Category: Our Globally economy

Identity – A Most Complex Thought

The idea of my identity, your identity, and our identity took me on a journey into social norms, physical realities, spiritual considerations, psychological consideration, and philosophy.  Starting with the classic approach of learning the definition of a word takes us to the dictionary.  What then assured the complexity of my quest is each of several definitions is similar, but, not the same.

I then found an interesting quote:

G.K. Chesterton once observed that the “special mark of the modern world is not that it is skeptical, but that it is dogmatic without knowing it.” His point was that moderns have forgotten that they are assuming what they believe to be a given. “In short,” he concludes, “they always have an unconscious dogma; and an unconscious dogma is the definition of a prejudice.”

With this thinking in mind on definition stood out:

identity n.

          1. an individual’s sense of self defined by (a) a set of physical, psychological, and interpersonal characteristics that is not wholly shared with any other person and (b) a range of affiliations (e.g., ethnicity) and social roles. Identity involves a sense of continuity, or the feeling that one is the same person today that one was yesterday or last year (despite physical or other changes). Such a sense is derived from one’s body sensations; one’s body image; and the feeling that one’s memories, goals, values, expectations, and beliefs belong to the self. Also called personal identity.
          2. in cognitive development, awareness that an object is the same even though it may undergo transformations. For example, a coffee cup remains the same object despite differences in distance, size, color, lighting, orientation, and even shape. Also called object identity.

I then thought of the various ways people expand on this word Identity and began to build a list.

        • Brand Identity
        • Cultural Identity
        • Digital Identity
        • Ego Identity
        • Emotional Identity
        • Ethnic Identity
        • Family Identity
        • Gender Identity
        • intellectual Identity
        • Material Identity
        • Moral Identity
        • National Identity
        • National Identity
        • Official Identity
        • Organizational Identity
        • Personal Identity
        • Physical identity
        • Political Identity
        • Psychology Identity
        • Racial Identity
        • Sexual Identity
        • Social Identity
        • Spatial Identity
        • Visual Identity

I am convinced my list is not complete.  What I can say is each item can be found in an article, definition or other written material produced by others.

As a final thought
Understand our identity leads one to wonder
“Who am I”
an Existential question
we each must answer for ourselves

It is time to move to Multi-Factor Authentication built on a Restricted Operating Environment

Passwords should become a thing of the past. Here’s why

This morning one of my Google alerts found a blog coming from the World Economic Forum.  It reminds us of the inventor of the password Fernando Corbato.  In an interview with the Wall Street Journal, he said passwords have become “a nightmare”.

The open question is how do we solve for the nightmare of password management we have created that is both effortless and secure.

This article calls for private enterprise and our governments to find answers.  I hope in finding these answers capitalism and profit do not become the reason to act.  I hope social responsibility and community action drive all to find answers that are affordable, convenient, secure and more importantly consumer-friendly.

What is a Cryptocurrency or better yet why do we want them

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

        • ‘decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation.’
        • ‘States will undoubtedly resist the spread of cryptocurrencies.’
        • ‘Bitcoin was the first widely used cryptocurrency, but few people know it is not the only one.’
        • ‘What does your cryptocurrency allow people to do that they could not do otherwise, and how does it help them do existing tasks more quickly or cheaply?’
        • ‘If cryptocurrencies are like other speculative activities, the early players and the big players benefit to the detriment of the late entrants and the small players.’
        • ‘As with all cryptocurrencies, price is based on supply and demand.’‘Even with recent fluctuations, the total value of the cryptocurrency is still over eight billion USD.’
        • ‘The majority of cryptocurrency activity still appears to be speculative.’
        • ‘A cryptocurrency may be hackable, but it can also be really, really, really hard to hack—harder than robbing a 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:

      • What is money?
      • What constitutes good money, and where do cryptocurrencies fit in?
      • And, finally, what role should central banks play?

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.

 

Where are we

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.

