Google Wallet May Compete With Paypal

theskeptic writes "According to the WSJ, Google plans to offer an electronic-payment service that could help the Internet-search company diversify its revenue and may heighten competition with eBay's PayPal unit. Codenamed Google Wallet, a payment service could represent a significant expansion beyond online advertising, which generated 99% of its $3.2 billion in revenue last year. Google's move could potentially threaten eBay's successful PayPal service, which generated $233.1 million, or 23% of eBay's revenue in the first quarter."

Comments

Re:And so,

[jsweval]

Crap comment

Fuckin' Right

[netfool]

Gotcha' Google. Do it. Do us wrong though - feel our wrath (nothin', literally). You're rollin' with it, please don't forget /.

Re:I agree - I look forward to Google Wallet

[BitGeek]

(This does eventually get around to google, and is actually on topic, but requires a bit of explanation.)

Right, and I think your points are underappreciated. Unfortunately, to be pendantic, you're talking about the issue of currency, not money. Visa is a currency, because its a representation of money, and it happens to be backed by something people think is money- the federal reserve note.

But, and here's what trips people up, the federal reserve note is not money.

To be money, currency has to have a couple features:
1. Divisability -- this the federal reserve note does, you can get quarters for your dollars and dollars for your quarters, its exchangeable.
2. Physical Robustness-- FRNs have this as well. They tend to last quite awhile and you can get a replacement when they are worn out, unlike, say, salt or corn, or other things people used as currency in the past.
3. Intrinsic value-- this is where the federal reserve note fails. Even salt is better money in this view. The paper and metal in our money have virtually no economic value-- between %1 and 1/100th of a % of face value.

And thus the "Dollar" is not money. But it is ignorance of this that leads people to think it is money, and this ignorance is something the government sure does appreciate.

It didn't use to be this way. The dollar is defined as about an ounce of silver. For much of this countries history, and according to the constitution, that is what a dollar is (or a comperable amount of gold- the founding fathers didn't link our currency to just one metal-- they linked it to those two.)

This means that legally you can get an ounce of silver for every dollar in your pocket--- if the government was followng the law.

But thru a series of steps starting with the founding of the federal reserve in 1913, the criminalization of gold ownership, and ultimately, when Nixon "closed the gold window", the governmetn weened us off of money, and let us keep trading currency instead.

BTW, Currency means a "current reciept." A "Current reciept" is a piece of paper that acts as a proxy for something of value, usually an amount of gold or silver.

Amazingly, people accepted this worthless paper as if it had the same value as it did back when you could exchange it for gold or silver... and still do today. Furthermore, I've heard an amazing number of justifications for why its *good* that our paper isn't backed by anything of value, including that "foriegners who hav dollars shouldnt' be allowed to hold them without penalty, and os we need inflation."

The reality is, government couldn't meet its responsibilities, and rather than change its ways, it just violated the law and continued to print money that it couldn't back. When it was called on this (By France, who demanded gold for their dollars) we just reneged on the whole deal.

So, despite the law, despite the constitution, we have a currency that is not money, and that is redeemable for nothing, and ultimately, worth nothing.

Eventually this situation, and the excesses that have been allowedd by it, will come home to roost in teh form of a currency crash.

So, google can do good, by providing a currency that is one to one backed by dollars, or if they want to be really good, by gold.
egold and other companies have set up gold payment systems that allow people to pay for goods wtih grams of gold, electronically. Hopefully, google will do paypal's multiple currency features one better by offering gold or silver as an asset you can hold your account balance in.

Also, I think that bankers will not be able to do much about this situation-- if Google goes the route of paypal and is not a bank (And does not engage in fractional reserve banking) they are not a threat to banks-- because they are not making loans... but they are sure to give one bank a lot of card clearing business.