My article on CoinDesk this week, on why China’s ICO ban was drastic, but not unreasonable. What’s more, it’s almost certainly going to be temporary.
And I stick by that conclusion even after the news out on Friday that cryptocurrency exchanges in China are being asked to close down. That will most likely also be temporary, especially as the authorities realise that it is much easier to control what is going on with regulated exchanges than in the offshore or OTC alternatives that will replace the volumes.
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Investor Albert Wenger makes the very good point that until we have global regulation for ICOs and cryptocurrencies, we won’t progress much in their development. A technology that aims to transform global capital markets needs global regulation – the current approach, he argues, appears to be to stuff everything back into country-specific, siloed regulations which complicate the cross-border application of the advantages.
Regulation is important and necessary, yes. But unless we can establish a global standard, we won’t end up with the new system that many of us believe we need.
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And then you have Balaji Srinivasan claiming in a CNBC interview that the internet will become one big stock market, just like Google became one big library.
I don’t agree with the analogy. Libraries don’t need regulating. Stock markets do. And while Google can hand out books, you’re not going to buy securities from “the internet”. The internet may become the marketplace in which various exchanges work. But that’s a far cry from becoming a global exchange itself.
With decentralized tokens, it is possible for an automated platform (ie. code) to act as an intermediary between people that want to buy and sell. But not on current internet infrastructure – you would need some sort of blockchain technology for that.
And sure, maybe the whole internet will one day be run on a blockchain, as Blockstack and IFPS (among others) are working on. But full replacement is, let’s face it, a ways off.
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A TechCrunch article on blockchain and identity succinctly points out why the technology is not the solution to the management of personal data.
It quotes an analyst as saying:
“Identity is not going to move to the blockchain in any big way (not as we know it). Blockchains were designed to solve problems quite different from identity management. We need to remember that the classic blockchain is an elaborate system that allows total strangers to nevertheless exchange real value reliably. It works without identity and without trust. So it’s simply illogical to think such a mechanism could have anything to offer identity.”
The analyst has a point. But he fails to tackle the nature of identity – it’s just data. Your identity is made up of certain characteristics, depending on the situation and/or need. Name? A sequence of characters. Place of birth? Coordinates on a map. Age? A date. Address, profession, marital status, favorite movie… They’re just bits of information.
And if blockchain technology can safeguard and distribute data in a more robust way than any other technology out there, why is it not appropriate for identity?
The thing is, the information needs to be verified. Depending on the use case, the requester needs to know that you’re not making up your date of birth or social security number. It also needs (again, depending on the use case) to be flexible – you’re likely to change your address at least once in your life, and possibly also bank account, IP address, even your name.
Could a blockchain handle that level of sophistication? Data that only you control, but that requires inputs from third parties? Yes, it most likely could.
Yet with a greater attack surface, could a blockchain identity platform guarantee security? Ah, that might be more complicated. It looks like data security and privacy might be even more urgent problems to solve.
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If these photographs of stunning fireworks don’t take your breath away, then you have no soul (or maybe you just don’t like fireworks…)…
By photographer Keisuke (who is just 25 years old!!), via Colossal.
You should check the other photos out, they’re all staggering…
As we saw in the previous entry in this series, credit default swaps are ideal for blockchain testing because:
they’re complex yet with a “programmable” structure;
they’re increasingly standardised following recent changes in regulation; and
they operate in a self-contained market – although they reference other securities, they don’t actually link to them, and can operate solely on straightforward data inputs.
The largest project currently underway – not only in credit derivatives but also in the financial industry as a whole – is that of the Depositary Trust and Clearing Corporation (DTCC) in the US, which is working on rebuilding its credit default swaps processing platform with blockchain technology.
To appreciate how huge the launch could be, let’s take a closer look at the structure of the DTCC and what it does.
