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Matchmakers: The New Economics of Multisided Platforms by David S. Evans, Richard Schmalensee
Airbnb, big-box store, business process, cashless society, Deng Xiaoping, if you build it, they will come, Internet Archive, invention of movable type, invention of the printing press, invention of the telegraph, invention of the telephone, Jean Tirole, Lyft, M-Pesa, market friction, market microstructure, mobile money, multi-sided market, Network effects, Productivity paradox, profit maximization, purchasing power parity, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, Steve Jobs, Tim Cook: Apple, transaction costs, two-sided market, Uber for X, Victor Gruen, winner-take-all economy
Less than ten years later, in 2014, more than 84 percent of Kenyan mobile phone users, including many of the very poor, were able to use their mobile phones to transfer money to each other, to pay their bills, and to pay at stores.7 People can now also use new financial services available through their mobile money accounts to save money and take out loans, and many do.8 Increasingly, stores are accepting mobile money for payment. The way this happened in Kenya is a remarkable story of how a company figured out how to ignite a multisided platform in trying circumstances, to massively reduce important market frictions, and to provide financial services to millions of impoverished people. And it is a story of how multisided platforms—M-PESA and other mobile money schemes that have started in Kenya and elsewhere—are leapfrogging traditional industries. Kenyans don’t need to rely on banks for many financial services. And while it is too soon to tell, Kenyan merchants and consumers may end up using mobile money instead of traditional payment cards and point-of-sale equipment.
In early 2015, the KCB Bank Group launched a program in partnership with M-PESA. This program allowed users to access loans of between KShs 50 and KShs 1 million ($0.565–$11,300), due in one to six months, at interest rates between 4 percent and 12 percent. M-PESA and the other mobile money schemes replace many of the services that traditional banks would provide. People can use mobile money as they would a depository account. They can obtain access to that account through CICO agents instead of bank branches. And they can get various financial services through their mobile money account. Although the mobile money schemes collaborate with banks for some things, they make banks irrelevant for many other things. M-PESA, on its own, introduced a payments system in mid-2013. Lipa Na M-PESA enables brick-and-mortar merchants to receive payments from M-PESA users (Lipa Na means “pay with” in Swahili).
Africa Rising M-PESA has shown the way for countries in the rest of Africa to bring financial services to people across the income spectrum, from the poorest rural farmer to rich urban executives. Mobile money schemes have started in thirty-seven of fifty-four African countries.21 So far, though, in only eight nations, shown in Table 11-2, have these schemes cracked the chicken-and-egg problem and obtained significant growth and penetration.22 Others are sure to follow, though, since M-PESA, as a pioneering platform, has shown a way to do it successfully and has demonstrated that successful mobile money schemes can speed up economic development by leapfrogging traditional banking and payment cards. TABLE 11-2 African countries where mobile money schemes took off Country Côte d’Ivoire Ghana Kenya Rwanda Somaliland Uganda Tanzania Zimbabwe Note: Mobile money has taken off in Somaliland, which is part of Somalia; it is currently not recognized as a country, however.
Bay Area Rapid Transit, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, money: store of value / unit of account / medium of exchange, offshore financial centre, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs
nl. 5 Bharti Airtel’s Pallab Mitra, from interview notes; The Economist, September 26, 2009, special report on mobile money, p. 4; and Associated Press, “More Cell Phones than Loos in India,” (Portland) Oregonian, October 31, 2010. 6 Andrew Steckl, Cincinnati University nanotechnology researcher, personal interview, December 2010. 7 “The Apparatgeist Calls,” The Economist, January 2, 2010. 8 “Calling Freedom,” The Economist, December 19, 2009. 9 GSMA, “Mobile Money for the Unbanked,” annual report (pdf sent by D. Lowther of GSMA); and http://mmublog.org/global/gsma-publish-2010-mobile-money-for-the-unbanked-annual-report-2/. 10 http://www.npr.org/2011/01/05/132679772/mobile-money-revolution-aids-kenyas-poor-economy. 11 Ignacio Mas, personal interview. 12 http://dailycaller.com/2010/04/10/kenya-owes-monetary-advances-to-imf-world-bank/; and http://allafrica.com/stories/201010240045.html. 13 http://technology.cgap.org/technologyblog/wp-content/uploads/2009/10/fsd_june2009_caroline_pulver.pdf (p. 27). 14 “South Korea Ready to Hang up Cash,” BBC News, February 13, 2009. 15 “Mercy Corps Mobile Wallet Innovation Brings Purchasing Power to Haitians’ Cell Phones,” (Portland) Oregonian, December 27, 2010. 16 “Sweden Weighs Benefits of Ditching Cash,” BBC News, July 17, 2010; also “Central Bank Wants Cashless Society,” nationmultimedia.com, October 27, 2009. 17 Hitachi group, personal interview, June 2010. 18 https://www.paypal-media.com/documentdisplay.cfm?
Make everyone think what you’re doing is distributing it, because that is what you’re doing, pushing it out to those villages.” That’s what mobile money can do, by way of so many thousands, even millions, of stores throughout the world providing the conversion service to people in the countryside, who receive payments from relatives or customers in cities, where wealth is disproportionately concentrated. That in turn brings business and prosperity into rural areas that badly need it. What that also does, however, is further marginalize cash. Before long, the baker where the Afghani cops buy bread, the store where the Kenyan farmer buys seed, and the pay-as-you-go medical clinic in the mountains of Mexico will all accept payment via mobile money. They will prefer it, for the same boatload of reasons about cash’s costs and risks that so infuriate Dave Birch.
