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I work at such a company. In real life, I have also lived in a whole lot of countries and thus have experienced the joys of attempting to get both business and personal accounts opened, even those wholly unrelated to Bitcoin, across many countries.

The current global situation is essentially an unspoken global monopoly on the world financial system that has been standing since at least the 1970s through the unholy triumvirate of SWIFT, ISO, and SIX Interbank Clearing. Credit cards are an adjunct to all this, essentially representing systematized usury and privacy loss as a requisite convenience, but they do not stand at the core. Western Union and so on are similarly edge case, but guilty.

If you are a country, you first need to be recognized by the UN in order to be recognized by the ISO. Then, you need to have your currency recognized. Finally, your central bank and national banking system need to play ball with SWIFT. If you refuse to play ball, then you don't get connected (North Korea), or get disconnected (Iran).

What do we mean here by play ball? We mean agree to give the US all of the information about all of the international financial transactions that anyone within your entire economy either does or attempts to do that cross a border. If you are a small country, this essentially draws a very accurate picture of your above board international economy including key players, volume of trade, key supply chain links, etc. To put it simply, SWIFT is one of the US' most important global intelligence assets and despite the best efforts of Europe to rid itself of SWIFT-based surveillance, it has persisted in a complete fashion (100% of all transactions) since at least 2001 (source: FOIA response, European Data Protection Supervisor, http://www.asktheeu.org/en/user/walter_stanish). (I would argue since at least the establishment of its first, hush-hush, 'International Operations Center' in the questionable location of CIA-friendly Virginia, way back in the 70s. But I digress.)

Understanding that this is the general government and international relations level background, then, let's now turn to the commercial. In order to actually create a bank account ('financial endpoint'), you basically need to be a bank. While there are often financial service provider (money transmission provider, or whatnot) categories that act as extremely limited alternatives, in reality any form of serious innovation does require being a bank. Unfortunately, to become a bank within a UN-recognized country and actually innovate, one must simultaneously face the wrath of both the entire established international system and the national government and industry of your home jurisdiction.

The solution which we are charting, is four pronged:

(1) to collaborate simultaneously with regulators across multiple jurisdictions such that a jurisdiction attempting to erect unfair barriers to innovation simply faces a direct loss of capital (as scaleup occurs);

(2) to establish forward looking financial settlement paradgims which empower the initiator to enable routing around specific assets or nations based upon their own priorities ("ethical settlement" as an adjunct to "ethical business") while using arbitrary settlement systems or assets: http://www.ifex-project.org/our-proposals/ifex ;

(3) to democratize the creation of individal financial endpoints ('bank accounts') by embracing and extending the emerging dominant financial standard for such, the IBAN, to a nominally familiar and interoperable system that can be decentrally allocated through a neutral party (IANA): http://www.ifex-project.org/our-proposals/iiban

(4) To standardize the intersystem identification of non-ISO approved currencies (new release of this about to come out; ISO reformatted their source release so slightly delayed): http://www.ifex-project.org/our-proposals/x-iso4217-a3

Regulators as well as banks and a lot of private sector businesses can see clearly that massive paradigm change is coming within global finance. Nobody quite knows how it will play out, but there are numerous significant factors supporting a shakeup: (1) the rise of China and the CNY as a reserve currency (2) Chinese parallel settlement networks (3) India and Iran's need to trade oil (4) cryptographic currencies (5) the increasingly globalized 24x7x365 nature of business (6) the inability of established banks to meaningfully innovate (is there even one globally with no downtime, where downtime includes evenings, weekends, holidays and scheduled systems maintenance?) ... we're talking 365 - 52*2 (= 104 weekend days) - 10 public holidys = ~251 days per year of actual availability, in which 80% of services are unavailable for at least 1/2 the time (6pm-6am) ... a far cry from five nines. (6) the coming rise of distributed manufacturing (7) the unsustainable social, environmental and economic costs of the current global consumer system.

