Wednesday, 30 November 2016

Bank chiefs demand new legal powers to help stop terrorists laundering money through London firms | London Evening Standard

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The BBA, which represents 200 banks managing £7 trillion in UK assets, wants MPs to “lower the threshold” for intelligence-sharing and make it easier for institutions to help each other spot criminal transactions.

From Bank chiefs demand new legal powers to help stop terrorists laundering money through London firms | London Evening Standard

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Financial Cryptography: Corda Day - a new force

Forum friend Ian Grigg, who I always take very seriously indeed on any such topic, wrote about Corda on his blog and concluded with a powerful statement.

Bitcoin told the users it wanted an unstoppable currency - sure, works for a small group but not for the mass market. Ethereum told their users they need an unstoppable machine - which worked how spectacularly with the DAO? Not. What. We. Wanted.

Corda is the only game in town because it's the only one that asked the users. It's that simple.

From Financial Cryptography: Corda Day - a new force

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It seems to me, however, what Ian is pointing to as the greatest strength of their approach is also the greatest weakness. A staple feature of unimaginative management consultants presentations about innovation is some variation on the statement by Henry Ford that if you had asked users what they wanted, they would have asked for faster horses coupled with some variation on the statement by Steve jobs that it was pointless asking users what they wanted, you just have to show them. In the context of the disruptive innovation analysis that we have all is a fair criticism of our 3 to say that they have been caught between two stools. On the one hand, their members want them to solve for problems that they already have in a context that they understand. Hence they want quarter to, essentially, emulate the kind of database solution that they are familiar with, potentially with some cost savings and some improved performance. But the more I think about it, and I think about it a lot, my experiences working with senior management teams in a variety of industries to help them to develop their strategies towards the general class a shares latest technologies and the specific technology of the block chain is that this new technology will have an impact not by making marginal improvements to the way in which markets function at present but by stimulating the creation of, in these new kinds of markets, the control transparency of transactions will have the most impact. This is why keep going on and on about ambient accountability.

 

I think am coming round to the point of view that block chain is a ragtag, not a thin tech.

 

Tuesday, 29 November 2016

The Royal Mint and CME to launch digital gold on blockchain

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In the UK, there have been robberies in which large quantities of gold and silver have been stolen from homes (here’s some I wrote about a few years ago)

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Why would anyone mess about with physical gold that you can drop, lose, have stolen etc. And I bet it’s hard to buy anything from Amazon with it. I’m more than happy for people to send me gold (you’re welcome to try the experiment) but generally speaking I’d prefer the dematerialised version sent to my Goldmoney account.

From Just popping out to get some gold | Consult Hyperion

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Even i

 

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A return to the gold standard may be impractical or even undesirable, but the idea of new technology monetising the store of value that is gold seems altogether a different proposition.

From There have been worse ideas, surely? | Consult Hyperion

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The Royal Mint and CME Group, the diverse derivatives marketplace, are collaborating on a “digitised gold offering" which will be traded on a blockchain – to be made available at some point in 2017. The blockchain-based gold product, called Royal Mint Gold (RMG) will transform the way traders and investors trade, execute and settle gold, said a statement.

From The Royal Mint and CME to launch digital gold on blockchain

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[The Mint] will issue RMG as a digital record of ownership for gold stored at its highly-secure on-site bullion vault storage facility. CME Group will develop, implement and operate the product's digital trading platform.

From The Royal Mint and CME to launch digital gold on blockchain

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Douglas Jackson is the Chairman and Founder of e-gold, one of the very first attempts to create an alternative electronic currency based on gold.

From Douglas Jackson, e-gold | Consult Hyperion

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Friday, 25 November 2016

Revenge porn: Peer says Twitter users must reveal real names - Telegraph

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Social media users should be forced to reveal their real names so police can track down jilted lovers who post “revenge porn”, a peer has said.

[From Revenge porn: Peer says Twitter users must reveal real names - Telegraph]

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Wednesday, 23 November 2016

Tuesday, 22 November 2016

Cash is still king in Japan, and that could be a problem for BOJ, Government & Economy - THE BUSINESS TIMES

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Even though many places now take credit cards, Apple Pay and other forms of cashless technology, the actual amount of notes and coins circulating in the country has doubled in 20 years. And that's while the economy and population has shrunk.

More than 101 trillion yen (S$1.35 trillion) of cash was circulating at the end of October. It was used for more than 80 per cent of transactions by value in 2014.

