
A Revolution in Money - wallflower
http://dealbook.nytimes.com/2014/04/01/a-revolution-in-money/?hp
======
bsirkia
I like that this is at least opening up to the possibility of new, more
efficient transaction methods. Marc Andreessen made me think about credit
cards differently after hearing him on a Freakonomics podcast:

"And so one way to think about credit card fraud, is credit card fraud is a
two-to-three percent drag on the entire economy. It’s an artifact of the fact
that credit cards were never designed to be used the way that they’re being
used today. Credit cards never anticipated online transactions. Credit cards,
by the way, the credit card system, never anticipated malware running inside a
cash register at Target. In the 1950s that was an inconceivable idea, which is
when credit cards were dreamed up.

And so if you have a payment system like Bitcoin where you don’t have the
credential exchange, and you have no risk of identity fraud, and you have no
risk of people being able to run transactions on your credit card after the
fact, you can basically eliminate that entire category of fraud…"

~~~
wdewind
On the other hand...

The 2 to 3% drag needs to be corrected for increased liquidity, which is
difficult to do. People don't use credit cards because they are convenient,
people use credit cards because they do not have the extra money, which drives
compounded economic growth. If bitcoin succeeds, credit mechanisms will be
built on top of it, and they'll behave almost identically to credit cards,
including have fraud.

The premise the article presents (essentially a different crypto currency for
every business I interact with, as well as loan instruments built on top of
btc) is actually not a preferable reality to the current one.

Also his claim that you have no chance of identity fraud is really only
relevant to the merchant (and is obviously worse for the consumer). But
merchants have already done the calculation: even at 2-5% transaction fee and
eating a lot of fraud, they are happy to process credit cards.

~~~
edanm
"People don't use credit cards because they are convenient, people use credit
cards because they do not have the extra money, which drives compounded
economic growth."

That's not true everywhere. I'm not sure if it's US-only behaviour, but in
other countries, the majority don't use credit cards for debt - just as a
convenient payment mechanism.

~~~
wdewind
> That's not true everywhere. I'm not sure if it's US-only behaviour, but in
> other countries, the majority don't use credit cards for debt - just as a
> convenient payment mechanism.

Sorry to pull an HN special on you, but do you have any kind of source for
that? I've never heard it, though I have heard that _debit_ card usage is much
higher in Europe.

~~~
edanm
No reason to apologise for asking for a source :) Always legitimate.

Unfortunately, I don't have one. I do live in Israel though and I can tell you
that here, at least, most credit cards are used like debit cards (as I
understand them). We do technically buy on credit, but pay up at the end of
every month.

We do have one thing which, afaik, doesn't exist in the US, which is that we
can "split up" a payment when paying for an item. E.g. you buy something for
100$, you can ask to pay in 2 installments of $50. That's pretty common, and
usually doesn't cost anything extra for small amounts of installments.

~~~
gus_massa
It’s very similar here in Argentina, but we usually have a different plastic
piece to use as debit card and as credit card.

------
funkydallas
"A Revolution in Money" would mean that no third parties do have control over
its value. Nowadays we have something like a server based money network. If
the server (bank) goes down, everybody is screwed.

Imagine a peer to peer kind of money network. Every member is a bank himself.
Getting a credit works like crowd funding. People can invest their money into
several projects. Investors get a certain percentage of the profit. This way
you avoid the "interest and compound interest" problem.

~~~
dllthomas
_" Imagine a peer to peer kind of money network. Every member is a bank
himself."_

This sounds a lot like the original vision behind Ripple.

------
gus_massa
> _We are going to have individually issued currencies. We already have
> corporations issuing currency: frequent-flier miles, although people don’t
> see them as that from a legal perspective._

Imagine that A issue A-coins and send them to B, then B sends the A-coins to
C, C send them to D and D sends the A-coins to you. But a few days later you
discover that A was a fake account of a scammer, or A goes bankrupt, or A an
all his family died in a car accident and he was renting his house, or ...
Then the A-coins are worthless and you are screwed.

A few years ago, here in Argentina each province (state) issued it’s own
money, and paid all the public employed with that money. It was technically a
bond, but it looked as money and was used like money. The more successful case
was the Patacón
[http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond)](http://en.wikipedia.org/wiki/Patac%C3%B3n_\(bond\))
. But in all the other provinces, after a time it was very difficult to
exchange the bond to real money (pesos or dollars) or products, and in that
case you get only the 70% of the face value. (Now they have been absorbed.)

I don’t trust in the money of the province, and I really will not trust in the
money issued by Joe Doe.

------
mbrynard
The idea of wallets with dozens of digital currencies ties in with another
idea which I've been intrigued by recently.

Apart from the payment mechanism functionality, units of cryptocurrency are
much like shares in a company.

The Cypherfunks experiment (www.thecypherfunks.com) illustrates this concept:
Imagine anybody could own shares in the music industry. To make this possible
bands simply accept payment in a specific cryptocurrency (e.g. FUNK). As more
people support bands using this form of payment, the value of the
cryptocurrency grows and the entire network of bands and their supporters
benefits.

------
burkemw3
A wallet with a dozen virtual currencies sounds rather hard to make a budget
with.

------
evli
While I would enjoy living in such a world. Changes like this often take a
very long time.

Have you used a self checkout machine lately?

~~~
yaddayadda
I have a love/hate relationship with the darn things. While I try to avoid
them, I had to use one just a couple days ago. So, to answer your question, a
couple of days ago. But I know lot's of people who love them and when present
I see them being used by others with high frequency.

Other than it being loosely related to the technology of money and shopping,
what does your question have to do with, "A Revolution in Money"?
Specifically, what does the recency of an individual's interaction with a
self-checkout machine have to do with the article?

------
jdimov
What all of this discussion is severely lacking is an understanding of how
money actually works and how it is created. In a modern economy, money is
created by commercial banks every time a bank makes a loan.

So the questions in this article are a bit off. E.g.: "What happens when you
no longer need a bank to provide capital? Where will people store money in the
future?" These questions are off-target, because it's not so much about where
people store it, or how it moves around. If you want to replace banks, you
will need some other mechanism of money creation on-demand, and I'm not at all
convinced that 'bitcoin mining' is the correct kind of answer...

~~~
lingben
What this discussion lacks is a basic understanding of economics. It baffles
me every time!

No one on HN would stand it for one second if a group of gardeners suddenly
popped up and only with their knowledge and mastery of agriculture and botany
decided to teach all the engineers and programmers a thing or two!

But by some miraculous logic, programmers and engineers are now pretending
like they can replace wholesale the system that economics is built on and has
mastered over hundreds of years of theory and practice.

ps money is not created by commercial banks but by the Fed through their
ability to either buy or sell treasuries issued by the government but maybe
that's splitting hairs

~~~
dllthomas
_" ps money is not created by commercial banks but by the Fed through their
ability to either buy or sell treasuries issued by the government but maybe
that's splitting hairs"_

That's using an overly-restrictive definition of money (M0, or "monetary
base") that doesn't mean very much in terms of how the economy works. Banks do
not create new dollar bills, but they do create new "dollars on deposit at a
bank" which I can spend very nearly like a dollar bill (sometimes quite a bit
more conveniently) by writing you a check or setting up a wire transfer. This
is what many people are paid in, and pay their rent and grocery bills in, and
considering it "not money" is wrong. Economists include this in M1, which is a
slightly broader measure of the money supply. There are still broader
measures.

