Category: Our Globally economy

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 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.

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 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.

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, 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.

    • 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.

Various articles worth the read

Thomas L. Friedman and James Manyika: The world’s gone from flat, to fast, to deep

Federal Reserve of Atlanta Annual Report One Region. Many Economies.

This time it’s war Keynote address to KnowID, Las Vegas, 25h March 2019.

The Chaps Friday March 29th, 2019

 

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. If you are still a little in the dark about what these are, you can Google questions such as “what is a promissory note?” “What are the elements of a promissory note?”, etc. so you are fully up-to-date with the information that you need.

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.

Remove Volatility

Today I was confronted with volatility. In a two week period gas prices had gone from 2.395 to 26795, quite a climb of less than 14 days.

Volatility, this is what we must remove from peoples lives. Stability and comfort are what is important. Having gameful activity to allows us to contribute to the whole. Being idle is unproductive and only benefits the traders who prey on short term activity to enjoy profits from volatility.

Our President must accept that the Wall Street lobby must be squelched for a while as volatility is banded from the marketplace. This will take an acceptance on the part of the wealthy that they cannot take it beyond the grave and before that excessive income is not acceptable to the healthy grow of civilization.

Set a maximum salary of say 2 million.

Foreign exchange markets are another area of concern. Volatility based on war and famine must the mitigated out of the civilization.

Our civilization is global and provisional limitations such as food subsidies need to be removed.

Remember they are simply subsidies paid by the tax payer. Government should be limited to a percent of the population; remembering its role is to only assure the the primitive functions of justice, liberty, freedom and security.

Regulation is something that must be removed and a new form of peer review established with responsibility to maintain quality, service, stewardship for the planet, and a judicious use of nature resources. Free enterprise is encouraged by remembering that it is the relationship between the customer and proffer that ultimately decides success.

Critical mass versus ubiquity the future of payments

In a paper recently published by the Federal Reserve they begin to consider what actions the FRB should take to drive the further adoption of P2P electronic payments and the reduction in paper checks.

http://www.bos.frb.org/economic/ppdp/2010/ppdp1001.pdf

Their introduction speaks to the differences in adoption of electronic payments in the USA and Europe.  Intriguingly they include privacy concerns as a key issue.  This being said, having lived in Europe for 15 years, I am not sure the desire for privacy is greater in America.  What can be said is that the moment when the underlining infrastructure was developed defines the ideas and feature sets.  Newer systems learned grew as other economies embraced and proved the viability of innovative ideas.

They go on to discuss the fate of eCash (Mondex, VisaCash) and the need to create ubiquity in order to assure success.    Clearly, as they outline, the major adoption issue in the field of payments is achieving a density of merchants willing to accept a particular means of payment  and simultaneously demonstrating a significant number of consumers willing to employ said means of payment.

Unfortunately for the inventors of neat solutions the reality is that without figuring out how to assure ubiquity the new idea they will not be a success.  If we look at contactless, MasterCard clearly recognised this reality and funded the initial investment in equipment.  Without this investment one wonders if PayPass would have reached the low levels it has.

The interesting thought that emerges from this paper is that the wide spread deployment of mobile phones means that an infrastructure that both merchants and consumers have is in place and if one can find an intuitive means of exploiting this installed base, part of the deployment problem is mitigated.

In my heart, I believe mobile will allow the establishment of new ways of paying,  The next question can today’s infrastructure support P2P payment instructions and will the issuers and acquirers figure out how to make money without cannibalizing existing revenue streams.

today on CNN – What about this idea

http://newsroom.blogs.cnn.com/2009/10/05/unemployment-what%e2%80%99s-to-blame/

Unemployment: What’s to Blame?

Posted: 08:44 AM ET

Former Federal Reserve Chairman Alan Greenspan predicts U.S. unemployment could hit 10%.  Currently the nation’s unemployment rate is at 9.8%.

So, what do you think is most responsible from the worsening employment picture: a failed stimulus package, an economy much worse than we knew, employers cutting deeper and hiring more slowly than expected, or something else all together.

Leave us a comment. We’ll share some of them on air in the CNN Newsroom, 11am ET — 1pm ET

 

So there we are.  A picture and a set of points on why we are where we are with unemployment.  Now what about this idea.