From Cash is still king in Japan, and that could be a problem for BOJ, Government & Economy - THE BUSINESS TIMES

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Banks to hire retired officials, extend working hours to stack up new currency notes in ATMs, branches | Business Standard News

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With largest ATM network in the country under its wing, SBI handles on an average 10 million withdrawal transactions involving cash worth Rs 2,800 crore every day.

From Banks to hire retired officials, extend working hours to stack up new currency notes in ATMs, branches | Business Standard News

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Just 35,000 personnel to replenish ₹16 lakh crore in ATMs | business-news | Hindustan Times

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“Re-configurations takes time so it has to be done one by one. Things should be normal in ten days. You have to understand there are 2 lakh ATMs in the country but there are only three to four vendors.”

From Just 35,000 personnel to replenish ₹16 lakh crore in ATMs | business-news | Hindustan Times

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Blogoff - The Curse of Cash - Philosophy of Money

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What I expect most non-economists reading The Curse of Cash are confounded by is not the idea of abolishing physical notes and coins – on many levels this is appealing, particularly its consequences for criminal activity. No, what’s bizarre is his insistence on charging negative interest rates on cash to stimulate demand under deflation.

From Blogoff - The Curse of Cash - Philosophy of Money

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A few days ago Ed. received a call from RBS – his bankers (well he assumed that it was the real RBS), asking if he was currently in Edinburgh trying to cash a dodgy cheque backed by a dodgy driver’s licence, all in Ed’s. name.  No said Ed. Thank you for your help, said RBS: we are here to safeguard your money.  Happy ending.  Well, except that this morning a cheque (on a different numbering sequence) for £7,332 was debited to the company bank account. Well done RBS fraud team for letting through a fake cheque with a fake signature, backed by a fake licence card, having already spotted the problem.

Saturday, 19 November 2016

Blogoff - The Curse of Cash - Philosophy of Money

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Central banks could set one interest rate on digital cash held by households and another on banks’ excess reserves

From Blogoff - The Curse of Cash - Philosophy of Money

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Blockchain sprint!

Well, that was the fun. The nice people at the Meaning Conference gave me 13 minutes to try to explain what a blockchain technology is, what blockchains might do, and what the implications might be, to an audience of largely creative people. Quite a challenge.

Meaning2016-DaveBirch  

Since they were creative types, I thought I ought to frame my explanations with poetry rather than mathematics. I decided to start with the Ur-statement of ordered immutability, the Rubiyaat of Omar Khayyam:

“The Moving Finger writes; and, having writ,

Moves on: nor all thy Piety nor Wit

Shall lure it back to cancel half a Line,

Nor all thy Tears wash out a Word of it.”

You can see the revised version of the slide deck here (we accidentally sent the wrong version on the day, but it really didn’t matter). It sets out the revised “4x4x4” model of shared ledgers, so that there is context for talking about the blockchain, and then quickly works through how there are different kinds of blockchains (and bitcoin is only one) and then gets to what I think will be the lasting impact: ambient accountability, new kinds of transaction environments where traditional auditing and policing are taken care of by the environment itself.

Meaning2016-DaveBirch2  

In order to explain my focus on ambient accountability, we went back to poetry, this time with T.S. Eliot and choruses from The Rock (1934).

“They constantly try to escape

From the darkness outside and within

By dreaming of systems so perfect that no one will need to be good.”

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Meaning2016-Crowd

They were kind to me with their feedback, although going back over the presentation I’m a little disappointed with it. I think I can do better to bring the new world of the shared ledger to the general audience. So I’d appreciate your feedback on two elements of the presentation. First, does the six layer “real world ledger” model help with the discussion or is it an unnecessary complications and second do the example ledgers presented across those six layers make sense? I want to quickly show the different types of ledger in one slide.

Wednesday, 16 November 2016

31 more Australian banks have partnered with Apple Pay | finder.com.au

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Apple has signed a deal with credit card processing behemoth Cuscal, giving an additional 31 banks access to the Apple Pay contactless payment facility.

From 31 more Australian banks have partnered with Apple Pay | finder.com.au

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Strong Customer Authentication in the Payment Services Directive 2 – Bentham’s Gaze

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This security/usability trade-off is not inherent to Strong Customer Authentication (SCA), and in fact the opposite is more commonly true: in order for SCA to be secure it must also be usable “because if the security is usable, users will do the security tasks, rather than ignore or circumvent them”.

From Strong Customer Authentication in the Payment Services Directive 2 – Bentham’s Gaze

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Tuesday, 15 November 2016

Fashion brand adds NFC and blockchain for authentic personal clothing • NFC World

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Fashion brand Babyghost has partnered with Chinese blockchain-as-a-service company BitSE and its VeChain project to deliver a range of clothes incorporating NFC tags and verified using blockchain technology.