What You possess, What You Are, What You Claim … Your Certificates

NCCOE NIST Multi-Factor Authentication

What you Possess — The Thing

What you Are — You

Your Relationships

Responsibilities

Authority

Advice

— Secrets

My Certificates

 

 

 

 

 

 

 

 

Seven Words

World Wide Web Consortium

FIDO Alliance

Global Platform

The Trusted Computing Group

Future interests

  • Artificial Intelligence
  • Machine Learning
  • Nature Language Interface
  • Predictive Analytics

Review of the IMF The rise of Digital Money

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”

  1. The Type, be it a claim or an object.
  2. The value, be it fixed or variable.
  3. If it is a claim who is liable?
  4. The technology, be it centralized or decentralized


They then speak to the five ‘Means of payment”.

Object-Based

  1. Central Bank Money (cash)
  2. Crypto-currency (non-Bank Issued)

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

  1. b-money (Bank issued)
  2. e-money (Privately issued)
  3. i-money (Investment funds)

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

 

 

Blockchain made simple

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 the land deed, cryptocurrency value, record of ownership, journal entry, smart contract … marriage contract.  Whatever 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.

A governance model is required

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 is a decision of the community.

We should 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.

A Transaction is appended to the chain

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.

Once governance is established
People can now interact

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.

    • The individual, as is always the case with cryptography, has their own private key(s); they must retain, never lose and keep secret.

When the two parties decide to record an event; the sale or transfer of the title to a car.

    • A formal record of a property, a transaction, ledger entry is created.
    • The basic data.
      • The seller’s public key
      • the buyers public key
      • the payload
      • a hash
      • the signature created by the seller using their private key.

The transactions are broadcast to the network. 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.

These records and blocks of data include content: of, by and following the rules of the consensus process.

    • Each active node or miner is attempting to create the next block.
    • The mathematics involved and the use of hashes to bind this new block to the existing blocks in the chain is beyond the scope of this blog.
    • Let us simply assume the mathematicians and cryptographers define as part of the original design of each chain an infallible solution to the issues of economics, security, integrity, and immutability.
    • These specifications will define the hash game and how one adds the next block to the chain retaining the immutability of the present and the past

By being the first to calculate the cryptographic nonce

The winner receives a reward.

    • Hopefully proportional to the cost of work or other discernable and agreed method of reward.
    • The other active nodes then test to see if they agree the first got it right.
    • If consensus is reached the new block is appended to the chain.
    • This all assumes 51% or more of the miners or nodes reach consensus on the winner’s answer.  And no one can control 51% or anything closer than 33%.

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.

Chains split and fun things happen

If the process is not elegantly managed in full sight of all the participants.

Going Cashless

For some twenty plus years, I can remember hearing people speak of the dream of an economy without coin and paper money.  A dream, driven by the desire to promote the use of electronic payments.

Over the last months, a number of articles focus on promoting the idea of a cashless society.  They all speak to the advantages and attempt to promote the concept, arguing we can:

  • Eliminate the concern of thugs insisting at gunpoint for the cash
  • Reduce the risk of employee theft
  • Stop paying people to count all those dirty coins
  • Remove the need for an expensive safes
  • Stop paying to have a specialist truck take the money to the bank
  • Eliminate the grey market

The business case for a merchant to eliminate cash seems to be beneficial.   Many have tried and succeeded to no longer accept cash.

At the same time articles report on the new regulations; various cities and states are implementing and considering.  These regulations are intent on outlawing merchants from going cashless.  The argument often focuses on how eliminating cash disadvantage the underbanked.

Then there is a reality! As a consumer, I recently have been surprised at the need to carry cash and the unsettling pleasure of finding out I still had cash in my leather wallet.

The first wake up to this reality took place while driving from St Simons, GA to the Orlando International Airport. In the trusting hands of Google Maps, I traveled down I-95, across I-4 and was directed to the FL-417. Suddenly a road sign informed me that I was on one of the various Florida toll roads.  Above my head was a road sign indicating which lane, based on my preferred method of payment, to move into. Driving a car that was not mine and knowing it did not possess a PeachPass, my only option was cash.

Fortunately, I had cash and was able to continue my journey.

The following Friday my father and I went to The Lodge to play Sniff, a dominoes game. The game was competitive and cash was the only method to settle. With a bit of cash in my pocket, I was able to pay the few dollars I lost.