We live in interesting times.




Very interesting stuff. Thank you for sharing. What readings would you suggest for someone who doesn't have a strong understanding of banking/financial systems?


Debt: The First 5000 Years is a broadly informed anthropological perspective on various human exchange systems and a masterly evisceration of the set of common misconceptions the author dubs "The Economists' Creation Myth".

For a detailed case study of the development of merchant banking (the direct predecessor to modern systems), a fantastic biography of the founder of the Rothschild banking dynasty Amschel Meyer Rothschild is available on Amazon Kindle. Interestingly, it was written by a self-exiled Israeli Jew who gained access to family archives in order to compile the work.

There are many others but nothing really holistic that fully takes in to account modernity.

(Apologies for the delayed reply: I'm switching continents at the moment!)


There's a documentary floating out there on Youtube, called The Money Masters. What is your feeling of the accuracy of this, and does it properly reflect the banking system history?


I've seen it. Can't recall the specifics but I believe it essentially skips the technical aspects of the modern era instead focusing on history leading up to the US Federal Reserve and some subsequent well known major events in an effort to raise concern about the systemic problems of fractional reserve and well known derivative issues versus the realities of globalization.

For example the fallibility of national regulators, corruption of financial institutions, challenges of post-facto manual slapdash policing versus things like HFT and off-market trading, etc.

Notably, I don't recall any mention of SWIFT or the ISO's centralized currency register.

Most of the documentaries I've seen are pretty much like that one: comfortable topics people feel are approachable and that they can easily acquire public faces to discuss. Dated enough to be out of view. Already discussed enough to be not too controversial. Often with slightly corrupting funding influences, eg. from the BBC.

As for investigative journalism at the heart of the matter, I've never seen any. While nobody can assert a complete knowledge of the current situation, there are clearly some places where digging needs to be done in the global public interest.


So I understand the points you're making and I appreciate your candor, but why not go all-in on cryptographic currencies?

I am tempted to take apart your proposed solution point-by-point but I'll wait. Crypto currency apparently is exactly what you want, so can you explain why you are instead attempting to achieve the same through ISO and a collaborative bank revolt against the "established banks"?

(Collaborative bank revolt: a vastly simplified explanation of your proposed solution.)


Your question boils down to: "Why not replace (insert hugely established system) with (completely new system)"?

The answer to this one is obvious. In order to grow, a replacements need to interoperate, ie. provide an "upgrade path". Instead of holding something up as the one true solution we are betting on the trend, which is certain. Besides, cash will always be around.

Cryptocurrencies, despite their huge number and numerous attractive properties, presently lack market depth, limiting both their stability as value stores and feasibility as trade instruments outside of rapid/realtime/automated exchange. Significant issues with the dominant one (Bitcoin) make it difficult to implement securely, hard for non-technical users to properly understand or trust (there is no benevolent dictatorial regulator, as per their established national currencies/financial service providers), they require connectivity or blockchain storage which is unvailable in much of the world's devices, and so on and so forth.

A parallel to your suggestion is the example of existing community currencies, which are essentially geographically bound equivalents of cryptocurrencies with an often more moralistic focus. I have been in contact with these groups and associations thereof, plus theorists in the area, and my understanding is that many face challenges in the same areas as Bitcoin; ie. new user education, balance of trade and interoperation with conventional established systems. Indeed, they are developing an inter-exchange protocol at present known as CXP.

As for your vast simplification, the best (from a moral standpoint) and hardest kind of change to reverse (from a potential opponent standpoint) is that which is is completely decentralized; an 'opt-in' from the edge nodes. I think this is what people are proposing in many spheres right now.

All roads lead to Rome.


> Significant issues with the dominant one (Bitcoin) make it difficult to implement securely, hard for non-technical users to properly understand or trust (there is no benevolent dictatorial regulator, as per their established national currencies/financial service providers), they require connectivity or blockchain storage which is unvailable in much of the world's devices, and so on and so forth.