It’s too massive, too variable, and, despite ballistic economic growth, too poor. Yet if mobile money systems really are going to help curb poverty and marginalize cash the way evangelists predict, they must become as diffuse and pervasive as physical money. “The whole premise is to make it really, really big,” says Mas. Big means “widely accepted,” because new forms of money have to be if they’re truly going to challenge cash. It also means big business. Without operating on huge scales, there’s little incentive for banks or telecom companies to invest in these systems, because the users themselves have little money. Collecting tiny fees from 10,000 customers and ten million are markedly different business propositions. “Because it’s so massive, and the need so pronounced, India is the ultimate proof of principle for mobile money,” says Mas. If it can work there, the impact and long-term viability of this technology will be undeniable.
Digital Bank: Strategies for Launching or Becoming a Digital Bank by Chris Skinner
algorithmic trading, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, augmented reality, bank run, Basel III, bitcoin, business intelligence, business process, business process outsourcing, call centre, cashless society, clean water, cloud computing, corporate social responsibility, credit crunch, crowdsourcing, cryptocurrency, demand response, disintermediation, don't be evil, en.wikipedia.org, fault tolerance, fiat currency, financial innovation, Google Glasses, high net worth, informal economy, Infrastructure as a Service, Internet of things, Jeff Bezos, Kevin Kelly, Kickstarter, M-Pesa, margin call, mass affluent, mobile money, Mohammed Bouazizi, new economy, Northern Rock, Occupy movement, platform as a service, Ponzi scheme, prediction markets, pre–internet, quantitative easing, ransomware, reserve currency, RFID, Satoshi Nakamoto, Silicon Valley, smart cities, software as a service, Steve Jobs, strong AI, Stuxnet, trade route, unbanked and underbanked, underbanked, upwardly mobile, We are the 99%, web application, Y2K
On a general point, our view is that if you fast forward five years you will see every local mobile operator in the developing world offer a mobile money product, where it’s allowed by regulation. If you look back, you had Smart and Globe telecom in the Philippines offering mobile money products for nearly a decade, and there have been other schemes in Korea for example, but M-Pesa really re-energised interest in mobile money systems. What we were able to show with the success in Kenya is that it was possible to reach out far beyond the existing financial systems and bank structures, by leveraging the scale of the mobile airtime distribution networks. That’s why, by 2009, if you were a mobile operator and were anywhere near Africa, you had to be looking to offer some form of mobile money scheme. Looking at that restructuring, the banks have not been that supportive of such schemes have they?
By 2010, M-PESA had attracted 9.5 million customers increasing to 17 million by 2013, of which over 10 million make at least one transaction per month. Add on the other mobile money operators in Kenya and a large part of the country’s GDP is now transacted over the mobile network. For example, 142 billion Kenyan Shillings (ksh) were transacted in the month of April 2013, or $1.6 billion, which would translate into around $20 billion a year processed via the Kenyan mobile payments network in 2013. Kenya’s GDP was $37.23 billion in 2012, and so you can see how significant a proportion of the economy is now dependent upon mobile money. In addition, M-PESA converted many unbanked into banked users, with around 2.5 million bank customers in Kenya when the system launched in 2007 increasing to over ten million today.
Making a payment becomes a basic human right In conclusion, the fact that mobile phone ubiquity is creating a wirelessly connected planet, is a key part of changing our world for more inclusion. First, six billion people now have 1:1, P2P connections. You only need to look at mobile densities by continent to realise how ubiquitous these devices have become. According to a 2012 survey by the Gates Foundation, the World Bank and Gallup, more than 10% of adults said they had used mobile money in the last year and, of the 20 countries surveyed, 15 were in Africa. This is illustrated particularly well by Somalia, a country which lacks a functioning government but 34% of adults use mobile money (often to receive remittances from family members abroad). The fact is anyone, anywhere can now send and receive money anywhere, anytime. In Kenya it has created financial inclusion, where 2.5 million people had bank accounts in a country of over 40 million people in 2007 increasing to over ten million today thanks to mobile payments creating credit history and credit worthiness.
The New Digital Age: Transforming Nations, Businesses, and Our Lives by Eric Schmidt, Jared Cohen
3D printing, access to a mobile phone, additive manufacturing, airport security, Amazon Mechanical Turk, Amazon Web Services, anti-communist, augmented reality, Ayatollah Khomeini, barriers to entry, bitcoin, borderless world, call centre, Chelsea Manning, citizen journalism, clean water, cloud computing, crowdsourcing, data acquisition, Dean Kamen, Elon Musk, failed state, fear of failure, Filter Bubble, Google Earth, Google Glasses, hive mind, income inequality, information trail, invention of the printing press, job automation, Julian Assange, Khan Academy, Kickstarter, knowledge economy, Law of Accelerating Returns, market fundamentalism, means of production, mobile money, mutually assured destruction, Naomi Klein, offshore financial centre, peer-to-peer lending, personalized medicine, Peter Singer: altruism, Ray Kurzweil, RFID, self-driving car, sentiment analysis, Silicon Valley, Skype, Snapchat, social graph, speech recognition, Steve Jobs, Steven Pinker, Stewart Brand, Stuxnet, The Wisdom of Crowds, upwardly mobile, Whole Earth Catalog, WikiLeaks, young professional, zero day
Warlords, extortionists, pirates and criminals will—if they’re smart enough—find ways to consolidate their own power at the expense of other people’s data. This could mean targeting specific populations, such as wealthier subclans or influential religious leaders, with more precision and virtually no accountability. If the online data (say, transfer records for a mobile money platform) showed that a particular extended family received a comparatively large sum of money from relatives in the diaspora, local thugs could stop by and demand tribute—paid, probably, over a mobile money system as well. Today’s warlords grow rich by acting as the requisite pass-through for all sorts of valuable resources, and in the future, while drugs, minerals and money will all still matter, so too will valuable personal data. Warlords of the future may not even use the data they have, instead selling it to outside parties willing to pay a premium.