Too big to fail
Set up in 1999 to combine the Depository Trust Company (established in 1973 to hold security titles) and the National Securities Clearing Corporation (founded in 1976 to handle clearing and netted settlement), the DTCC is currently the largest securities processor in the world. It settles transactions of almost $1.7qn a year (that’s quadrillion, with 15 zeroes). There’s no point in trying to get your head around that large a number.
Since then it has acquired or created further subsidiaries to extend its services to include pan-European equities clearing, fixed income transaction processing, information management for trading institutions among other functions.
In 2006, the DTCC launched the Trade Information Warehouse (TIW) service, to centralize the storage of information regarding trades of over-the-counter (OTC) derivatives. One of its main functions is to maintain the “golden copy” − the unique, reliable and actionable record of transactions. It also manages post-trade processing such as payments and adjustments over the life of each contract (which, in the case of OTC derivatives, can be as long as 10 years). It currently handles the event processing services for 98% of the world’s outstanding CDSs.
Time for an upgrade
This is the platform that the DTCC wants to replace with blockchain technology. One of the main attractions is the possibility of making the “golden copy” accessible to all participants. Another is being able to automate the processing of lifecycle events via smart contracts (currently a largely manual process). Also, on the current infrastructure, settlement can take as long as a week to close, whereas on the new platform it could be almost instantaneous.
To this end, the DTCC started work on the redesign of TIW at the beginning of 2017, following a successful proof-of-concept executed in 2016. IBM is acting as project lead, blockchain startup Axoni will provide the technology, and R3 is acting as advisor. The platform is expected to go live in early 2018, at which time the underlying protocol will be submitted to opn-source blockchain consortium Hyperledger (of which the DTCC is a founding member) for others to also work on.
Given the systemic importance of efficient derivatives settlement, initially the new platform will launch in “shadow” mode and run alongside the current system. Participation will be optional, and participants will adapt their internal processes gradually, with large firms implementing their own nodes on the ledger while smaller ones hook in via the DTCC’s node.
To start with, the platform would only handle information and reconciliation. Payments would continue to move on traditional rails.
An interesting question is why the DTCC would do this. Are they not potentially writing themselves out of the picture?
What they are in effect doing is “disrupting” their own processes. As the largest CDS post-trade processor, they do have a choke-hold on the market. But the DTCC is a not-for-profit organization, owned by the industry. As such, its obligation is to the market participants, and includes future-proofing its service. What’s more, a reduction in reconciliation costs could boost transactions and liquidity, possibly helping to offset the post-crash decline in trading volumes.
Furthermore, its systemically important role gives it a clear view of how fast financial services can shift. By upgrading the principal post-trade platform and making it easier for derivates to be centrally cleared, the DTCC could be getting ahead of regulatory changes. With a node on the distributed ledger, regulators would have a complete and real-time view of the state of the market.
When the platform goes live (expected to be early next year), it will be the largest project to date to enter production. Its effects will not be visible to the mainstream market, but the financial sector will be watching this closely, not only to see if the technology works, but also to gauge the impact of the cautious implementation strategy.
Blockchain technology is not the answer to all of the problems, structural and otherwise, that currently plague financial markets. But its potential is intriguing, especially the opportunity to affect how information is handled. That in itself could fundamentally change how the markets work.
With many more projects in the pipeline – from the DTCC as well as other significant players in the field – the launch of the CDS blockchain platform could well be the tipping point that triggers a host of implementations. With that, we will finally be able to say that the next era of financial infrastructure has begun.
Popular Science explains a new calendar proposed by economist Steve Hanke, which would adjust our calendar to a less random, more efficient structure. We would have four quarters of three months, each with 30 or 31 days. January 1st would always be on a Monday, Christmas Eve and New Year’s Eve always on a Sunday. Every five or six years we would adjust for the orbital drift by having a work-free “Leap Week”.
It makes sense. We would waste less time jiggling calendars. But it is unfortunately unlikely to happen, since we tend to resist change. Getting rid of daylight savings time might be a better first step, to get us in the mindset.