Download and install Electrum [1]. Open Electrum. Write down the 12 words. Done.

There's your 100% non-technical Bitcoin wallet in three easy steps.

Just takes pen and paper. Or, memorize it instead. Instant, secure brainwallet. No electricity, no Internet, no hardware and no software.

Starts in seconds and syncs across Windows, Mac, Linux and Android devices.

[1]: http://electrum.org


My only issue with something like this, since no one is "in charge" of an account people will fail to remember their wallet or password. If they put large amounts of money and by chance they cannot access their wallet for whatever reasons who is going to give them their money back or is that money gone forever? Doesn't that also mean eventually we will loose track of a fair number of bitcoins?


That money is gone forever. It is your money, you are responsible for it.

No one will be able to "give your money back", because you didn't give your money to anyone.

If you fear you might lose your password, back it up. Store it in a safe. Send it to someone you trust. Tatoo it on your forearm (although this is not really secretive)

Heck, if you _really_ want to be sure to have someone who could give the money back to you, just give it to someone you trust. Family, friends... or a Bitcoin bank. But if you do that, we're back to square one.


Would a banker be able to replace your lost or stolen cash?

If you're worried you might lose your Electrum wallet, write down the 12 words on several sheets of paper. Inscribe them in metal. Put them in a document, and put the document in TrueCrypt. Upload it to Dropbox. It's as easy as managing your digital music collection.


Thank you for responding in detail. I need to think over what you've written to grok the finer points, but here's one I can talk to:

"Why not replace (insert hugely established system) with (completely new system)"?

It's not a total rip-out-and-replace. Bitcoin might be the grease that enables the seriously broken parts of our struggling world economy to slip through the entrenched tax collectors and let the actual consumers reward the actual producers. It fills the niche of Community Currencies without the balkanization.

One thing that the huge, established system misunderstands about the new entrant is where the most effective inroads will happen:

The lower class.

Someone already richly rewarded by the establishment is not going to be very interested in Bitcoin (other than as a toy). But someone in a nation outside the US and Western Europe?

Bitcoin gives them first-world tools that completely bypass their local currency.

It sounds like the classic innovator's dilemma. Suddenly trade barriers are being circumvented. Chinese currency can escape currency controls. Micropayments and small businesses have an option.

I'm not convinced Bitcoin is that thing, but I'm certain the established system will fail to adapt.

Develop a game plan for what that will look like and where you want to be when it happens. In thinking along those lines, I see that you're working with ISO‚Äďand in my mind, that's not where you want to be! :)


Bitcoin might be the grease that enables the seriously broken parts of our struggling world economy to slip through the entrenched tax collectors and let the actual consumers reward the actual producers.

Bitcoin requires middleman, just like credit card processors. It also is significantly easier to trace than current financial systems, which don't assign digital fingerprints to units of currency. Bitcoin isn't going to let the world economy "slip through the entranched tax collectors." Bitcoin is a tax collector's wet dream.

I've met with quite a few Treasury lawyers who work in their policy office. They're so giddy about the prospects of actually being able to trace income from start to finish, including across borders, that they've formed an internal task force to see what they can do about spurring adoption of Bitcoin or other similar digital currencies.

Bitcoin gives them first-world tools that completely bypass their local currency.

In many nations, you can already do that. In the US, businesses must be willing to accept USD for their services/products but they are free to also accept any other currency they wish. At the end of the day (or more accurately, their fiscal year), their books (and taxes) must be converted to USD for determining their taxes.


> Bitcoin requires middleman, just like credit card processors

No it doesn't? Your address exists as a private key, no external middlemen play a part in the maintenance of that unless you want them to.

> It also is significantly easier to trace than current financial systems

No it isn't. Even if you're talking the base bitcoin without extensions like zerocoin, it is still effectively as hard to trace as it is to decrypt a widely distributed shared encrypted wikileaks file, for example. If someone slips up and a key becomes available to allow decryption, it can be done, otherwise no dice. Compare with OP's statements about full visibility into 100% of SWIFT transfers.