First, there is an issue of Greed.  A small percentage of the global population has accumulated a massive amount of wealth.  I am not here to judge the right or wrong of how they or their ancestors acquired the wealth.  I am here to suggest looking forward. 

  1. 100 million dollars a year as a salary to hedge the price of gasoline and contribute to raising the profits and consumer costs associated with oil.
  2. $17.2 million to successful sell Visa inc, to the market, earning bankers a significant return.
  3. Numerous excesses that programs like Nip/Tuck mimic for Wall Street millionaires.
  4. A stock market that has a curve that simply should not have been allowed.  Long term prudent economic management is essential.

 Ponder this.  If equities is suppose to represent the inherent stability of the corporations that employ our neighbors; what happened starting in 2000 and culminating in the bear Stearns collapse in 2007.  Is Wall Street unravelling the growth that began in 1982 and went into a hyperactive phase in 1995, and simply correcting itself. 

What next should represent a step change in how we think about governance, compensation, risk, responsibility and morality.

 What I think a lot of us forget is that our society evolved over millennium and here we are thinking we are so important.  What is important, is being faithful to a common morality, and making sure that we leave something better for our children. 

I agree with the Dali Lama, all we want is peace and happiness.

So what next?

  1. Cap salaries for the rich at 2 million per year.
  2. Institute a managed health system that still uses the concept of insurance and hedging risk to fund our healthcare system.  
  3. Introduce a health management system, with a basement for those that cannot afford even the most basic plan.
  4. Re-introduce exercise in the school system and subsidize community gyms and recreational facilities.
  5. Re-introduce the luxury tax for non essentials over $30,000 and on things that are not good for you or are excessive.  Say anything not associated with your food,  transportation and housing.
  6. Focus on better educating the family practitioners, gynecologists, internist and pediatricians so that they do a much better triage and assessment of appropriate care given available resources with fear of reprisal for taking risks.  If necessary, require an additional year of service at a teaching hospital earning a reasonable income say $120,000.
  7. Do a lot of what Congress is already talking about
    1. Strengthen the VA hospital and medical care system
    2. Do not mess with Medicare or Medicaid, until the new system is in place.  Let the people move to the free market approach.
    3. Do not create a Government run insurance system.  Yes to creating a open market, knock down state borders and promote re-introduction of the original Blue Cross Blue Shield concept of a co-operative not for profit solution
  8. Focus on regulating the quality of care with a no one left behind principle.
  9. Keep the insurance companies out of setting fees.  Manage thje cost of the healthcare system by focusing on competition.  The patient is the client and is to be saught after without offensive advertising.
  10. Mandate a National Id card keying off the social insurance number.  Combine it on the Drivers license, as a day one requirement.
  11. Focus as a corporate priority on employment being the key indicator of success.  Begin discussions on Right to Work legislation and stimulating more humane approach to managing down costs in a period of economic recession.  Reduce executive wages well before the first person can be let go, without cause.
  12. Merge all the work in the fields of governance, risk and regulation into a replacement bill.
  13. I could go on.

False Prophets and False Profits

Last night, 11 September 2009, I watched hours of material on 9/11. 

 

I saw the planes as the flaming arrow of the False Prophet. 

 

I saw the two towers as the symbol of the moral decay of the False Profit. 

 

Both clashed in a period of 102 minutes we will long remember.

 

The terrorist is acknowledged and the false prophet stands accused. 

 

Yet the False Profit continues to bring harm to many and shame to those of us who seek to know God and the work Jesus’ expects of us.

 

When will the False Prophet “Profit” finally be recognized as the work of the devil?

Good, Bad or indifferent. The Good has it.

Voices Reflect Rising Sense of Racial Optimism

Kristen Luce for The New York Times

Shel Harris of Brooklyn said the election changed his attitude.

By SUSAN SAULNY Published: May 2, 2009 the New York Times
Optimism.  What a powerful word, emotion and focus to help us rise from the ashes.  This morning as I scan the New York Times I am encouraged.  Tears come to my eyes and the possibility that President Obama may be good for this country appears like a Phoenix on the horizon.
The idea that simply because We the People took that unimaginable step and elected a Black man at this time in history, says to me that  people are demonstrating, with real actions, that we are all equal, is simply fantastic.
Yet, hidden under the surface is the risk that hatred and the white underclass, those that call them supremacists and style themselves on the belief that we are better than you, are still out there.  Words that ring of the worst days of Hitlers reign ferment.

