Pervasive banking

Pervasive banking

Bitcoin Crypto 2.0 Ripple Singularity of Money tokens value

In computer science, there is a concept of "pervasive computing" - an idea that instead of using a specific device to perform computation, it would instead be distributed "everywhere" and we would instead just use our devices as interfaces to access this ubiquitous computing environment. So instead of having say, a laptop or a PC where we run our programs, we could have a local cloud of computing devices to provide us with their resources at our disposal. Just as computing appears to be moving to this model with say, home game streaming, perhaps it's time for the banking services to take a clue as well?

What would constitute a pervasive banking experience?

1. The ability for anyone to access the banking network
2. The ability to cash in and cash out at any location, not just the banks and ATMs
3. The freedom to pay conveniently in any fashion

Number 1 we've discussed before. It would be really good if banks were considered to be a common carrier, and thus unable to refuse the service to anyone that pays the fees and follows the rules.

Number 2 is interesting. There are a few examples of some convenient cash in / out cropping up here and there. I've seen a few banks offering cash out services during checkouts at stores, Apple Pay looks like it will be offering P2P payments to allow people to pay for other people's purchases and what not, and Abra is looking into offering P2P remittance services.

Perhaps in the future we will see more companies embracing the "anywhere-in, anywhere-out" nature of banking and we might see say, self-checkout kiosks or even vending machines acting as our convenient ATMs? After all, if they can already accept deposits, make change and accept credit cards, they have all the functionality needed.

Number 3 appears to be also already in the works. We've got Google Wallet allowing you to pay wirelessly (although at the time, only in US, which still appears to be too focused on magswipes...), or a poorly named "Coin" card that replaces your multiple card with a single programmable card (unfortunately, with the outdated magswipes...). We also have some people developing Bitcoin applications that use MasterCard's PayPass technology.

Perhaps this step will become easier once everyone is talking on a common standard. Luckily, we have a W3C Web Payment Interest Group hoping to create a standard protocol for payments (list of participants includes Ripple Labs, although I don't see any other cryptocurrency expert representing). It is possible that with the standard being established it would be easier for companies to build gateways in and out of the old banking systems and allow for everyone to be able to pay in a way that is the most convenient for them - cash, credit, mobile or crypto.

Conclusions

All in all, it seems that we are heading towards the pervasive banking / Singularity of Money concept on a few fronts, although it might still be years before the idea is fully realized.


Relevant links:

• The Singularity of Money
• The rise of fiat-denominated cryptos

The need for a new measurement of value

The need for a new measurement of value

currency wars money value

As many of you might be familiar, there are a few key functions money needs to perform in our society. While the exact list may vary, here are some of the functions listed:

1. Medium of exchange
2. Measurement of value
3. Standard of deferred payments
4. Store of value

Today, I would like to talk to you about the measurement of value function of money in the context of the "Currency Wars".

Measurement of value

Money being used as the measurement of value (or a unit of account) means that we use the money units to denominate how much other things are worth. It is useful to have this standard reference because then we can compare things that would be otherwise hard to compare. While it might be easy to estimate that a loaf of bread is worth about a few buns, since they both fulfil a similar role and are essentially interchangeable, it is much harder to compare how many loafs of bread would be equivalent to a book in a pure barter system.

With money, everything is compared to the same unit of money, be it dollars, euros, bitcoin or otherwise. As such, everything has its own price and all of the prices are easily comparable, making everyone's life that much easier.

Currency wars

The topic of currency wars is rather big, and I don't think this post will do it justice. I recommend the book "Currency Wars" by James Rickards to learn more about this subject.

The short of it is, that a currency war, also known as competitive devaluation, is a competition between countries to achieve a relatively low exchange rate for one's own currency in comparison to everyone else. While at first it may sounds like a silly idea, after all, the stronger your currency is the more you can buy after all, it does make sense when you think about the state of your domestic industry.

If one's currency is going up in value relative to everyone else's, you will have more imports (you can buy more), but less exports (your products will become more expensive for everyone else and thus less attractive). In order to stay competitive on the global market, you want to reduce the cost of producing your goods. You can either do that through a long process of technical innovation and so on, or you can go the fast route and make your currency worth less. Since your money will be worth less, the wages you have to pay your employees are smaller, the cost to run your company are smaller, and thus your product gets cheaper.

This can be quite insidious, as it essentially means cutting everyone's wage without their consent or knowledge. One dollar today is worth less than one dollar last year and so on. Here is some rough overview of how much $1 is worth as expressed in 1913 dollars:

[source]

New measurement of value

As the money all over the world is fluctuating in value, its use as a measurement of value is a bit ridiculous once you think of it. You could compare it to trying to measure a height of a wave on a stormy sea in relation to other waves. We need a new form of measurement of value that would form a solid ground amidst the currency wars storm.

The reasoning as why we would want something like this is simple - for a lot of people, they would want to be earning the same value performing their jobs and pay the same value for their goods and services, no matter how much their local currency is fluctuating. This would allow them to detach themselves from the monetary policy of their countries that are doing their best to run it to the ground. Having an absolute measurement of value would promote real growth and innovation in becoming more and more competitive, rather than fake growth brought about through inflation.

As for what this measurement would be, this might be a bit complicated. If it was a commodity like gold, everyone would start hoarding it and its value swings would affect the economy. It cannot be a national currency, since those are too easily printed and manipulated. It cannot be a currency like Bitcoin, since it can be too easily gamed through a cycle of hoarding to increase its value and releasing to flood the market. I doubt there is anything that could be used as money in traditional sense that could be used for this purpose.

At the same time, none of this matters if we don't make it a currency. If instead, we take the VALUE of anything, be it $1 today, 100 years ago, 1BTC from January 1st 2015, or some handful of magical beans, and use that VALUE as a new standard for measurement of value of everything else, it would become like a metre stick (of for folds on imperial system, a yard stick) for the economic world. A metre is not a measurement of anything in particular, it's not a metre rod of iron, or a metre of water, it's a metre no matter what it's measuring. Similarly, our new Value Stick could be use to measure how much a dollar is worth and how much a euro is worth without actually being anything in particular.

So instead of seeing tags with dollar prices, we could see tags with Value prices, and an exchange rate of Value to dollars or any other currency, perhaps computed on the spot, like in BitTag:

Conclusions

In a world where countries go out of their way to change the value of their currency, we need a new standard for the measurement of value that is independent of any national currency, commodity or otherwise.