Vodafone’s speedy restoration of service in Egypt: “Statements—Vodafone Egypt,” Vodafone, see January 29, 2011, and February 2, 2011, http://www.vodafone.com/content/index/media/press_statements/statement_on_egypt.html. “We had people sleeping in the network centers”: Vittorio Colao in discussion with the authors, August 2011. Roshan, is also the country’s biggest investor and taxpayer: “Western Union and Roshan to Introduce International Mobile Money Transfer Service in Afghanistan,” Roshan, News, February 27, 2012, http://www.roshan.af/Roshan/Media_Relations/News/News_Details/12-02-27/Western_Union_and_Roshan_to_Introduce_International_Mobile_Money_Transfer_service_in_Afghanistan.aspx. Roshan employs thousands: Ibid. 8 percent stake in The New York Times: Russell Adams, “Carlos Slim Boosts Stake in New York Times Again,” Wall Street Journal, October 6, 2011, http://online.wsj.com/article/SB10001424052970203388804576615123528159748.html.
It will not be unusual for a French technology company to operate its sales team from Southeast Asia, while locating its human-resources people in Canada and its engineers in Israel. Bureaucratic obstacles that prevent this level of decentralized operation today, like visa restrictions and regulations around money transfers, will become either irrelevant or be circumvented as digital solutions are discovered. Perhaps a human-rights organization with staff living in a country under heavy diplomatic sanctions will pay its employees in mobile money credits, or in an entirely digital currency. As fewer jobs require a physical presence, talented individuals will have more options available to them. Skilled young adults in Uruguay will find themselves competing for certain types of jobs against their counterparts in Orange County. Of course, just as not all jobs can or will be automated in the future, not every job can be conducted from a distance—but more can than you might think.
3D printing, additive manufacturing, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, asset-backed security, augmented reality, barriers to entry, bitcoin, bounce rate, business intelligence, business process, business process outsourcing, call centre, capital controls, citizen journalism, Clayton Christensen, cloud computing, credit crunch, crowdsourcing, disintermediation, en.wikipedia.org, George Gilder, Google Glasses, high net worth, I think there is a world market for maybe five computers, Infrastructure as a Service, invention of the printing press, Jeff Bezos, jimmy wales, London Interbank Offered Rate, M-Pesa, Mark Zuckerberg, mass affluent, microcredit, mobile money, more computing power than Apollo, Northern Rock, Occupy movement, optical character recognition, performance metric, platform as a service, QWERTY keyboard, Ray Kurzweil, recommendation engine, RFID, risk tolerance, self-driving car, Skype, speech recognition, stem cell, telepresence, Tim Cook: Apple, transaction costs, underbanked, web application
Groupon, Amazon and eBay all have offerings that fit into the mobile commerce world. Mobile Money is a term that was driven by the success of financial-inclusion initiatives in many African nations, where entire financial ecosystems were built that enabled bank-like services to be delivered over a mobile device. In these ecosystems, the primary role of the service is to create a market-optimised banking network that replaces cash while enabling nations with poor infrastructure to leap forward in adoption cycles. The main difference between mobile money and other vehicles is that in this case mobile is both the transactional and customer acquisition channel, and often the mobile is the only way to interact with the business. M-Pesa, G-Cash, WING and MTN Mobile Money are prominent examples. Mobile Banking refers to the adding of mobile as a channel for existing bank customers.
US consumers’ use of cash is predicted to decline by 17 per cent between 2010 and 2015.30 In the UK, cash was seen in 73 per cent of retail transactions in 2000, but will be a fraction of that by 2018.31 Figure 1.4: Decline in Cash Use—US Forecast (Source: Aité Group) There are the great unbanked who don’t yet have a bank account and who currently rely heavily on cash and prepaid debit cards, but as we will see with M-Pesa and G-Cash (Chapter 6), this is hardly a hurdle for mobile cash and payments. The success of the Octopus card in Hong Kong, T-money in Korea, Edy and Suica in Japan, and other emerging technologies already prove the concept. What would quickly kill the need for cash in its entirety is a technical standard for mobile money that could be adopted globally by network operators and device manufacturers. Even if only 50 per cent of cash transactions are replaced by electronic stored value cards, debit cards and mobile wallets in the next five to ten years, the current ATM and branch infrastructure that supports cash becomes untenable from a cost-burden perspective. If we no longer need to go to the ATM to withdraw physical cash or currency, then pretty much everything we do on the ATM today can be done on our mobile app phones.
The mobile as a bank account With somewhere around 4.5 billion people owning a mobile phone, there’s a very strong case for pushing financial inclusion through the mobile phone and mobile payments, especially in developing economies where mobile penetration is 5–10 times the penetration of the basic bank account. In fact, by 2020, what we consider a bank account will most likely be defined by the mobile phone. The mobile phone is likely to be the basic bank account of the world by the next decade. Although mobile payments are quickly gaining traction in more developed markets, peer-to-peer m-payments, such as mobile money transfers, are an established and fast-growing fact of life in many developing economies. A large proportion of households in developing countries lack access to basic financial services, which impedes economic growth and development. A large body of evidence shows that access to financial services and, indeed, overall financial development, are crucial to economic growth and poverty reduction.
