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The Future of Money
Snuggums writes "Apparently some major forces at play in the tech money world. People like Vint Cerf, Tim O'Reilly, Andre Durand, and Cory Doctorow are teaming up with Tom Frey and the futurist think tank, DaVinci Institute, to dive into the forces at play with a Future of Money Summit later this year. They've even tapped a Nobel Prize winner and Visa founder, Dee Hock. They're hoping to answer questions like; what kind of money you'll be putting into vending machines 25 years from now; when will cash disappear; when will our current banking system become obsolete; and who gets to own money in the future?"
Not wanting to burst your bubble, but that is CNN talking about what France is doing/planning to do. This is a conference where they are going to talk and look at what is going to happen else where.
I agree. Same with checks, my mom asked my bank(on one of her many trips to get a cashiers check, Ebay) and they said that they are required to report if the check is good/bad with in 48 hours.
hackwrench: "the gold standard was generally a bad idea, keeping gold from other purposes."
I think you meant to say that the gold standard was generally a good idea, keeping politicians from manipulating the value of money. Other than that, thanks for the link.
I DISagree. I have $6 in cash sitting in my wallet right now, and it's been there untouched for over a month because I rarely use paper money anymore.
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I live in Northern California, and everything is wired. I buy food and groceries using my ATM card. I pay my bills using EFT or checks. When my car needs gas, all of the pumps have built in readers. Even the local McDonalds, Wendy's, and Burger Kings have card readers at the counter. EVERY store I visit, from WalMart, to SaveMart(groceries), to the dingy little corner store run by the non-english speaking Punjabi down the street, has some type of card reader capable of processing electronic transactions. To be 100% honest, I can't even remember the last time I was in a store that didn't take plastic. In many areas, the cashless society is already here for those who choose to embrace it. For everyone else, it's just a matter of time.
Kinda sucks when the power goes out though
There is nothing so pathetic as seeing a beautiful young theory roughed up by a tough gang of facts.
Credit cards cost even more than debits - you just pay a different way. The fee for using a credit card is 3% MINIMUM, and only a large retailer can get that rate. For small businesses it's more like 10%! That goes directly into the prices you pay.
The only reason more people aren't aware of this is that government has been in the pocket of the credit card companies for a long time - that's why it's illegal for the retailer to actually put the amount you're paying to Visa or Mastercard on the bill, where it belongs. Some have gotten around that by offering a "cash discount", but it's a legal grey area.
Credit card companies are the worst of finance industry, and that's really saying something.
There's overhead to maintaining a cash system too, of course, borne by the government that prints the cash (and polices counterfeiting, etc). But I really wonder how much extra we'll be paying in assorted "service charges" with every new electronic-cash scheme that comes along. If it's coming from banks and other financial empires, you can assume you're being bilked, because the only reason they ever have to offer a new service is to find a new way to skim your money.
People complain about paying taxes all the time; what I object to is bank charges. And the "take your business elsewhere" is ridiculous - they're all the same (even credit unions are only marginally better these days).
It's worth reading Dee Hock's writings. He sounds like a collectivist nutcase at first. But this is the guy who designed how Visa, the organization, works. He got all the big banks to sign on. And he was a mid-level guy at a small bank when he did it.
Few people outside the banking industry understand what Visa really is, let alone how it's organized and governed. Internet people should. It's a good model for shared infrastructure, like Internet backbones.
Visa is a major corporation organized as a cooperative. Its members, and owners, are banks. Visa sets standards and runs the backbone network that transfers credit card transactions between banks. Visa doesn't issue credit cards or do financial transactions itself.
The details of how that works politically are complex. Yet it does work, and a lot better than, say, ICANN. I'm not going into how it's done; read Dee Hock's book.
Already done...
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http://slashdot.org/article.pl?sid=03/02/08/213
Never trust a man in a blue trench coat, Never drive a car when you're dead
You are incorrect in associating paper with wealth. There is no connection. That dollar bill in your wallet is no more or less money than a digit in a Wells Fargo computer. Both represent a unit of confidence in the issuing body - the US government. That is all they represent. You cannot redeem that dollar bill for a fraction of preciou metal. You cannot redeem the bill for a piece of a brick of a government building. You are not assured of receiving a set unit of a foreign currency for it either. It is a fiat currency. It has no inherent value. The paper bill is simply a physical container for a fractional unit of confidence in the US government, nothing more or less.
I'm not sure what the banking requirements for e-money schemes would be like, but banks are only required to keep a small fraction of deposits in reserve. If that applied to e-money as well it would expand the investment options for the money collected by e-money firms.
Of course, consumers understand this logic perfectly well --- why should I pay for the privilege of spending my own money? why not just use a debit card and cut out the intermediate steps? That's one reason why these ideas have been floating around since the 1980's without really catching on.
My point: a lot of hype about a "cashless society" is coming from firms with an interest in replacing the current system with one in which they effectively "issue currency" and make money off of the float, as well as from percentage based and flat fees. They don't mean "cashless"--they mean "use our cash instead of theirs."
arrrggh, I never thought it would come to this, but...
