Monday, 15 January 2018

POST Crime for Medium

I’ve been wondering why we don’t see more bitcoin crime. This sort of thing, I mean. Pavel Lerner, CEO of a cryptocurrency exchange, was released by kidnappers on payment of a $1 million bitcoin ransom. According to the Financial Times, the Ukrainian interior minister specifically labelled the crime “bitcoin kidnapping and extortion”.

(I would have asked for Monero, rather than traceable bitcoins, but there you go.)

Given the number of Bitcoin billionaires out there — I seem to bump into one at every conference I go to these days — you would have imagined that the more enterprising and forward thinking members of the cosa nostra (the coder nostra, as I call them) would be out in force to exploit this new opportunity. All they would have to do is to stand around outside Consensus or Money2020 and bundle most anyone into a van, drive them to a secluded spot and then pick up their  Bitcoin, Ripple, Ether or Bitcoin Cash payoff. It’s a puzzle that this doesn’t happen all the time, although it’s entirely possible that it does and that I never get to hear about it because I’m not rich enough, just like with those Silicon Valley sex parties.

So is kidnapping for cyber-ransom the defining crime of the 21st century?  Is this really a cyber-crime? Or is it just the same old crime that we had before Mr. Nakamoto’s invention? If Bitcoin is all that, where’s the commensurate innovation from the criminal fraternity? What if, rather than traditional money–related crimes such as kidnapping and extortion, there were much better crypto-crimes invented in parallel with the new forms of crypto-money made available by technology? Is there such a crime that is unique to this virtual world? Not a virtual shadow of a crime that has been around since year zero, but a wholly new crime for the virtual world? Actually, one such crime was invented many years ago. It's the "assassination market" that I wrote about in "Before Babylon, Beyond Bitcoin".

An assassination market is a prediction market where any party can place a bet (using anonymous crypto-currency through an anonymous crypto-network such as TOR) on the date of death of a given individual, and collect a payoff if they “guess” the date more accurately than everyone else betting on the death of the same individual. This would incentivise the assassination of specific individuals because the assassin, knowing when the action would take place, could profit by making an accurate bet on the time of the subject’s death.

Here’s how the market works. Someone runs a public book on the anticipated death dates of public figures. If I hate some particular pop star or politician, I can place a bet on when they will die. When the person dies, who ever had the closest guess wins all of the money, less a cut for the house. Let’s say I bet a fiver that a specific TV personality is going to die at 9am on April Fool’s Day 2018. Other people hate this personality too and they put down bets as well. The more the person is, the more bets there will be.

April Fool’s Day comes around. There’s ten million quid bet on this particularly personality. I pay a hit man five million quid to murder the personality. Hurrah! I’ve won the bet, so I get the ten million quid and give half to the hit man. I don’t have to prove that I was responsible for the assassination to get the money and no-one can pin the crime on me because I paid the hitman in untraceable anonymous electronic cash as well: I’m just the lucky winner of the lottery. If someone else had bet 31st March and murdered the television personality themselves the day before, then I would be one of the loser. But hey, it would only have cost me a fiver, and I would have regarded that as a fiver well spent.

The average nutter might think it a form of modern entertainment to invest £20 quid a month on four bets! Pop stars, politicians, bankers and all sorts of people would find themselves checking their assassination lottery pools ten times a day just as they check on their Twitter followers now. I’m not sure whether it would be a badge of honour to discover that your assassination pool had gone over a million quid or a sure sign that you should go into the witness protection programme.

To be honest this is a rather an old idea that originated, as far as I know, with Jim Bell. Way back in 1995, Mr. Bell wrote an essay on “assassination politics” that brought the idea to the popular (well, amongst a nerd subgroup) imagination. I suppose it was inevitable that the arrival of digital currency would stimulate thought experiments in this area and it was interesting to me then (and now) because it showed the potential for innovation around digital money in adjacent sectors. If I hire thugs to lure a cryptobaron to a hotel room and then beat him up to get a $1m in bitcoins from him (as actually happened in Japan recently), that’s just boring old extortion. If I use Craigslist to lure a HODLer to a street corner and then pull a gun on him and force him to transfer his bitcoins to me (as actually happened in New York back in 2015), that’s just boring old mugging. What if new, bigger and better crimes are just around the corner though.

"Privacy coins such as monero, designed to avoid tracking, have climbed faster over the past two months as law enforcers adopt software tools to monitor people using bitcoin… For ransomware attacks, monero is now 'one of the favorites, if not the favorite’."

From "The Criminal Underworld Is Dropping Bitcoin for Another Currency - Bloomberg".

This followed from the obvious fact that, as I explained in the FT some years ago, Bitcoin is not a very good choice for this sort of cyber-criminality. It’s just not anonymous enough for really decent crimes or the darkest darknets. Hence my scepticism about the claims that Bitcoin’s long term value will be determined by malevolent money mischief. If there is anonymous, untraceable cryptocurrency out there then an assassination market is a much better bet for the coder nostra than the physically demanding felony of kidnapping.

Latin lesson

Latin Lesson  


Latin lesson at Winchester College.

Sunday, 14 January 2018

Who wins from open banking

An Accenture report on the topic from 2017 notes (accurately, in my opinion) that “trusted social media companies (Facebook, Twitter, LinkedIn) and tech companies (Google, Apple) will capture a significant slice of the [AISP/PISP] market".

Open banking will change the merchant payments ecosystem

We think a major focus for the whole merchant payments ecosystem in the coming year will be the new threats, opportunities and players in the emerging open banking world. Starting with the U.K.’s move to open banking in January (the implementation of the Competition and Market Authority's “remedies”, or the “CM9”) and moving ahead with PSD2 across Europe, the ability for trusted organisations to access consumer bank accounts and to not only obtain transaction information but also to instruct payments will inevitably change the landscape.