The Social Life of Money by Nigel Dodd
accounting loophole / creative accounting, bank run, banking crisis, banks create money, Bernie Madoff, bitcoin, blockchain, borderless world, Bretton Woods, BRICs, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, computer age, conceptual framework, credit crunch, cross-subsidies, David Graeber, debt deflation, dematerialisation, disintermediation, eurozone crisis, fiat currency, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, German hyperinflation, Goldman Sachs: Vampire Squid, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, mobile money, money: store of value / unit of account / medium of exchange, mortgage debt, new economy, Nixon shock, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer lending, Ponzi scheme, post scarcity, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative ﬁnance, remote working, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Satoshi Nakamoto, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Wave and Pay, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond
It is therefore worth pausing to ask why there has been such an explosion of payment services in recent years, before discussing what it might mean for the future of money. Google Wallet and Wave and Pay are forms of “mobile money” that have been developing alongside the growth of alternative monies. Mobile monies appeal to users because they remove from the act of payment the inconveniences and impositions associated with traditional banking. Some forms of mobile money do this explicitly. Take the M-Pesa system, which mainly operates in Kenya, Tanzania, Afghanistan, South Africa, and India. M-Pesa48 uses mobile phones to transfer money, advertising itself as a cheap and easy way to move money without needing banks (or, in many cases, not visiting bank branches). Other forms of mobile money, such as Square Wallet, still use banks but eliminate most of the aggravation that usually come with banks.49 With Square, once a merchant and a customer have both registered for the service, the merchant needs only the customer’s name; the customer’s photograph appears on the merchant’s terminal while the system manages the details, sending the customer a text message to confirm.
This phenomenon is the new, private, seigniorage.50 The expansion of mobile money has proceeded hand in hand with the development of increasingly sophisticated ways for private corporations to “mine value in the act of payment” (Maurer 2011: 10). The payment services “industry” is still dominated by the credit card companies, but they are increasingly being joined by social networking platforms and mobile phone companies, all vying for the 1 to 4 percent slice that gets extracted from virtually every payment made. What this slice amounts to, essentially, is a significant “grab” for a major part of money’s infrastructure, the global payment networks, by private capital. There is an important irony here because although the emergence of mobile money appeals to money’s users for a mixture of reasons—speed and convenience are two—a significant part of their selling point is the appearance that mobile money is loosening the grip of the state over money, primarily by undermining its capacity to exploit its formal rights over money’s creation for financial advantage—otherwise known as tax.
There is an important irony here because although the emergence of mobile money appeals to money’s users for a mixture of reasons—speed and convenience are two—a significant part of their selling point is the appearance that mobile money is loosening the grip of the state over money, primarily by undermining its capacity to exploit its formal rights over money’s creation for financial advantage—otherwise known as tax. From this point of view, cash is the enemy of human freedom (Wolman 2012): never mind that it is corporations such as Visa who are in the vanguard of the “struggle” against this “enemy.” If we were to liken money’s infrastructure to a road system, the emergence of mobile money is roughly equivalent to a takeover of the highways by private corporations. We still pay a toll for using the road; indeed, we may be paying more than before. It is merely the corporations, not government, that take the proceeds. If a major advantage of this system is the damage it does to the privileges of the state, a significant potential disadvantage is that an important aspect of money’s infrastructure is potentially being taken further away from, not closer toward, the civic benefits that are meant to accrue from the emergence of alternative monies.
Pax Technica: How the Internet of Things May Set Us Free or Lock Us Up by Philip N. Howard
Affordable Care Act / Obamacare, Berlin Wall, bitcoin, blood diamonds, Bretton Woods, Brian Krebs, British Empire, call centre, Chelsea Manning, citizen journalism, clean water, cloud computing, corporate social responsibility, crowdsourcing, Edward Snowden, en.wikipedia.org, failed state, Fall of the Berlin Wall, feminist movement, Filter Bubble, Firefox, Francis Fukuyama: the end of history, Google Earth, Howard Rheingold, income inequality, informal economy, Internet of things, Julian Assange, Kibera, Kickstarter, land reform, M-Pesa, Marshall McLuhan, megacity, Mikhail Gorbachev, mobile money, Mohammed Bouazizi, national security letter, Network effects, obamacare, Occupy movement, packet switching, pension reform, prediction markets, sentiment analysis, Silicon Valley, Skype, spectrum auction, statistical model, Stuxnet, trade route, uranium enrichment, WikiLeaks, zero day
Lita Person, Mobile Wallet (NFC, Digital Wallet) Market (Applications, Mode of Payment, Stakeholders, and Geography)—Global Share, Size, Industry Analysis, Trends, Opportunities, Growth, and Forecast, 2012–2020 (Portland, OR: Allied Market Research, November 2013), accessed September 30, 2014, http://www.alliedmarketresearch.com/mobile-wallet-market; Marion Williams, “The Regulatory Tension over Mobile Money,” Australian Banking and Finance, February 17, 2014, accessed September 30, 2014, http://www.australianbankingfinance.com/banking/the-regulatory-tension-over-mobile-money/. 30. “University of Cumbria Becomes First in World to Accept Tuition Fees in Bitcoin,” India Today, January 22, 2014, accessed September 30, 2014, http://indiatoday.intoday.in/story/british-university-to-accept-tuition-fees-in-bitcoin/1/339087.html. 31. Philip N. Howard and Nimah Mazaheri, “Telecommunications Reform, Internet Use, and Mobile Phone Adoption in the Developing World,” World Development 37, no. 7 (2009): 1159–69, doi:10.1016/j.worlddev.2008.12.005. 32.
