cool and run these computers.
Mr. Krugman properly outlines the challenges. He effectively focuses on two issues. The cost and the idea of tethering.
It is this need to identify the value of the coin. Governments help to stabilize their defined currency. The intrinsic value or use of Gold, establishes its value.
Understanding and being able to clearly articulate how cryptocurrencies are valued and how then can achieve the stability necessary to support commerce is essential. This is what tethering is about. How do we establish and more importantly share the nature of the valuation.
I recently absorbed the following article and offer the following reflections.
http://paymentsjournal.com/there-are-an-estimated-how-many-million-smartphones-in-the-hands-of-us-consumers/
An article answering the question can now be found at this link.
http://paymentsjournal.com/could-a-us-cryptocurrency-prevent-systemic-harm-to-the-underbanked-and-underserved/
After reading the article, I thought about this graph derived from the US Census. What income level equates to that of the un-banked? I think of my expenses and about the expenses most people are dealing with. Health issuance for two people in Georgia is $1,100 a month. That’s a lot of people struggling to make sure they at least have health insurance! If $53,700 is the median income and $13 thousand is spent on health Insurance, and then we consider all the other daily expenses we need to live: food, medicine, co-pay, gas, utilities …
Then I remember an economics report which claimed that the hourly wage required to afford a place to live in the least expensive part of the US was something just over $15/hour. All of this causes me to ask the question – At what income do people find it of value to have a banking relationship, e.g. a card?
Those who argue that we should migrate from Cash to Card should remember the primary motivation for credit cards is directly related to the profits and revenue the banks, processors and other players who touch the flow of money earn from processing the payment transaction, and the revenues earned by lending money (i.e., a credit card) or by holding your money (a debit card).
Sure, we could propose giving the poor pre-paid cards, as some of the Government’s entitlement programs already do. But then who will be responsible for the fees to manage the program and who will earn the interchange from each transaction?
The service fees, OK, maybe we the taxpayer will cover, given the perceived social value of supporting the poor. On the other hand, entitlement is perceived by many to be a scheme to support the lazy, therefore many would say that the fees are part of what the entitlement should cover.
Let’s get back to the real subject at hand: What is the most economic form of payment and are crypto-currencies the future?
In the world of cards, interchange is a cost to the merchant and revenue to the Banks. Therefore, since merchants end up loading their processing costs into their price, the consumer pays. Those who advocate migration away from cash recognize and argue cash has costs, for intance:
Many would agree that a card is cheaper. Others would argue they are not. This becomes a question of faith in your employees, the cost of a safe and a visit to the bank and the fun of sitting up at night counting your earnings.
Are crypto-currencies an answer? At whose cost? The nodes or miners who maintain the Blockchain need to be paid to ensure the immutability and consensus inherent in the Bitcoin model. Someone must pay.
This begs the question: Which is more expensive to society?
A toll on the Massachusetts turnpike is $4.00, unless you can’t afford an EZPass then it will cost you $7.35*. This article published in Convenience, the web site of National Association of Convenience Stores (NACS), points out that restaurants are also increasingly eliminating cash and that the impact this has on the poor has finally started to create some pushback in D.C.:
“As more restaurants go cashless, a backlash is building, especially in the nation’s capital, where an increasing number of fast-casual eateries are only accepting credit or debit cards and mobile payments, the Washington Post reports. Sweetgreen, a national chain, doesn’t accept cash at most locations, including its Washington, D.C., unit, while Menchie’s, Barcelona Wine Bar, The Bruery, Jetties and Surfside in the District also refuse cash payments.
‘By denying the ability to use cash as a payment, businesses are effectively telling lower income and younger patrons that they are not welcome,’ said D.C. Council member David Grosso, who has introduced a bill that would require retailers to let customers pay in cash. Chicago didn’t pass a similar bill last year, and Massachusetts has a 1978 law on the books that’s for cash payments but it hasn’t been enforced regularly, according to the state retailers association.” (Emphasis by Payments Journal)
I was unaware of the 1978 Massachusetts law described here, but clearly MassDOT and the Massachusetts legislature are more interested in how it will spend the money saved and the new revenue generated than it is in old laws. The fact that the policy to go all electronic will also increase late payment fines from the poor, perhaps even putting some in jail for non-payment, is just icing on the cake.
In our rush to save money we have ignored the systemic biases this action creates against the poor (if you doubt this statement reread the Justice Department’s report on Ferguson Missouri and how the town’s cost cutting measures created that very same bias). My dollar bill states that “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE” and yet nobody is considering how this is becoming less true every day and the impact that reality will have and it isn’t just the poor.
It is ludicrous to think that paper currency can survive even as everything around us shifts to electronic bits that are controlled by software. But we mustn’t ignore the ramifications of this shift. Consider what the future would be like if all payments are electronic utilizing our existing payments infrastructure. It is likely the cost burden would move from the Federal government (that prints money) to all the entities that need to send or accept money (because they pay the network and processing fees). In this scenario a) the government will see significant savings, b) the entities making a payment will see increased costs, and c) payment networks will receive increased revenue and profits.
If we would prefer to keep the status quo then the Federal government should support an electronic form of tender, establishing a cryptocurrency that replaces paper but is also recognized as “LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE”.
If not done relatively soon, say in the next 5-8 years, then every state and private payment network will be so entrenched that it would likely prove too difficult and costly to switch.
* The difference described above is for anyone driving 113 miles between Natick and West Stockbridge according to MassDOT’s toll calculator
Yesterday over a lunch I ended up synthesizing my thoughts into a neat little package that I would like to start sharing.
Those who extoll the virtues of Block Chain speak of:
Be it Proof of Work or Proof of Stake the entities that do the work are intermediaries and will want to be rewarded for their work.
Then one must think about shifting from a solution that rewards someone with a coin to a system that rewards someone with a fee earned.
Coins are created by the party who figured out the Nonce, as a reward for solving the cryptographic puzzle.
As the chain gets longer the work gets harder
As time moves forward and the number of coins in circulation grows
The reward decreases in notation value.
Sounds like inflation is built in.
Real estate, computers and electricity cost money.
As the work expands the costs increases!
There is inherent Inflation built into the Bit Coin Model.
We simply replace intermediaries with Nodes and Miners.
We require a governance model so we simply change the governor to another.
People will want to be paid for the work they do to build the block or assure consensus of the chain
The math, ok maybe.
Immutability, it is done today with cryptography, without a block chain.
Multiple copies of the ledger spread around the world. Yes, as long as we address confidentiality.
We have governance, sure we can always elect a new government