“Woo is understood specifically as dressing itself in the trappings of science (but not the substance) while involving unscientific concepts, such as anecdotal evidence and sciencey-sounding words.”
He holds up ethereum as an example of “woo”, especially its claims to be “a world computer”.
It seems to me that this argument is beside the point, in that it depends on what your understanding of a “computer” is. If to you a computer is a device, then no, ethereum is not. Yet if you understand “computing” to be more of a function than a thing, then maybe. Either way, it’s not important – I, too, get pissed off with annoying and meaningless hype. But, beyond that, it’s not important.
“Whenever technological change has divorced the old forms from the new moving forces of the economy, moral standards shift, and people begin to treat those in command of the old institutions with growing disdain… This widespread revulsion often comes into evidence well before people develop a new coherent ideology of change.”
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These are cakes, not modern art sculptures… Cakes… Awesome. By Dinara Kasko, via Colossal.
While cringing through reviews of “Tulip Fever”, released in the US last weekend, I couldn’t help but wonder why the story still captures our imagination.
The bitcoin bubble has often been likened to the tulip bulb mania of the Amsterdam markets in the 17th century. That is wrong.
While the speculative fervour may have the same underlying root (cough, sorry), namely the me-too desire to get rich quick, there the similarities end. Historical analogies make for good copy, but unless you believe history does repeat itself (and I don’t), the usefulness ends there.
First of all, in the tulip frenzy, the actual price of tulips was volatile, but not nearly as much as the futures price. People were entering into contracts to buy tulip bulbs at a certain price a few months hence. In early 1637, the Dutch authorities decided that the futures contracts would become options – the purchase contract could be “cancelled” upon payment of a small percentage. In other words, speculators were buying the right (but not the obligation) to buy tulip bulbs at certain prices – these are the ones that went through the roof, not the actual prices at which the bulbs changed hands.
Second, bitcoins are obviously not tulips (not nearly as pretty), but even the nature of the investment (or speculation) is totally different. Bitcoin actually has a practical use. It can be used to transfer value without third party control or interference. It satisfies all of the characteristics of money, except for the (dubious) requirement that it be authorised by a central authority.
Tulip bulbs, on the other hand, have the potential to make people happy, but beyond that, they’re not useful, not even as a means of exchange. They are 1) not a store of value (they perish), 2) they are not fungible (no way is a lily-flowered the same as a viridiflora), and 3) they are not limited in supply. They shot up in price because people expected them to shoot up in price. The same can be said of bitcoin, true, but the difference is in the residual value – what is the underlying use worth? With bitcoin, it is potentially worth a lot. Tulip bulbs, not so much.
(Although as a caveat I would like to stress that I do believe that the enjoyment of beautiful things, even ephemeral ones, is worth paying for – although nature so often gives them to us for free. An interesting anecdote is that the most coveted bulb during the tulip mania was the Semper Augustus – it turns out that the flower’s beautiful striations were due to a virus that eventually killed the breed off. Even nature’s accidents can have aesthetic value.)
It remains to be seen what impact the growth of the bitcoin derivatives market will have. In the case of tulips, the emergence of a liquid options market lend the market some stability – the strike prices were volatile, the actual traded prices much less so. Could bitcoin’s development follow the same path? Or will derivatives undermine the financial incentives of proof-of-work consensus? As soon as I have the time, I’ll be looking into this some more.
“Never waste a good crisis,” said Winston Churchill, and this one brings data security front and center. We can expect to see over the next few days an increasing number of experts explaining how it could have been avoided (and no, the answer is not necessarily “the blockchain”).
It should go farther, though. The issue speaks to centralization, not only of data storage but also of financial influence. Why does Equifax need that much data? Credit scoring, yes, but why does one firm hold that kind of power? A safer construction would be to use a combination of inputs, each gathered by a different entity, with relevant information fragmented and distributed. And yes, here is where blockchain technology could play a part – a relatively decentralized system with many, smaller and more insignificant points of failure.