The financial services sector expects government investment in the internet, and when countries invest in information infrastructure, many industries benefit. The perception of technical innovation, the size of the information economy, and the reach of high-tech industries are all important to the evaluation of modern economic wealth. This new sense of valuation is what drives the startling rise of virtual currencies, mobile money, and other digital exchanges. Such virtual currencies are designed to free money, or more abstractly “value,” from the control of a particular country’s central bank. The World Bank estimates that by 2020, the economy of mobile-phone money exchanges might top $5 trillion and include the two billion people who otherwise have no access to banks.29 Some of the oldest institutions around—universities—have started accepting virtual currencies like Bitcoins for tuition.30 It was easier for governments to hoard and guard their gold than it is data, information infrastructure, and intellectual property.
Fortunately, there is a growing number of vigilante watchers, citizen journalists, hacktivists, and whistle blowers. In many countries, the government is also the largest employer. And payroll is a big target for corrupt officials. So any system that helps the government pay its employees properly makes the entire economy a little more transparent and efficient. In Afghanistan, when the government started paying its police officers using “mobile money” through mobile phones, many officers were surprised at the size of their paychecks. Some thought they had been given a raise, but it turns out that the new system simply cut out the middlemen who had long been taking their cut.69 Local bureaucrats could no longer carve out their portion, and funds were suddenly flowing right from the public purse to the public employees. Using digital networks in this big way not only makes it easier to manage the economic role of the state, it improves the personal financial security of public employees.
Bitcoin: The Future of Money? by Dominic Frisby
3D printing, altcoin, bank run, banking crisis, banks create money, barriers to entry, bitcoin, blockchain, capital controls, Chelsea Manning, cloud computing, computer age, cryptocurrency, disintermediation, ethereum blockchain, fiat currency, friendly fire, game design, Isaac Newton, Julian Assange, litecoin, M-Pesa, mobile money, money: store of value / unit of account / medium of exchange, Occupy movement, Peter Thiel, Ponzi scheme, prediction markets, price stability, quantitative easing, railway mania, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, Stephen Hawking, Steve Jobs, Ted Nelson, too big to fail, transaction costs, Turing complete, War on Poverty, web application, WikiLeaks
People can deposit and withdraw money, transfer money (even to non-users), pay bills, buy airtime and, in some cases, actually transfer money to a bank account. They can even obtain credit. This is precisely how Szabo envisages Bitcoin changing the world. Mobile phones are replacing banks. ‘Financial inclusion is reported to be at 80% in Kenya’, says Sitoyo Lopokoiyit of Safaricom. ‘When you remove mobile money, it drops to 23%. So you can see what mobile money does for financial inclusion in Kenya.’193 The M-Pesa has been launched in Tanzania, South Africa, India, Afghanistan and Eastern Europe. It has had some success in Afghanistan and Tanzania, rather less in South Africa – but nowhere has it worked as well as in Kenya. Steps are currently being taken to launch it in India. I’ve spoken to some of the venture capitalists involved.
Technology was at such a point where China was able to bypass all that and go straight to wireless. It’s very easy to get all excited and imagine something similar with developing Third World nations by-passing banks and banking infrastructure altogether and going straight to Bitcoin. In fact, something similar is already happening – but it doesn’t involve Bitcoin. It is most apparent in Kenya with the M-Pesa. M stands for mobile. Pesa is Swahili for money – so you have ‘mobile money’. It began quite organically in the early 2000s in various parts of Africa. People started transferring their mobile phone minutes – their airtime credits – to friends or family. This airtime, of course, has a definite value. Based on a ‘real thing’ it would become a modern day commodity currency. Safaricom and Vodafone both picked up on the practice and brought in systems to both regulate and facilitate it.
23andMe, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, algorithmic trading, artificial general intelligence, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Bill Joy: nanobots, bitcoin, Black Swan, blockchain, borderless world, Brian Krebs, business process, butterfly effect, call centre, Chelsea Manning, cloud computing, cognitive dissonance, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, data acquisition, data is the new oil, Dean Kamen, disintermediation, don't be evil, double helix, Downton Abbey, Edward Snowden, Elon Musk, Erik Brynjolfsson, Filter Bubble, Firefox, Flash crash, future of work, game design, Google Chrome, Google Earth, Google Glasses, Gordon Gekko, high net worth, High speed trading, hive mind, Howard Rheingold, hypertext link, illegal immigration, impulse control, industrial robot, Internet of things, Jaron Lanier, Jeff Bezos, job automation, John Harrison: Longitude, Jony Ive, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, knowledge worker, Kuwabatake Sanjuro: assassination market, Law of Accelerating Returns, Lean Startup, license plate recognition, litecoin, M-Pesa, Mark Zuckerberg, Marshall McLuhan, Menlo Park, mobile money, more computing power than Apollo, move fast and break things, Nate Silver, national security letter, natural language processing, obamacare, Occupy movement, Oculus Rift, offshore financial centre, optical character recognition, pattern recognition, personalized medicine, Peter H. Diamandis: Planetary Resources, Peter Thiel, pre–internet, RAND corporation, ransomware, Ray Kurzweil, refrigerator car, RFID, ride hailing / ride sharing, Rodney Brooks, Satoshi Nakamoto, Second Machine Age, security theater, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart meter, Snapchat, social graph, software as a service, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, Stuxnet, supply-chain management, technological singularity, telepresence, telepresence robot, Tesla Model S, The Wisdom of Crowds, Tim Cook: Apple, trade route, uranium enrichment, Wall-E, Watson beat the top human players on Jeopardy!, Wave and Pay, We are Anonymous. We are Legion, web application, WikiLeaks, Y Combinator, zero day