From Fashion brand adds NFC and blockchain for authentic personal clothing • NFC World

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Friday, 11 November 2016

McDonald’s to launch mobile order and pay next year • NFC World

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McDonald’s is planning to launch a mobile order and pay service in up to 25,000 restaurants worldwide by the end of 2018, starting in the US next year

From McDonald’s to launch mobile order and pay next year • NFC World

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US same-day ACH

In the US, the new NACHA same-day ACH will have a 5.2 cent per transaction fee that is paid by the originating institution to the receiving institution. It is up to the institutions whether they charge customers anything for it. But even if they were to pass that whole cost on to merchants, my guess is that the merchants will prefer the low-cost, same-day payment over the existing schemes (e.g., debit cards).

With a Flurry of New Ways to Pay, Cash Hangs On - Real Time Economics - WSJ

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A new Federal Reserve study finds while consumer habits around cash are changing, its popularity remains high

From With a Flurry of New Ways to Pay, Cash Hangs On - Real Time Economics - WSJ

I’m not sure I would say “high”. What the Fed study actually shows is that cash was 40% of all transactions in 2012, 32% of all transactions now. So it’s fallen from being used for less than half of all transactions to less than a third. That doesn’t sound like “hanging on” to be honest. What was most interesting, to my mind, was that fact that the use of cash for P2P transactions has gone up despite the advance of Venmo. My guess is that cash displaced checks.

POST The laundry bill

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These costs might all be worth it if there were any proof that anti-money-laundering laws lowered crime rates. But the laws don't even put a dent in money laundering. A Brookings Institution scholar testified before Congress that 99.9% of dirty money in the United States is successfully laundered.

[From The $7 Billion Laundry Bill - Forbes.com]

Perhaps there has been some progress, because a more recent study in the UK suggested that some 0.75% of the dodgy cash is being intercepted now. But the general point holds. Our mental model is all wrong. We shouln't be trying (and failing at great expense) to keep dirty money out of the system, we should be getting it into the system and then using the modern technologies at our disposal - data analytics, forensics, machine learning and artificial intelligence - to work out who is up to no good so that law enforcement resources can be properly targeted.

Wednesday, 9 November 2016

Undercover Criminal reveals 'Adil' who is selling fake IDs to illegal immigrants in Birmingham | Daily Mail Online

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The conman, known only as Adil, has been exposed for selling fake residency cards to immigrants in Birmingham – and charging up to £600 per ID card.

From Undercover Criminal reveals 'Adil' who is selling fake IDs to illegal immigrants in Birmingham | Daily Mail Online

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Identity, verification and blockchains

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So is a blockchain based identity practical?

I think the answer is “yes” but it needs to be designed very carefully. It may also need to start with the sort of areas that can manage it best and already need a virtual identity (such as land registration or financial services transactions).

From Identity, verification and blockchains

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Monday, 7 November 2016

From Colorado, a glimpse at life after marijuana legalization - The Boston Globe

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But her company struggles with what she estimates to be an effective tax rate of nearly 50 percent, as well as having to deal almost exclusively in cash. Because marijuana remains illegal under federal law, access to banking services is severely restricted.

From From Colorado, a glimpse at life after marijuana legalization - The Boston Globe

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From Colorado, a glimpse at life after marijuana legalization - The Boston Globe

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Each plant for sale must be tagged with a radio frequency identification chip

From From Colorado, a glimpse at life after marijuana legalization - The Boston Globe

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POST Will payment trends continue?

I happened to be reading

Instrument Change 2013-2018E
Cash down 33%
Check down 50%
Credit Card up 64%
Debit Card up 48%
Electronic up 62%

I think that as a longer-term guide these figures are misleading, because I am convinced they underestimate the impact of instant payments. If the US banks are sucessful with Zelle, I'd expect to see electronic payments grow more rapidly at the expense of cash, checks and cards as we shift to an app and API infrastructure for payments.

Thursday, 3 November 2016

Black cabs to support contactless payments next week, no more stopping at cash machines - Pocket-lint

As I have long maintained, taxis are the prosaic benchmark for a mass-market payment technology. If you can pay with it in a cab, then it’s a mass market technology.

Vegas Cab Card Reader

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From Monday 31 October, all black cabs will be required to have a contactless card payment reader, either fixed or handheld. Although from January 2017, cabs will need to have a card reader installed on the passenger side of the glass.