If, on top of it all, you can get an identity system in which the information resides with the user, and all the aggregators see is the verification that the information satisfies certain requirements (without seeing what that information is), then we are looking at a potentially secure service.
This crisis has to drive home the point that the current vertical and siloed business and information structures need to evolve. The verticality of finance – inherited from the previous generation of powerful corporations – is at odds with the liquid nature of today’s principal product, data.
It’s also a welcome reminder that all corporations should have a “we’ve been hacked” protocol in place. And it should be rehearsed regularly, because the simulated horror should be enough to remind the IT executives to make sure this doesn’t happen. If it does, at least the firm could avoid irreparable damage to its reputation by handling it with more empathy and ethics than the current management seems to be doing.
“When a company sells equity to raise money, it doesn’t pay any income tax on the proceeds. When a company raises money through a token sale, the proceeds are treated as revenue, and therefore subject to tax.” (my emphasis)
In the US, that could equate to 40%. So, if the threat of SEC scrutiny and sanctions weren’t enough to put you off the idea of doing an ICO, there’s the fiscal efficiency of the proceeds. Not that investors would care in this get-rich-quick market… But they should.
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The New York Times published a fascinating timeline of best-selling stock photos for the search term “woman”, which shows a stark trend towards less focus on beauty, more on activity. Less on serenity and more on personality. Less on youth and more on achievement.
“In 2017, based on the Getty photos most chosen by marketers and the media, to be a woman is to be on your own, physically active and undeterred by either sweat or circuit boards.”
We all know it’s not that simple, and media trends do not always reflect reality. They can influence it, though.
It’s a good time to be alive, and a good time to be a woman.
Russia’s central bank joins the list of regulators warning against initial coin offerings (ICOs), hot on the heels of China going as far as banning them.
A warning may not be enough to curb the hype, however, as statements from the US’s SEC, Singapore’s Monetary Authority and Canadian regulators didn’t seem to make much of a dent. It took China’s outright ban to spook the market. And since memories tend to be short, especially if the tantalizing promise of easy riches in dangled in front of investors large and small, the effect could end up being short-term.
I hope not. The sector needs a shake-out and a return to reality. The potential innovation is getting drowned out with empty ideas and white papers that read like marketing documents.
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Just when I thought overwhelm couldn’t get more overwhelming, I find out that there are three Marvel movies planned per year until 2020. Pile on the Netflix sequels and spinoffs, and I… just… can’t… keep… up.
(Your favourite so far? Mine’s Jessica Jones. The Defenders was pretty good, too.)
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These thoughts on how the retail clothing sector in the US got it wrong by following trends (ie. focusing on “fast fashion” and renewing designs frequently, without checking that that’s what customers wanted) could well be applied to the blockchain sector.
Do you have to raise an ICO, or are you doing it because it’s fashionable?
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Paris Hilton pumping ICOs is nauseating. Please, someone call the top. Regulators step in. Whatever. This is getting painful.
Next up in our look at the potential impact of blockchain technology on the derivatives market are credit default swaps. There is much to unpack here, so this section will be divided in several parts: the first entry will give an overview of what the instrument is and why its market is so important. The second will talk about blockchain work already going on in the space. Later posts will discuss recent scandals and new legislation in more detail, and how regulatory changes point to blockchain roadblocks and opportunities.
The credit default swap (CDS) emerged in the 1990s, rose to notoriety in the 2008 crash, and was one of the protagonists of the hit 2015 movie “The Big Short”. Few financial instruments get to star in a film, but the CDS has a talent for superficial deception: it masquerades as a humdrum insurance play, but in reality, it can be a volatile risk investment.
Although the CDS market is nowhere near as large as other derivatives such as foreign exchange and interest rate swaps, it has attracted more than its proportional share of scrutiny and criticism. To understand why, let’s take a look at how they work.
What is a CDS?