And if you add coming enhancements like Zerocoin? No, it's just nowhere near as easy letalone significantly easier.

> which don't assign digital fingerprints to units of currency

Serial numbers are quite common on physical fiat currency. Electronic transfers are done via SWIFT or interbank transfer networks which have the aforementioned 100% visibility.

> that they've formed an internal task force to see what they can do about spurring adoption of Bitcoin or other similar digital currencies.

The church was one of the foremost patrons of science at its peak, that they didn't understand the final implications of those developments would prove fatal to their foundations doesn't change that fact. So it is with states and bitcoin, although from what I've seen, and I look very closely indeed, the sentiment from the state has primarily been fear and trepidation. And they are right to fear, it could and hopefully will kill them.


> > It also is significantly easier to trace than current financial systems

> No it isn't.

He's talking about following a bitcoin's life from wallet to wallet, not about impersonating a wallet. The whole bitcoin principle is that exchanges are made in clear between wallets and shared to all peers, so yes, it _is_ traceable, like nothing before.

Now, the game is to know who is behind a wallet. And if you didn't use some anonymity method, your name will not be a secret to anyone looking for it.


>In the US, businesses must be willing to accept USD for their services/products...

Not according to the U.S. Treasury:

  There is, however, no Federal statute mandating that a
  private business, a person or an organization must accept
  currency or coins as for payment for goods and/or
  services. Private businesses are free to develop their own
  policies on whether or not to accept cash unless there is
  a State law which says otherwise. For example, a bus line
  may prohibit payment of fares in pennies or dollar bills. 

  In addition, movie theaters, convenience stores and gas 
  stations may refuse to accept large denomination currency
  (usually notes above $20) as a matter of policy[1].

>I've met with quite a few Treasury lawyers who work in their policy office...spurring adoption...

Well, they're taking a big risk, since Bitcoin can be easily upgraded to fully anonymous with a protocol upgrade using existing technology (Zerocoin) [2]. I think it's wise to wait until Bitcoin is more entrenched before implementing the extension, but there's no huge technological barrier preventing Bitcoin from being fully anonymous.

Besides, it's not like the current system isn't fully tracked by the Treasury department. They already have access to everyone's transactions (via Swift, etc). The hard part is figuring out which transactions to investigate, and Bitcoin won't make that any easier.

1. http://www.treasury.gov/resource-center/faqs/Currency/Pages/... 2. http://zerocoin.org/


> why not go all-in on cryptographic currencies?

Because with an armload of cryptographic currencies, and $5, you can buy a cup of coffee at your local coffee shop?


No, with 0.01 BTC and nothing else, I can buy coffee at my local coffee shop. The Coupa Cafe in Palo Alto accepts Bitcoin.

On a more serious note: Bitcoin has steadily gained acceptance as a form of payment. In 2010, a guy bought a pizza for 10000 BTC. It was a one-off transaction between two Bitcoin enthusiasts, but a milestone: the first purchase of real goods. In 2011 and 2012, Bitcoin matured from enthusiasts to a wider audience, albeit mostly for illegal uses. The biggest was Silk Road.

Now, in 2013, Bitcoin is starting to be accepted by regular, legal businesses. Shopify, Coupa Cafe, WordPress, Reddit, OkCupid, and new merchants joining every week. There are startups like Coinbase devoted to making this as easy as possible. Someone in Vancouver set up an ATM that takes Bitcoin and gives you cash.

Sure, there's a long way to go. But acceptance has been improving rapidly. And Bitcoin has features--very low transaction costs, no "chargebacks", etc--that make it inherently attractive to sellers. Instead of focusing on "where the puck is", we should skate "where the puck is going to be".



It takes about 0.01 bitcoin to buy a $5 cup of coffee.

But decimal placement is irrelevant and cryptocurrencies are intangible, silly.




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