One Saturday a street vendor in front of the local Harris Teeter was selling spare ribs. When I went to pay they informed me, they only accepted cash. Once again I was fortunate, I had enough cash and was able to buy those delicious ribs for dinner.

On various Sundays, when the collection plate came around, I’ve had a check or a bit of cash and was able to leave my tithing.

On a number of occasions, the valet, tour guide or other service individual deserved a tip and I’ve had a few dollars in my wallet.

Two more events brought the reality of how society does not want cash to disappear.

One morning, I wanted to enjoy a pastry. Not having $2.75 to pay for the Danish, Sweet Mama’s, a local baker, charged me $0.50, an eighteen percent surcharge, simply to use a credit card

Finally, yesterday as a guest for lunch at the local Rotary Club, I was confronted with a series of cash only events. This time I did not have any cash and was not in a position to contribute to various worthy causes.

We dream of a cashless society. Yet churches, valets, toll booths, street vendors and the Rotary all continue to desire or require cash. Some are not even willing to accept anything but cash.

Looking at our society from two different angles, we must accept the continuing need for cash.  Be it the underbanked, unable to acquire a credit or debit card; or those who carry many credit cards, both need to use cash simply to eat or enjoy life.

Later today I will have to visit the ATM and make sure I have a bit of cash in my wallet.

 

https://www.paymentssource.com/news/target-outages-show-the-failings-of-cash-as-backup

A world between yeaterday and tomorrow

The week of March 25, 2019 I had the opportunity to visit with a room full of community banks with assets in the 100 million to billion range. Organization with 25 to maybe 300 staff.

The presentations taught me more about the difference between what large International Organizations worry about and what these small community banks need to learn. Faster Payments, Zelle, same day ACH all new services these organizations must integrate into their organization, both technically and procedurally.

Things I have been exposed to are new challenges for these small town banks.

Words like liquidity risk clearly top of mind. Yet, as we move from over night settlement to real time settlement.

Phone fraud, risk mitigation all greater challenges not necessarily appreciated yet alone understood.

In the end what is clear these community banks exist because of the small towns they understand and work within. Do those of us exposed to a larger world understand what drives these communities banks, at least not I.

Biometrics carry risks.

Hacking Our Identity: The Emerging Threats from Biometric Technology

As I skimmed through this article I was reminded of the reality of biometrics.  It is a statistical algorithm designed to compare what was registered to that was just sensed.  It is an imprecise process.  The author reminds us of the importance of our identity in each and every interaction we engage in.  She further ponders the question, of the potential threats to the biometric solutions that countries, people and enterprises are embracing, as we work to address the questions of Authentication and Identification in our complex digital and physical world.

The article asks the questions:

      • Do the countries and enterprises understand the technology and processes used to support biometrics as a means of authentication.
      • Do they appreciate the need to secure and protect this most sensitive of data?
      • Is the data they store able to be used to compromise the individual of the integrity of that which it seeks to protect?
      • Are we at risk of creating a surveillance society?

Finally there is the question of the accuracy of biometric matching.  It is interesting to observe the comparison of the accuracy of biometric matching to PIN or password matching.  We all recognize the challenges of PIN and password.  It is not the concept it is the question of how many complex PIN or passwords is the human mind capable of retaining without writing them down or storing them someplace that can be compromised.

As I have argued in other blogs, the answer must be in the possess of something unique which has a False Reject Rate FRR and a False Accept FAR Rate, both approaching zero.  Clearly the PIN or password has such a characteristic the challenge is in remembering so many.  An object or a thing “Something You Have”, be it a card, phone, watch or bracelet with a Restricted Operating Environment inside e.g. secure element, TEE or TPM, secured using strong cryptography, paired with a biometric makes the most sense.

Distributed Ledger and Things

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?

Where are we going from here

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:

    • The level of trust the various parties have in each other.
    • The cost of multiple copies of the distributed ledger.
    • The cost of the consensus mechanism versus a trusted intermediary.
    • The governance required to maintain security, software and specifications.
    • The value and ethical issues of anonymity.