Stripping it down to the basics, a credit default swap allows a holder of a bond (corporate or sovereign) to hedge the exposure by promising a payout (usually a pre-established percentage of the face value of the bond) if the issuer defaults on its debt. So, if you hold a debt instrument issued by a corporation which then goes bankrupt, your bond is almost worthless but you offset that with the payout from the CDS.
This hedge can be especially useful if the bond is relatively illiquid, which would make it difficult to sell if the market starts to get nervous. The possibility of hedging can also lower borrowing costs by reducing the risk of a security.
It’s important to note that a CDS is not actually tied to a certain bond – it just references it.
And you don’t have to hold the referenced obligation to buy a CDS. You could just do so for speculation if you believe that things will go badly for an obligation issuer. Or, if you’re convinced that a company is solid with no risk of default, you could write a CDS – someone will pay you a purchase price and periodic interest, and you will only have to make a payout if you’re wrong.
Given current volumes (greater than the those of the underlying obligations), it seems that speculation is the main motive these days for purchasing CDSs. However, limits are starting to be imposed. For instance, the systemic risk inherent in betting on government defaults (and possibly doing what you can to nudge them along) led the European Union to ban the purchase of “naked” CDSs (held without the underlying security) for sovereign bonds.
It’s not just debt default that could trigger a payout. Any “credit event” could suffice, depending on the contract, such as a debt rating downgrade, a restructuring or a currency redenomination (although new standards exempt the debt of members of the EU switching to a new sovereign currency, unless the creditworthiness declines).
And, CDSs don’t always have to be based on a specific debt security. They can also reference several bonds at once.
As if all that wasn’t complicated enough, you can also buy and sell a “credit default swaps index”, which allows you to hedge your entire bond portfolio. These derivatives are standardised financial instruments, with relatively high liquidity.
Apparently trading volumes on credit derivative indices has shot up recently, indicating unease about the US debt and interest rates. In fact, the CDS market is becoming so sophisticated that it is increasingly read as a barometer for market outlook.
Where do they trade?
Originally, all CDSs traded on over-the-counter (OTC) markets. However, the lack of control over the accumulation of heavily leveraged positions did serious damage in 2008 when unexpected payouts came due.
The 2008 financial crisis triggered a re-examining of regulation and oversight, which culminated in the Dodd-Frank Act of 2010, the most sweeping reform since the Glass-Steagall act almost 80 years earlier. One aspect, the Volcker Rule, mandated the separation of proprietary trading and commercial banking (to ensure that customers’ deposits were not used for trading for the bank’s own profit). This meant that many large CDS traders exited the market, further reducing liquidity.
Title VII of the Dodd-Frank Act, which came into effect in 2013, ruled that all CDS index derivatives (not single-entity CDS, or those that reference a narrow range of borrowers, since they generally have low trading volumes) had to be centrally cleared – that is, settlement had to be carried out via a central clearing house, which stands between the buyer and seller and ensures liquidity and delivery. It also mandated more reporting and increased collateral requirements.
The clause also requires all cleared credit derivatives to be traded on a regulated exchange, or a swap execution facility (a registered trading platform with more oversight than the OTC market).
Europe has followed a similar path. The European Market Infrastructure Regulation (EMIR), introduced in 2015, mandates the reporting of derivative contracts to a trade repository, and requires the central clearing of CDS indices and certain euro-based corporate credit default swaps. This is to be gradually implemented over 2017-18.
The global net volume has shrunk considerably since 2008 (when it reached a whopping $60tn), but is still a considerable $10tn a year.
According to the Bank of International Settlements, the majority of CDSs are still OTC-traded. This is likely to see a substantial shift in the short term. In 2015, a group of large asset managers, including Citadel, BlackRock and Anchorage, pledged that they would centrally clear their own single name CDS trades, with a view to increasing volume and lowering costs (in addition to having lower liquidity, non-cleared single-name CDSs carry heavy capital charges).