Geithner – Architect of the House of Cards?

http://www.nytimes.com/2009/04/27/business/27geithner.html?8au=&emc=au&pagewanted=all

Geithner, Member and Overseer of Finance Club

By JO BECKER and GRETCHEN MORGENSON Published: April 26, 2009  New York Times

I am reading William D. Cohan’s book “House of Cards” and then I read this extremely long article on the Secretary of the Treasury and his culpability!!!! 🙁

As discussed in an earlier post our President says and I quote

“We cannot go back to an economy that is built on a pile of sand — on inflated home prices and maxed-out credit cards, on over leveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,”

One of the key-members of the executive branch of our Government was sitting in the fortress down on Wall Street, deep into discussions with everyone that mattered and is responsible for the abyss, crisis, depression that has taken the world into uncharted waters.

How can our President, that does not want to “go back to an economy built on a pile of sand,  hire, support and continue to seek advice from Mr Geithner.  this man was there there, saw the crisis brewing and helped to make it worse.  Now we expect the leopard to change his spots and fix it.  He had his chance when he was president of the NYC Federal Reserve.  If the book I’m reading and this article are accurate he has had his chance and failed.

Please Mr. Obama find someone who is risk adverse, intelligent and not part of the club.

Do as you say

Today in a New York Times Article reviewing President Obama’s press conference, held Wednesday April 30th 2009, he is quoted to have said:

“We cannot go back to an economy that is built on a pile of sand — on inflated home prices and maxed-out credit cards, on over leveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,”

Reading these words all I can say is YES.  Yet, I remain troubled.  We’ve all read about the various programs our government is implementing to “fix” our economy.  Too often these programs are simply a mechanism to take money from Honest Tax Payers and distribute it to those that over-leveraged themselves and where reckless.  President Obama that is not what those word would suggest your policy is.

We seem to think that whatever we do the Government will bail us out.

  • Build on the Mississippi flood plane and when the river does what it has always done help those who built where the water has always been supreme.
  • Live on the cliffs in California.  When the rain comes, and it will, the land will be washed out from under the foundation. Washington will come to the rescue.
  • Build on a fault line and when the earth shakes don’t worry too much papa will rescue you.
  • Run up your credit card debt, buy a home you can”t afford and daddy will punish the lender and protect the reckless.
  • Leverage yourself as Bear Stearns did and we will make it all better
  • …

Nature is and has been since God set the universe in motion.  Moses in his dialogue with God learned of the beginning and in Genesis he recorded those first days of Adam’s life and how easy it would have been to follow the rules. 

 The LORD God put the man in the Garden of Eden. He put him there to work its ground and to take care of it.

 The LORD God gave the man a command. He said, “You can eat the fruit of any tree that is in the garden. But you must not eat the fruit of the tree of the knowledge of good and evil. If you do, you can be sure that you will die.”

He gave us the chance to live in paradise for eternity.  He gave us plenty.  All he asked is that we work the ground, take care of it and not eat of the fruit of the Tree of Knowledge of …

I do not mean to look at original sin nor do I want to talk about how the serpent beguiled woman and man simply ate with her.

What I am concerned with is that Obama is saying all the right things.  Yet, when we look to the results we see money flowing into the pockets of those that took us into the abysm.  We tell credit card companies that they should reduce interest charges and not protect themselves.  We simply seem to be protecting those that are reckless.

So President Obama, please do as you say,

  • Don’t bail out the banks and investment company, then let them skirt the rules.
  • Don’t fix it so people with maxed out Credit Cards can get themselves back in trouble.
  • Don’t help people and mortgage lenders who agreed to mortgages that could not be sustained by the home-owner.

This idea that some companies are just to big to let fail sounds smart.  Yet, unless they are also made to appreciate their failings we will simply see it happen all over again. 

They personally must feel the pain not simply do as Merrill, AIG and all the CEOs want to and do  do, get a government hand out and still get the big bonus.  They need to be held accountable and made to put their money where their mistakes are.