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.

      • What are the goals and objectives of the solution?
      • What are the economics of the various approaches?
      • Who are the stakeholders?
      • Who determines the rules and manages change?
      • Can the participants trust an intermediary?
      • Does everyone fear what another could do?

Helping you to understand the answers to these questions is what we do.

As Facebook Raised a Privacy Wall

NYTimes: As Facebook Raised a Privacy Wall, It Carved an Opening for Tech Giants

As Facebook Raised a Privacy Wall, It Carved an Opening for Tech Giants https://nyti.ms/2GqnbC9

As I read this article my mind asked the question what drives an organization and its American employees to forget they are American citizen’s with responsibilities to protect this nation from the acts of our enemies.

Excess profits, what other motivation could there be. The one motivation which is and will remain the greatest threat to society, the environment and our grandchildrens’ future.

Be it the concentration of power which drives excess profits or the reduction of quality, weight, volume or size, simply to maintain price and margin the shareholder will be served after senior management take its plenty. Stakeholders – client and employees come second, after the key executive and strategic shareholders are rewarded.

Russian’s and our other enemies will find our weaknesses and take advantage deluding us with propaganda and lies, all to achieve their aims.

Disruption or the Reality of Legacy

Often times people speak of disruption as this traumatic thing being imposed upon them, their industry or society. Yet, if we look under the covers disruption more than likely is all about a competitor, not locked into a legacy approach, approaching the market with different tools.

The world of payments, as so many others, have implemented technology then gone on to enhance or update multiple times. Each time, someone or some group of people, had to adapt therefore invest to keep up. More often than not, a community would decide to hold on to what they built, sometime ago, hoping no one tried to disrupt the status quo.

With payment the need to embrace more effective approaches parallels the robustness and frequency of transactions. It also parallels the desire of sellers to do business with anonymous buyers. A lack of trust and a need to reduce the amount of cash we carry drove, markets to promissory notes. These promissory notes further evolved, as trusted intermediaries entered the market and created more efficient methods of providing that guarantee of payment.

Not wanting to duplicate what is already written about the history of money and payments we can jump forward through the paper phase to where we are in North America: Cash, cards, some checks and electronic debits & credits.

If we look inside the evolution of legacy.  We find what we have, is a stumbling block, holding innovation back.  We need to decide to adapt what exists or remove and replace.

Of NFC, Mobile and History

Today I read Karen Augustine’s  Mobile Payments Use in the U.S. Lags

As I read and reflected on what Karen wrote, I reflected on my experiences as a sagged payment consultant and executive, with international experience.

What I see is an issue of legacy and muscle memory – setting a pattern for the future.  Said another way – our history defines the boundaries of our future.

Asia did not have electronic payments.  I am sure did not want to embrace the globally dominate American solution.  Therefore, they had the opportunity to start fresh.  It is very much like what Spain went through, went they moved from cash to electronic card-based payments.  They bypassed the check.

Her article brings back memories of life in Belgium in the 90’s.  Writing a check was a rare occurrence.  Direct debit mandates, a MisterCash card and a Eurocard was all we needed to buy and enjoy life.  Electronic payments was the norm, paper checks were a rare oddity and cash, well yes there was a very present grey economy.

Here in the USA we developed our payment systems off the back of regional or state banks with acceptance networks limited to a local domain.  Moving to a national system required early adoption of a common national currency.  We then went on to replace IOUs with paper checks and store cards with credit cards.  In time we enhances the ACH system and developed support for remote deposit and check capture.

Why do we need to move the card into the wallet?  Why change habits that are comfortable and work?  Most of us drive to shop and therefore must have our drivers license.  We must carry a physical document with us.  We simply carry two or more ID-1 sized cards.

You make the statement and was once again reminded of times past.

“… universal mobile wallets and more often driven from merchant based applications that often incorporate loyalty and rewards, which to date still remain nascent in universal mobile wallets.”

When I produced this rendering, back in 1996, I was on stage talking about a world where leather and technology converged.  I imaged Bluetooth, NFC, secure elements, GPS and our various credentials converging into this personal device.  Those credentials grouped into: travel, identity, membership, loyalty and payments; easy to find and present.