A significant change for the market is that the Act requires all swaps – even uncleared and OTC-traded ones – to be registered with a swap data repository (SDR).
The US and Europe account for about 90% of the global CDS market, with Latin America following behind with about 5%. China recently started trading CDSs – given the relatively fragile state of its bond market, this source could become significant in the near future.
Who regulates them?
This is a complicated area, with overlap, gaps and quite a bit of confusion, even within jurisdictions.
In the US, the two main regulatory bodies when it comes to financial instruments are the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).
The SEC has regulatory authority of “security-based swaps”, including CDSs that reference a particular bond or a narrow range. The CFTC regulates credit swaps based on indices. Both organizations jointly cover credit swaps that have a commodity component (such as foreign exchange). Also, both organizations jointly make decisions regarding jurisdiction, data recording and intermediaries. (I’ll be writing about this more soon, as it’s a fascinating mess.)
In Europe, the framework appears to be simpler: the CDS market is regulated by the European Commission (EC). The European Markets Securities Authority (ESMA) makes regulatory proposals for the EC’s consideration, and can set fines in certain circumstances.
The International Swaps and Derivatives Association (ISDA) sets global standards.
So, here we have a systemically important yet relatively opaque financial market, with complicated regulation and siloed data. The complexity alone, with a relative lack of standards and an increasingly international impact, makes the need for streamlining clear – even though the consequences are not.
More investigation of the regulation of the CDS market is warranted, as is a detailed understanding of recent rulings and fines in the sector, but this post is long enough as it is. However, the recent surge in interest in CDS trading makes clarity on the lessons learned and the way forward especially important.
In the next post in the series, we’ll look at some of the ongoing work on blockchain implementations in this market. As we’ll see, the progress is slow, but – given the complexity – that is both understandable and desirable.
This is excellent: Preston Byrne on why the initial coin offering (ICO) craze is calling out for regulator intervention, and what that might look like.
“The ICO bubble and its promise of cheap, quick gains is rightly the focus of attention for most folks at the moment. It is the promise of the greatest gains in the shortest time with the least effort. That bubble needs to pop before we can get down to business with the utility-driven applications of this technology. And pop it will, as surely as the sun rises in the morning.”
I am looking forward to things “settling”, as it will be such a relief to be able to stop shaking my head in bewilderment.
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A curious but subtly beautiful form of street art, by Paige Smith (via Colossal).
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Ev Williams, founder of Medium, doesn’t think media should carry ads.
I agree with him (on both user experience and journalistic independence grounds), but the economic reality of modern publishing takes a harsher view. Many of the publishers that left the Medium stable did so, not because they like ads, but because they want to have the option (which means they will probably carry ads – again, economic reality).
Recently I have been toying with the idea of going back to publishing on Medium. I still might, since I like the format and it does seem to aggregate good thematic content.
But many are sounding the death-knell for the platform because it got complicated with the introduction of the premium service.
So, what hope does a cryptocurrency-based decentralized remuneration scheme for good content have, if a really-not-that-complicated premium model is too much? Not much of one, unfortunately.
There may be hope on the horizon, though, if the flight to the easier-to-monetise (-and-understand) advertising model is more due to the need to keep the lights on, rather than to an I-can’t-be-bothered ethos. The blockchain-based options will get easier with time and iteration, and the user experience will get better.
Until then, I am sceptical that any such model is viable today. My vote is with the subscription-based/freemium model.
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An information titbit I can’t get out of my head (seen in a surprisingly fascinating interview in The Atlantic of the founder of a magazine for the meat industry): a laser that slices frozen pork chops in uniform thickness (down to the milimeter) costs around $250,000. You may wonder why it would be worth it (aren’t totally uniform pork chops a bit disconcerting?), but it turns out that some hospitals require them that way. And it helps for big batch processing. The mind boggles.
I’m just back from a trip to London without my computer (hence the silence). While, there, I paid a visit to the British Museum for the first time in ages. I remembered the imposing façade, but had not seen the luminous inner court that makes you feel like you’re floating in light. I found myself doing laps in a sort of daze… And it was only morning.