1) issue alternative currency
2) ????
3) Profit!
except that in this case ????? = collect interest.
blog-O-rama
foldplay your photos won't know what hit them.
Michael was referring to Robert Mundell, who sits on the summit's advisoryboard and won the 1999 Bank of Sweden Price for Economic sciences in Memory of Alfred Nobel. Often Mistaken for a Nobel Prize, because the Nobel Foundation disingenuously treats it as such in their announcements and on their web site, this award has nothing whatsoever to do with Alfred Nobel, his endowment or his vision. The award is totally politicized, disproportionately awarded to the U of Chicago school, and frequently goes to fringe cranks like Ronald Coase.
The great economist Gunnar Myrdal, who sat on the board of the Bank of Sweden, argued for the prize's abolition. In 1974 Myrdal shared the award with Freidrich Hayek. Basically, Myrdal felt that if ideologue hacks like Freidman and Hayek won the prize it was meaningless.
Nothing against Mundell, but that prize is a load of crap.
It is cowardly, and a betrayal of whatever it means to be a Jew, to act as a white man
-James Baldwin
Speaking as someone who has been cashless for the past 3 weeks (too lazy to go to the ATM, plenty of cash in my checking account), a plastic life ins't too horrible. My primary complaint is with 2 aspects:
1) Slow bandwidth. Sometimes those who accept credit/debit cards use dial-up modems to authenticate. This causes me a few extra minutes in the checkout line and a few dirty looks from the people in line behind me. I visited a Home Depot today (for phone line punch-down baords, if you must know) and their system was lightening-quick. Every quicker than cash. With $40/mo. DSL lines, makes you wonder why the rest of businesses haven't signed up.
2) Lack of credit/debit card support. I want all my cabs to support this. I want fast-food restaurants to support this. Everytime I buy something, I should be able to swipe. (I understand the cab/wireless dilemma, but why doesn't Wendy's have swipe stalls at the drive-thru?)
We are 90% there in terms of economical technology. But there is still a sort of stigma associated with using a piece of plastic to buy things. Like you can't afford it. Why is this?
I agree with the ideas espoused above, but wanted to correct some factual errors.
The fee for using a credit card is 3% MINIMUM, and only a large retailer can get that rate. For small businesses it's more like 10%!
Running a small business in Central California, I had an account with Cardservice Intl and paid 1.59%, with an annual volume somewhere around $80,000-100,000. 10% is simply rediculous, and it's a good idea a credit card merchant account isn't that expensive!
that's why it's illegal for the retailer to actually put the amount you're paying to Visa or Mastercard on the bill.
It's not illegal - it's just against the contract that you sign to get your merchant account. The contract actually says that you won't charge extra for credit card transactions.
You won't go to jail, but you might lose your merchant account!
I have no problem with your religion until you decide it's reason to deprive others of the truth.
I think you had an account with a third-party go between, essentially a clearinghouse that is a conglomerate of smaller merchants. These aren't legal everywhere (again probably because they reduce credit card company profits). I'd be surprised to hear of a merchant account directly with Visa or Mastercard at that rate.
Most technical conferences give out lots and lots of free complimentary tickets to their events. That's partly why the remaining tickets get to be so expensive. If you don't receive any free complimentary tickets yourself, then it could possibly mean you're not really part of the social fabric of those communities.
I am not making an assertion, so please don't get upset, I am just making a guess based on my personal experience.
Here's an example. Your paycheck is deposited, putting your account at $1500. The next day, someone goes and fradulently buys some stuff, say $1500 worth. Your account balance is now $0. If you report the incident, your balance will still be $0. Not until everything is tracked down will you get your $1500 back. In the meantime, I hope you have some savings, since your rent and phone bill will still come due.
Solution? Always use a credit card. In that case, it's the bank's money that's gone missing. And, suddenly, they're much more interested in recovering it.
Too big to fail? Does that make me to small to succeed?
For non-U.S. residents it is a bit suprising that all geeks here really only discuss the monetary/banking system inside the U.S.. Please please listen: In other countries things are alreay waaay different.
E.g. I mean, here in Germany we have a banking system with fully functioning direct deposit/direct debits which can be used by almost everybody, not only big business. These direct money transfers work at small cost (probably $0.10-$0.30 per transaction, but not something like 1% of the amount) and usually with at most 1-2 days of delay. This is the reason why something like Paypal wasn't necessary at all in Germany -- the German banks already offer these services by themselves.
We have the bank-independent online banking protocol HBCI, with a free implementation here and GnuCash supporting it. This means that for a direct deposit (money transfer) I can directly enter the destination account in a GUI form in GnuCash, enter my secret RSA key passphrase, and *pow* the money goes its way. Same way for statement retrieval -- no screen scraping anymore or browser incompatibilities. HBCI is a full protocol so all these business actions are fully specified in that protocol, and no web browser is needed anymore.
cstim