Vaughan-Nichols, “First Case of Android Trojan Spreading via Mobile Botnets Discovered,” ZDNet, Sept. 5, 2013. 26 As such, criminals: “Gartner Says Worldwide PC, Tablet, and Mobile Phone Shipments to Grow 5.9 Percent in 2013 as Anytime-Anywhere-Computing Drives Buyer Behavior,” Gartner Newsroom, June 24, 2013. 27 The vulnerability meant: Salvador Rodriguez, “Hackers Can Use Snapchat to Disable iPhones, Researcher Says,” Los Angeles Times, Feb. 7, 2014. 28 Moreover, hackers were also: Selena Larson, “Snapchat Responds to Massive Hack,” ReadWrite, Jan. 3, 2014. 29 Worse, it was revealed: Kashmir Hill, “Snapchats Don’t Disappear: Forensics Firm Has Pulled Dozens of Supposedly Deleted Photos from Android Phones,” Forbes, May 9, 2013. 30 As a result, tens of thousands: Tyler Kingkade, “Ohio University Student Accused of Using Nude Snapchat Photos to Extort Sex,” Huffington Post, Dec. 30, 2013. 31 Today 89 percent of employees: Juniper Networks, “Trusted Mobility Index,” May 2012. 32 For just a few hundred dollars: Brian Montopoli, “For Criminals, Smartphones Becoming Prime Targets,” CBS News, Aug. 7, 2013; Dan Nosowitz, “A Hacked Mobile Antenna in a Backpack Could Spy on Cell Phone Conversations,” Popular Science, July 16, 2013. 33 In Kenya, for example: “Why Does Kenya Lead the World in Mobile Money?,” Economist, May 27, 2013. 34 Mobile money payment: Claire Pénicaud, “State of the Industry: Results from the 2012 Global Mobile Money Adoption Survey,” GSMA, Feb. 2013. 35 The Google Wallet system: Keith Wagstaff, “Google Wallet Hack Shows NFC Payments Still Aren’t Secure,” Time, Feb. 10, 2012. 113 Moreover, if and when a user loses: Sarah Clark, “Google Wallet Faces Its Second Hack of the Week,” NFC World, Feb. 10, 2012. 36 Given the volumes: Anthony Wing Kosner, “Tinder Dating App Users Are Playing with Privacy Fire,” Forbes, Feb. 18, 2014. 37 In fact, in 2012 police in South Australia: Miles Kemp, “Police Warn Photos of Kids with Geo-tagging Being Used by Paedophiles,” Herald Sun (Melbourne), April 18, 2012. 38 In 2012, the U.S.
One area in which this will be most clearly seen is in the disappearance of physical currency. The future of money is mobile and virtual, and a bevy of new sensors and apps are on track to replace your wallet and the cash in your pocket. In fact, some mobile phone providers, such as Safaricom in Africa, dominate the overall payment space. In Kenya, for example, 25 percent of the nation’s GNP is actually transacted on Safaricom’s M-PESA payment system. Mobile money payment systems, which did not even exist at the turn of the last century, are now available in over seventy countries and are used to move billions of dollars every month. In particular, they have been incredibly useful in getting previously “unbanked” populations in the developing world access to the global world of commerce with significant positive impact for local economies. In the developed world, there has also been a rush to adopt and deploy mobile phone payment systems.
Google Wallet works with the NFC chips on a wide variety of mobile phones from HTC, LG, Motorola, and Samsung. The money as represented on these mobile devices is nothing more than data—data that are stored in vulnerable applications, controlled by deeply vulnerable mobile operating systems, using insecure sensor technologies and sensor data-transfer protocols. The obvious result? The future of mobile money may also be the future of mobile pick pocketing. The Google Wallet system has already been subverted by criminals on numerous occasions, and apps such as Wallet Cracker allow anybody to see a user’s personal identification code (PIN) number for the system on demand. Moreover, if and when a user loses his or her Android phone, any pre-stored money in the user’s Google Wallet (data on the device) can readily be spent in a store by the person who happens to steal or find the device.
Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama
Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, libertarian paternalism, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nicholas Carr, North Sea oil, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K
Even without digital technology, Green Foundation was committed to farmers and capable of supporting them. For packaged interventions to have positive impact, they need a positive human force to amplify. Rule 2 – Use packaged interventions to amplify the right human forces. Gandhi observed what Green Foundation was already doing and used technology to amplify its work. It’s also possible to amplify the impact of unorganized social trends. In Kenya, for example, a mobile money transfer system called M-PESA famously increased the flow of money from urban to rural areas because there was already an underlying culture of urban migrants sending cash back home.12 Rule 3 – Avoid indiscriminate dissemination of packaged interventions. Digital Green doesn’t work without a strong partner that has rapport with farmers. And Digital Green didn’t branch out into, say, children’s education, because its partner organization had no expertise in that area.
Levin. (1972). Effect of feeling good on helping: Cookies and kindness. Journal of Personality and Social Psychology 21(3):384–388, http://psycnet.apa.org/doi/10.1037/h0032317. I-TECH. (2011). About I-TECH, www.go2itech.org/who-we-are/about-i-tech. ———. (2013). The leader who says “I can.” Everyday Leadership.org, www.everydayleadership.org/video/p519. Jack, William, and Tavneet Suri. (2011). Mobile money: The economics of M-PESA. National Bureau of Economic Research Working Paper 16721, www.nber.org/papers/w16721.pdf. Jakiela, Pamela, Edward Miguel, and Vera te Velde. (2012). You’ve earned it: Combining field and lab experiments to estimate the impact of human capital on social preferences. National Bureau of Economic Research Working Paper 16449, https://ideas.repec.org/p/nbr/nberwo/16449.html.