Peeling off into the gloom of history, I came face to face with a surprising combination of permanence and progress that layers cultures on top of and next to each other, creating an incongruous sense of continuity. An ideal way to feel small and yet part of something important.
My main objective was to check out the History of Money exhibition, sponsored by Citibank. The room is small but packed with information, examples and anecdotes. The displays are intriguingly split down the middle into “The history of money” and “The history of coinage” – most attempts at synthesising the timeline conflate the two.
I confess that I had assumed that coins were tokens representing money. According to the curators, it turns out I was wrong – only metal tokens classify. The cowrie shells used in China are on the “money” side of the room (an interesting detail: the Chinese word for shell – bei – is still used to talk about money today).
Yet we refer to digital currencies as “coins”. The official definition (according to Google, of course) agrees with the curators, that coins are metal. Merriam Webster takes a broader view, allowing a coin to be “something resembling a coin especially in shape”, or “something used as if it were money (as in verbal or intellectual exchange)”. I’m on the side of the broad definition. But this is worthy of debate.
There is so much in the history of money that points to what money could look like tomorrow. The earliest coins (minted around 650BC in Lydia) appear to have been “authorised” by the king (central authority). But the system didn’t hold for all cultures, and in the 1600s, London saw the issuance of local, business-specific tokens exchangeable for coffee, ale, fruit, etc.
We worry today about our ability to manage a host of different tokens. But back then, without electronic wallets, people seemed to manage. True, this was during a time when the government had stopped issuing small change, so there was a market opportunity (and not much alternative). But still, it speaks to our ability to organise when there is incentive to do so.
Also on exhibit was the first global currency: the silver eight-reales, or “pieces of eight”, which later became the basis for the dollar. Issued by the Spanish empire from the end of the 16th century, they became the standard trade coins for most of Europe and Asia.
While it wasn’t the only currency in circulation at the time, it shows that a virtual alternative could end up accepted around the world for a specific purpose. Could this point to global acceptance of a niche use for bitcoin, or perhaps a specific use-case cryptocurrency?
There is so much more to unpack from the exhibition, which warrants further study. For instance, how even in some euro countries, more than one currency circulates. Did you know that in Northern Ireland some commercial banks have the right to issue bank notes, even today? And it turns out that the islands of Jersey, Guernsey and the Isle of Man issue their own versions of the British pound.
In a stroke of coincidence or perhaps insightful intent, the Money gallery is right next to another whose concept is also based on a fundamental innovation in measurement: clocks and watches. The idea of standard measures for the passage of the abstract idea of time is as fundamental to our modern world as that of measuring value and debt. Food for thought.
JP Konig’s analysis of India’s recall of banknotes to supposedly eliminate counterfeits (it turns out that either fake notes weren’t really a problem, or the government is bad at catching them) threw out this telling graph:
How come the UK has such a high percentage of counterfeit bills?
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Quartz points out that Game of Thrones was really about debt. Most great stories are, actually.
(I confess I haven’t seen any of the seasons yet… now I’m more interested in tackling it.)
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As if to help with our digestion of that revelation, Visual Capitalist shares an infographic (by Equifax) of the origins of debt. It’s visually appealing, but frustratingly limiting – the origins of debt are anything but simple, and the infographic doesn’t go into what is meant by “credit”, or why credit emerged.(And economic activity did not “grind to a halt” in the Dark Ages!)
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You thought that QR codes were so last decade? Not so.
A16z listed ways in which the pixelated boxes are used in China. You have a smattering of expected ones, plus some unusual functions: at a wedding, for instance, to make it easier to send money to the bride and groom; on beggars’ signs (this could solve the how-do-you-support-others problem of cashless societies); as part of billboards.
The one that I found most intriguing is QR codes on tombstones, that lead to you information about the deceased. Creepy, but also fascinating.