From Black cabs to support contactless payments next week, no more stopping at cash machines - Pocket-lint

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Wednesday, 2 November 2016

Smart Contracts and the Role of Lawyers (Part 3) – About Lawyering Transactions on Blockchains – Biglaw KM

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Today, information concerning the assets and liabilities of even “public” companies is obscured, widely dispersed and often untrustworthy. But imagine a future in which a target company’s internal financial and transactional history (including all substantive contracts with third parties) is readily accessible online to permissioned legal counsel and financial auditors, fully traceable back to their sources, immutable and completely trustworthy.

From Smart Contracts and the Role of Lawyers (Part 3) – About Lawyering Transactions on Blockchains – Biglaw KM

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POST Zcash, privacy and practicality

You’ve probably read about Zcash. It’s the new kid on the bitcoin block, a cryptocurrency with the added special sauce of genuine anonymity rather than the pseudonymity that got some people into trouble for using the Satoshi system for a variety of nefarious purposes. The claim of the founders is that Zcash is electronic cash because it shares the characteristics of cash, such as fungibility.  Transactions remain confidential unless the counterparties real their addresses by “selective weakening” of the cryptographic protection. Now, I am sceptical about whether confidential transactions will get much traction in the mass market, but that does not mean that do not have a point. 

“If you start with a perfect electronic cash system building block, then you can build an electronic cash system with selective weakening in a way that makes sense for society.”

From ZCash Will Be a Truly Anonymous Blockchain-Based Currency - IEEE Spectrum

Adam Back is, as you would expect, completely correct about this. An electronic cash system that is going to offer some forms of privacy must be built on a truly anonymous infrastructure. You can’t do it the other way round. But… a truly anonymous infrastructure provides ample opportunities for mischief and some of this mischief might be of significant harm to society as whole. So what will happen?

Trying to think this through, it seems to me that there is something of a paradox here in our mental transaction models. We want our transactions to be anonymous because we are good people but we want other people’s transactions to be tracked, traced and monitored because they might be criminals. Obviously we don’t want child pornographers and terrorists to have access to anonymous electronic cash but we do want freedom fighters and oppressed minorities to have access to electronic cash.

So how might this paradox be resolved? Well, one option might be to assume that the anonymous cash will be used primarily by criminals and possession of it will be taken to be prima facie evidence of criminality. Thus law enforcement resources can be targeted. Remember, in an anonymous world no-one knows you’re a dog but no-one knows that you’re from the FBI either. Hence you could argue that anonymity can actually help law enforcement to carry out old-fashioned police work (and since no-one knows you’re a bot either, I’d assume that the police will have large-scale big data analysis and pattern recognition and machine learning and all sort of other things to help them). It’s not at all clear to me that a terrorist child-pornographer will be any further beyond the reach of the law because their cash is anonymous, but I’m open to debate.

What about the mass market though? As I wrote before, I can envisage an environment where some kind of what I generically refer to as “zerocash” is in existence but is never used in its “raw” state, because people, companies and governments will only use the privacy-enhanced layers on top of it.

In Zcash, there are two types of addresses, "transparent" and "shielded." The transparent addresses and the amounts sent to and from them show up on the blockchain as they would in bitcoin. But if a user opts to use a shielded address, it will be obscured on the public ledger. And if both the sender and receiver of funds have opted to use shielded addresses, the amount sent will be encrypted as well.

From How Zcash Tries to Balance Privacy, Transparency in Blockchain | American Banker

The reminds me a little of the idea for light transactions and dark transactions that artist Austin Houldsworth put forward. The idea that counterparties can choose whether a transaction is visible or not is interesting and under explored. Whether Zcash succeeds or not, and I have no relevant knowledge to help me to decide one way or the other, the general principle strikes me as unlikely to vanish and it makes consideration of the institutions and structures that are needed in the presence of anonymous electronic money all the pressing.

This discussion takes me back to the early days of Mondex and DigiCash, when the new era of electronic money began. As indeed, did the Consult Hyperion Tomorrow’s Transactions Forum. Next year will be the 20th annual Forum (so block out 26th and 27th April in your diaries right now) so I think it will appropriate to set up an informed discussion about electronic money and anonymity to see if we can come up with a narrative for the future that makes sense for finance, technology and society. Stay tuned.

Dunkin’ Donuts Leverages Mobile Gifting | NACS Online – Media – News Archive

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Users can purchase Dunkin’ Donuts mGifts in Messages using Apple Pay, and once received, the mGifts can be moved into the Dunkin’ Mobile App and registered for use.

From Dunkin’ Donuts Leverages Mobile Gifting | NACS Online – Media – News Archive

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