Limits to self-organising systems of learning – the Kalikuppam experiment. British Journal of Educational Technology 41(5):672–688, www.hole-in-the-wall.com/docs/Paper13.pdf. MixMarket. (2014). Microfinance institutions, www.mixmarket.org/mfi/. Mnookin, Seth. (2011). The Panic Virus: A True Story of Medicine, Science, and Fear. Simon and Schuster. Morawczynski, Olga. (2011). Examining the adoption, usage and outcomes of mobile money services: The case of M-PESA in Kenya. PhD Thesis, University of Edinburgh, https://www.era.lib.ed.ac.uk/bitstream/1842/5558/2/Morawczynski2011.pdf. Morawczynski, Olga, and Mark Pickens. (2009). Poor people using mobile financial services: Observations on customer usage and impact from M-PESA. CGAP Brief, Aug. 2009, https://www.cgap.org/sites/default/files/CGAP-Brief-Poor-People-Using-Mobile-Financial-Services-Observations-on-Customer-Usage-and-Impact-from-M-PESA-Aug-2009.pdf.
The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey
3D printing, Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, Internet of things, inventory management, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, underbanked, WikiLeaks, Y Combinator, Y2K, Zimmermann PGP
Without savings accounts, without access to banking services, people in emerging markets—as well as a good number in advanced markets such as the United States—have a difficult time building up lasting wealth. It’s just one more challenge that leaves so many trapped in poverty. For them, the pursuit of other freedoms—of speech, for example—must be subordinated to the task of tackling these financial and economic challenges. The escape from all that, bitcoiners surmise, may lie in those $5 phones and a radical new mobile-money system. Mali is one of the poorest nations on the planet. It ranked 175th out of 187 nations on the UN’s Human Development Index. More than 70 percent of the population lives below the poverty line. It is largely dependent upon agriculture, and per capita income averages $500 a year. There are efforts to boost tourism, but the country’s history of violence, including the coup in 2012 that drove people such as Fatima from their homes, makes that a hard sell.
She has started a meetup culture and teaches coding to schoolchildren. Five people were at her first meetup; six months later, there were forty, and they were doing coding and coming up with their own apps. “People are responding, people are excited about it,” she says. M-Pesa, now combined with a nascent bitcoin community, is proving to be Kenya’s on-ramp to a broader technology revolution, as mobile money and the Internet spark a wave of creativity and entrepreneurship. Nairobi has become one of Africa’s most important tech hubs, if not the biggest. It is sometimes called Silicon Savannah. The city even has its own version of 20Mission, a hacker house called iHub that’s not far from the University of Nairobi’s science center. It occupies a spacious, modern space on the fourth floor of an office building that would be right at home in Silicon Valley, with lots of light, room for talks and presentations, couches and lounge space (including a foosball table), and a coffee bar.
Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia by Anthony M. Townsend
1960s counterculture, 4chan, A Pattern Language, Airbnb, Amazon Web Services, anti-communist, Apple II, Bay Area Rapid Transit, Burning Man, business process, call centre, carbon footprint, charter city, chief data officer, clean water, cleantech, cloud computing, computer age, congestion charging, connected car, crack epidemic, crowdsourcing, DARPA: Urban Challenge, data acquisition, Deng Xiaoping, East Village, Edward Glaeser, game design, garden city movement, Geoffrey West, Santa Fe Institute, George Gilder, ghettoisation, global supply chain, Grace Hopper, Haight Ashbury, Hedy Lamarr / George Antheil, hive mind, Howard Rheingold, interchangeable parts, Internet Archive, Internet of things, Jacquard loom, Jacquard loom, Jane Jacobs, jitney, John Snow's cholera map, Khan Academy, Kibera, knowledge worker, load shedding, M-Pesa, Mark Zuckerberg, megacity, mobile money, mutually assured destruction, new economy, New Urbanism, Norbert Wiener, Occupy movement, openstreetmap, packet switching, patent troll, place-making, planetary scale, popular electronics, RFC: Request For Comment, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart grid, smart meter, social graph, social software, social web, special economic zone, Steve Jobs, Steve Wozniak, Stuxnet, supply-chain management, technoutopianism, Ted Kaczynski, telepresence, The Death and Life of Great American Cities, too big to fail, trade route, Tyler Cowen: Great Stagnation, Upton Sinclair, uranium enrichment, urban decay, urban planning, urban renewal, Vannevar Bush, working poor, working-age population, X Prize, Y2K, zero day, Zipcar
Indian Express, last modified January 3, 2012, http://www.indianexpress.com/news/is-your-city-smart-enough/894919/. 22“UN award for SA’s Dr Math mobile tool,” SouthAfrica.info, blog, last modified June 9, 2011, http://www.southafrica.info/business/trends/innovations/drmath-090611.htm#. UHA-00IQTzI. 23Katrina Manson, “Kenya to India: exporting the mobile money model,” Financial Times, blog, last modified November 11, 2011, http://blogs.ft.com/beyond-brics/2011/11/11/kenya-to-india-exporting-the-mobile-money-model/. 24“Ericsson and Orange bring sustainable and affordable connectivity to rural Africa,” Telefonaktiebolaget LM Ericsson, Stockholm, last modified February 18, 2009, http://www.ericsson.com/news/1291529. 25Andrew Nusca, “Vodafone Debuts $32 Solar-Powered Mobile Phone for Rural India,” Smart Planet, blog, last modified July 27, 2010, http://www.smartplanet.com/blog/smart-takes/vodafone-debuts-32-solar-powered-mobile-phone-for-rural-india/9367. 26A.
