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Hiccups in a Cashless Society
jchaw sent us a story thats running over on CNN and
talks about hiccups with Singapore's Cashless System
which apparently messed up 4500 transactions and caused a quarter of a million dollars to
be lost in the system. Kinda creapy- as we become more and
more reliant on credit cards, debit cards, and ATM cards,
the chances of bugs popping up increases.
The typical "do it all" automatic system. It is pretty interesting that the thing debts accounts *before* transaction is Okyed. And yes "it's not a bug, it's a feature..."
Such features are the most hillarious thing I ever seen. Well we have all these credit card, robberies, electronic frauds and so on. But is pretty funny to see algorithms based on the idea that things are bug, *oops*, feature free.
This is a sad side of such things. The good side is seeing ATM's working like jackpots. One friend of mine got once 5 times more cash than he had required. But the best was that ATM _didn't_ debt him on it!
OK guys, some basics
The properties of a unit of current are related to its functions.
1) long-term store of value
2) convenient medium of exchange
3) measure of economic goods and services
Gold has some nice properties
1) extremely stable and durable
2) divisible into smaller subunits
3) considered a luxury item and thus independent of goods and services.
The history of money is rather intriguing as historically, people have used different mediums for exchange (eg. roman solders used salt from which we've derived salary). The reason why gold has traditionally been used is that it is very hard for governments to dilute it's value. However, relying on it has rather negative consequences when everybody is using it as there are physical costs and circulation (ie liquidity) problems. Oh, plus the rather inconvient fact that the world's largest suppluers are in South Africa and Russia so whether you are leftist or rightist, you're sure to alienate half your population by depending on it as the sole measure of your economic future.
The modern fiat money system is based on trust (e.g. social security) backed by the laws of the host country. That is why the feds get rather irritated with things like counterfeiting and trying to escape the tax system as it dilutes the trust and ultimate value of the currency. Of course, they're also hoping that nobody points out the clothesless emporor in by inflating the currency through increasing the M3 supply, they automatically devalue the currency. Considering the US owes nearly 6 trillion to the rest of the world and, as a global reserve currency, is not on the gold standard, they can theoretically inflate away the entire debt through accounting tricks. (one reason why the Euro has appeared and indebted countries are so pissed off).
Governments and banks would dearly like to move people into an electronic currency (consider it as the pure economic laws without the paper or cheque bits fiddly bits) as it eliminates the horded value locked up in circulating paper (one reason why Russia is so bad is that all the rubles have been tranformed into illiquid assets and horded, thus denying their use as a circulating unit of exchange) and allows financial firms to cut handling costs (not to mention lend on the stock exchange for the hours in the day you're not using it).
Modern capitalistic countries are already seeing this with the move towards a credit-based society. Of course, if the system screws up (as the Singapore case shows), the population gets rather annoyed as nothing brings out the fear of mob hysteria than losing your shirt. However, no matter what currency you use, it still has to satisfy the functions of a universal store of value, common medium of exchange and independent unit of pricing.
LL
PS As an interesting academic exercise, you can figure out the instrinsic value of software by creating synthetic measures of its value, much like you can trade Hollywood futures on the future value of stars and films.
This illistrates perfectly why moving away from the gold standard was a Bad Idea(tm). When infrastructure freaks out, get's destroyed, it's government falls, etc. GOLD and SILVER still retain value. This is why it's good to have real gold coins, etc. locked away.
I use VISA, but that's as far I as trust this plastic crap. I was pissed when my former employer (The US Navy) FORCED me to go to direct deposit to get paid.
All things considered, this kind of tech is not ready yet. I'd like cash, please.
"I have no respect for a man who can only spell a word one way." - Mark Twain
"Going to war without France is like going deer hunting without your accordion." - Jed Babbin
Isn't (paper) cash money only backed by trust, though? Unless you barter every transaction with valuable property, you're going to have to accept some level of immateriality in your money.
There is a hotel that accepts items in exchange for accomodations. There was a recent story about a man who tried to pay for his stay with an iguana. When they refused, he let it loose. I have not yet heard the report of its capture.