When contactless payments were  introduced, in 2004, by Visa’s with PayWave and MasterCard’s PayPass; I argued why contactless cards – how can the issuer afford the extra dollar per card (cost of the antenna and inlay) and the merchant the extra 60 dollars to enable the NFC reader?  The way Issuer income works, “Interchange”, the consumer would need to spend more on that issuer’s card.  For the merchant to justify the necessary POS investment, meant the retailer believed the consumers would spend more, because it was “easier”.  Was Tap To Pay going to make me spend more.  Maybe for small ticket purchases, I may use cash less; but at the merchants expense!  We argued the cost of cash was more than the Merchant Discount.  Some agreed.  Many wondered what the blank are they trying to sell us!

Around the same time America was exploring this contactless experience, the European Payment Council and GSMA debated and ultimately offered an approach for mobile card based contactless payments https://www.europeanpaymentscouncil.eu/sites/default/files/KB/files/EPC220-08-EPC-GSMA-TSM-WP-V1.pdf .  Handset manufactures like Nokia had already added NFC Antenna’s to their mobile phones and mobile network operators, the MNO, saw the SIM as the secure element capable of holding payment credentials.

Some tried, the Trusted Service Manager as a service was developed and deployed.  The challenge, the economics of the model.  In this case the MNO saw revenue and wanted to charge fees to load the payment credential into the phone and better yet charge rent to store these payment cards in our phones.  Again I ask the question, by changing the way we pay, do I cause us to want to spend more? I think not!

Maybe some would argue, with  a credit card people am able to buy things today that they cannot afford.  Let them end up in debt.  This is true.  But then is debt  at 18% a good thing?  Europeans simply decided to establish a line of credit, as a feature of a Current Account, at reasonable interest rates.

We could go on and talk about how Apple saw the possibility of a 0.15% income stream from ApplePay based mobile payments and how the EMVCo tokenization framework evolved to support their desire to protect the Apple Brand.

What is clear, we could solve George’s problem and replace his Full Grain Vegetable Tanned Cow Leather leather wallet with a Mobile Wallet managed by Apple, Google, Samsung or …

Or, we could think about the consumer and what they really want?

As your article made clear, and so many others have shared, Asia leaped forward.  Be it AliPay or WeChat, the device, the mobile phone, became the consumers wallet, their method of engaging, shopping, learning and exploring.

We need to accept to simply replace what we are comfortable with, with something new; which does not enhance our experience, is simply not worth it!

Many of us, like Karen, would argue the experience of shopping is what the mobile phone can enhance and let the act of payment become the afterthought.  A simple click to say – yes, I agree to pay.

Amazon got it right with One Click.  Others, as the patent expires, are embracing the same technique to simplify payment to a friction-less act of satisfaction.  When my favorite stores offer me an mobile app designed to enhance my shopping experience, to thrill me with offers and entice me with things I want; then yes I will become more loyal, I will shop at their store more frequently and maybe even buy a few things I did not intend to buy.

Many years ago while attending conference of groceries  in Abu Dhabi – one of the speakers share an experience.  when that supermarket executive instructed each store to put the beer across from the diapers, the intended result occurred.  The husband, sent to get the diapers, ended up buying  a six pack too.

Maybe, like this experience reveals, if we focus on the consumer experience and on delighting them.  They will embrace change.

If there is no value why should we?

Years ago I prepared and published an idea.  I called it Cando.  I was still committed to the idea of the mobile wallet.  I was an early adopter of the smart phone and saw its potential.

 

Cando

Block Chain. Hype, the future, fiction or a scheme?

A month or so ago I was asked to speak to an assembly of bankers and processors at the Atlanta Federal Reserve on Cryptocurrencies and blockchain.

 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:

  • Immutability – Cryptographers and mathematicians will prove the immutability of the algorithms, at least for now
  • Distributed – as long as there a multiple diverse and competing stakeholders this is great
  • Trustless – I keep asking the same question Who defines the content of the Block or the ledger or the transaction?  Everyone ultimately agrees a body of people and I sit there and say that sounds like a governance model.  Be it a currency, a ledger, a contract two or more must agree to structure format, content and rules.
  • Consensus – Great as long as we never exceed the 51% participation by A party, the model is superb.