There are new opportunities for acquirers to become broad-spectrum merchant service providers (MSPs) to facilitate interaction between the open banking infrastructure and the merchant community. This very appealing vision of the future (for merchants) will draw them towards a once in a generation change at point of sale. Merchants can easily afford to incentivise customers to switch to account-to-account “instant payments” and at the same time offer considerable customisation based on customer account data.

Merchants definitely need some help, and it’s not all about payments. A recent Consult Hyperion survey found that more than 90% of merchants want to use PSD2 to reduce card fees, three-quarters of them also want to use it to reduce the impact of fraud and data breaches. An Accenture survey last year also found that half of the retailers they surveyed want to use customers’ bank account data to provide special offers and customised services at POS.

Apart from anything else we expect to see a resurgence of interest in the “decoupled debit” proposition whereby platform-provided strong authentication to retailer apps will allow them to bypass the existing card infrastructure (I have seen projections indicating that a third of European card volume could disappear in the coming years) and perhaps even the physical POS itself. I can certainly imagine self-scanning my way around Waitrose and when I hang up the scanner to leave, the Waitrose app will pop up on my phone with the total, ask me to swipe my fingerprint to confirm, and then Waitrose will instruct an instant payment from my account to theirs.

As a customer, the instant payment proposition seems to me just like the familiar debit proposition: I walk out of Waitrose and the money walks out of my account. The fact that it never goes near the existing rails is something I neither know nor care about. This, as is often pointed out (by, eg, me), is a great opportunity for new players (eg, Google, Apple, Facebook and so on) to join the ecosystem. These are players with a business model built on data, not merchant service charges, and thus the business models in the ecosystem will reorient. This was one of the key themes I picked up at last year’s Merchant Payment Ecosystem conference in Berlin, and I wrote at the time that my impression was that some of the big plays coming would be big data, analytics and machine learning.


Having said that the existing rails may be bypassed, open banking also provides an opportunity for the schemes to reinvent themselves and their propositions. (As we think that the UK is about to become an interesting, exciting and unpredictable laboratory experiment in open banking, it seems to us that Mastercard’s work with VocaLink should be a focus of industry attention in this regard.) After all, a payment scheme isn’t just a data switch that connects consumers, banks, merchants and retailers. If it was, there wouldn’t be any, because we’d all just use the internet instead. Rates, rules and rights are fields in which Visa, Mastercard, Amex, Discover et al have decades of experience to leverage through both their existing relationships and the new ones that will arise.

The retailers themselves, especially the millions of small retailers, will also benefit from this transition because a variety of new products and services will spring up to help them to manage their bank accounts, funding requirements and general financial services needs. I’m no expert on small business financing but the ability to see the details of a retailer’s bank account will surely lead to new opportunities for specialist financial services providers.

Gary Munro at MPE  

All things considered, 2018 is going to be a pretty interesting year and we are very much looking forward to learning about the new possibilities at Merchant Payment Ecosystem 2018 in Berlin. If you want to meet me or our Principal Consultant in the POS field, Gary Munro, at the the event then just drop us a note and we’ll see you there.

Thursday, 11 January 2018

Blockchain in Practice

LegalFling is the first blockchain based app to verify explicit consent before having sex.
- via
LegalFling is the first blockchain based app to verify explicit consent before having sex.
- via

To look at the blockchain in practice, I am delighted that we have been able to put together a distinguished panel with real-world experience of what the illuminati call “blockchain solutions”:

Keith Pritchard completed a secondment from JPMorgan to the DTCC in 2017, where he was responsible for building a blockchain-based platform to support the credit derivatives market. He is currently with the consultancy Base60 where he is helping ISDA with the groundwork for a wider distributed ledger strategy.
Martin Walker is currently head of product management at Broadridge for securities finance and collateral management, and worked on capital markets product development at R3 – the firm behind the Corda distributed ledger platform;
Haydn Jones is founder and MD of Blockchain Hub providing educational, strategic and operational support for organisations seeking to leverage blockchain technology;
William Garner is head of CRS’s broking, trading and markets practice, where his list of blockchain clients includes SETL – which uses blockchain technology for payments and settlements (and which now has Deloitte as a major investor).
I hope we will get beyond the hype, to see exactly what is being done by whom and for what in the blockchain space. If you (or a colleague) would like to join us and perhaps share your thoughts, please call the CSFI on 020 7621 1056 or email Thanks to CRS, we can promise generous wine and sandwiches.
- via CSFI

Monday, 8 January 2018

POST The better way to use biometrics


The truth is, biometrics are collapsing all round. The figures for biometric failure have been staggering. In Rajasthan, in the PDS, exclusion because of fingerprint failure has been close to 36 per cent — which means not even one person from 36 per cent households are able to authenticate using their fingerprints.
- via The Indian Express


That biometrics are not working as hoped is made evident in the Watal Committee report on digital transactions, in December 2016… the committee asks that for digital transactions, the “OTP sent on registered mobile number of Aadhaar holder” be allowed, thereby downgrading biometrics.
- via The Indian Express


Sunday, 7 January 2018

Bakeries struggle as banks refuse to take coins - OTHER STATES - The Hindu


Neither banks nor are our material (like sugar, flour, etc) suppliers accepting coins. Even, workers are not accepting wages in coins. Many of us stopped manufacturing cakes,


Bakeries struggle as banks refuse to take coins - OTHER STATES - The Hindu