I then think about Work and the reward

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.

I then reflect on Bit Coin and its use of Proof of Work

Coins are created by the party who figured out the Nonce, as a reward for solving the cryptographic puzzle.

  • Once they earned 25 Bitcoins
  • Today they earn 12.5 Bitcoins
  • At some point, in the future, the reward will be cut in half and then half again

The challenge

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!

In conclusion

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

What is truly revolutionary? 

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

What is so magical?

 

Words all bound to who we claim to be – How do we identify ourselves on the Internet or in Cyberspace?

Identifier – Something you create or are provided to digitally identify yourselves. Identifiers are things like an alias, user name, email address are examples.

Identity – This is who we are or wish to represent ourselves to be. These are attributes and information about: where we live, who we work for, which banks we have relationships with, who our friends are, which clubs we belong to, our certified skills, what schools we graduated from, which country(s) we are citizens of, our LinkedIn profile, Our Twitter handle, our Facebook identifier, our phone number … .  It is the sum of the attributes we can and will share with others, be they individuals, governments, entities or organizations; as we establish relationships and prove to them who and often what we are.

Authentication – The method we employ to assure that you, based on the identifier presented, are who we (the relying parties) thinks you are.  You are the person the relying party accepted when you registered that Identifier as how you would digitally identify yourself.  By itself the method of authentication should not allow another party to be able to determine anything about your identity.  Privacy is the goal.  FIDO Alliance and W3C have defined standards to support authentication.

Verification – The process of confirming that the secret or biometric match the secret or biometric that where originally registered to that Identifier.

Identification – A means of authentication that is bound to your identity.  A EMV payment instrument “Chip and PIN”, a PIV card, an electronic passport, a membership card, a drivers license, a national ID are all forms of identification  issued by a party that should be trusted to have performed a proof of the individuals Identity, based on a defined and often published criteria.

This particular word, for many, has an alternate meaning.  In the biometric community they see Identification as the ability to use a biometric to determine ones Identity.  This is achieved by performing a one (the person present) to many match (persons registered).  The goal is the same, bind Identity to the mean of Authentication by using the Biometric as the Identifier.

Proof – The method a relying party or an individual uses to validate your claim of a specific Identity.  In many cases this is achieved by relying on knowledge of another party.  The relying party accepts the due diligence to proof your claimed identity was done to their satisfaction by another party.  This other party is often referred to as a Trusted party.  This effort to proof the identity of an individual is linked to words and acronyms like KYC “Know Your Customer”, ID&V “Identity and Verification” and Self Sovereign Identity.  We classically assume that documents provided by a Government e.g. drivers License and Passports are a solid proof of the claims asserted on those same documents.

In a digital world this is the most important element of a how we as people, entities, governments and corporations can be assured that you are who we believe you to be.

I am once again am reminded of the 1994 New Yorker Cartoon

The Fourth Industrial Revolution

A new term was added to my learning today The Fourth Industrial Revolution. Better said the age of Disruption.

Is the common man able to embrace the change ahead. Yes, those of us who have the education, the experience and the desire to embrace change; can fathom this new world. What of those that live in the middle – what happens to them in this new age

The Fourth Industrial Revolution – A video to help people understand the change ahead

Then in this weeks issue of the economic

http://www.economist.com/news/leaders/21730412-time-fresh-thinking-about-changing-economics-geography-right-way-help-decliniIfrsc=dg%7Ce

Legacy infrastructure impedes truly innovative disruption

An interesting thought – Is the USA behind in adopting payment technologies.

Areas that one could ponder are:

* Payment Card Security
* P2P Mobile Payments
* P2P and P2B Electronic Funds Transfer as part of Home/Mobile Banking
* Elimination of Checks including Check images
* A/R and A/P electronic payments integration
* …

What would be interesting is to eventually be able to catalog the global differences and define the ultimate payment capabilities a country should adopt.

Please let’s share and explore.