How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran
access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor
The M-Pesa program in Kenya is the most-cited example of mobile banking successfully leading to financial inclusion. In 2007, Kenya’s leading mobile company, Safaricom, joined up with the Central Bank of Kenya to launch M-Pesa for Kenyans, who are 80 percent unbanked. As of January 2013 (in just under six years), 17 million adults (approximately 74 percent of Kenya’s adult population) used M-Pesa, and over 25 percent of Kenya’s gross domestic product was funneled through mobile money services.77 With over forty thousand agents across the country, users can make deposits, transfer funds to anyone with a mobile phone, pay bills, distribute employee salaries, and even get loans. Financial inclusion of the unbanked in Kenya has resulted in significant benefits. Not only do Kenyans waste less time waiting in lines at banks or paying bills, one study even found that in rural Kenya, households that used M-Pesa enjoyed increased incomes of 5 to 30 percent!
It is also probable that they will trust companies like Google, Amazon, and PayPal even more than the likes of Bank of America or Wells Fargo, whether this trust is warranted or not. Danielle Douglas-Gabriel, “How Wal-Mart and Google Could Steal Young Customers from Traditional Banks,” Washington Post, May 27, 2014, accessed March 15, 2015, www.washingtonpost.com/blogs/wonkblog/wp/2014/05/27/how-wal-mart-and-google-could-steal-young-customers-from-traditional-banks/. 77. “Why Does Kenya Lead the World in Mobile Money?,” Economist, May 27, 2013, accessed March 15, 2015, www.economist.com/blogs/economist-explains/2013/05/economist-explains-18. 78. “[Sixty-nine] percent of the unbanked … [and] 88 percent of the underbanked have access to a mobile phone … 39 percent of underbanked consumers have used mobile banking in the past 12 months.” Federal Reserve Board of Governors, “Consumers and Mobile Financial Services 2014,” March 2014: 2, accessed March 15, 2015, www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf. 79.
Broken Markets: A User's Guide to the Post-Finance Economy by Kevin Mellyn
banking crisis, banks create money, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, call centre, Carmen Reinhart, central bank independence, centre right, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, disintermediation, eurozone crisis, fiat currency, financial innovation, financial repression, floating exchange rates, Fractional reserve banking, global reserve currency, global supply chain, Home mortgage interest deduction, index fund, joint-stock company, Joseph Schumpeter, labor-force participation, labour market flexibility, liquidity trap, London Interbank Offered Rate, lump of labour, market bubble, market clearing, Martin Wolf, means of production, mobile money, moral hazard, mortgage debt, mortgage tax deduction, Ponzi scheme, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, rising living standards, Ronald Coase, seigniorage, shareholder value, Silicon Valley, statistical model, Steve Jobs, The Great Moderation, the payments system, Tobin tax, too big to fail, transaction costs, underbanked, Works Progress Administration, yield curve, Yogi Berra
Some of this reﬂects the high level of recent immigration, legal and undocumented, and the number of households living below the poverty line—both factors that set America apart from other rich countries and always has. Some of it reﬂects the suspicion of banks, much of it deserved, felt by many people without much money or education. We stand at the cusp of a much cheaper and more transparent consumer ﬁnancial services model based on mobile devices. Poor countries such as Kenya have already demonstrated the potential of mobile money to improve the lives of people living on a few dollars a day. These same technologies and business models could vastly increase ﬁnancial inclusion in the United States. However, the rush of post-crisis legislation—including the Card Act discussed previously; the Durbin Amendment to Dodd-Frank, which sets prices on debit card transactions; and above all, the establishment of an unaccountable CFPB with expansive powers under Dodd-Frank—could swing the pendulum in the direction of reducing the incentives of banks to operate in the consumer segment.
Rethinking Money: How New Currencies Turn Scarcity Into Prosperity by Bernard Lietaer, Jacqui Dunne
3D printing, agricultural Revolution, Albert Einstein, Asian financial crisis, banking crisis, Berlin Wall, BRICs, business climate, business process, butterfly effect, carbon footprint, Carmen Reinhart, clockwork universe, collapse of Lehman Brothers, complexity theory, conceptual framework, credit crunch, discounted cash flows, en.wikipedia.org, Fall of the Berlin Wall, fear of failure, fiat currency, financial innovation, Fractional reserve banking, full employment, German hyperinflation, happiness index / gross national happiness, job satisfaction, Marshall McLuhan, microcredit, mobile money, money: store of value / unit of account / medium of exchange, more computing power than Apollo, new economy, Occupy movement, price stability, reserve currency, Silicon Valley, the payments system, too big to fail, transaction costs, trickle-down economics, urban decay, War on Poverty, working poor
As a consequence, they are relegated to operate solely on a cash basis. These individuals are left vulnerable to theft; they are excluded from all e-commerce transactions and forced to utilize expensive cash-wiring ser vices. “More than a billion people worldwide lack bank accounts but do have mobile phones, providing a dramatic opportunity to achieve greater financial inclusion,” according to a recent Mobile Money Market Sizing study.27 Furthermore, and perhaps most important, mobile banking will be free to expand, unfettered legislatively, and “since no deposits are accepted or interest paid, the ser vice provider does not need a banking license.”28 The convergence between ever-cheaper computing and growing access to the Internet and to mobile phones will drastically change the global banking scene. More important, it will trigger the proliferation of further innovations and real prosperity around the globe, in domains that today seem to be the stuff of science fiction.
The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley
banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business process, call centre, capital controls, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population
They accounted too for a very high proportion of trading activity on the New York and London stock exchanges. 372 The hedge fund industry had been ‘pushing the limits of financial regulation for decades.’373 When the US Congress pushed for tougher regulation of hedge funds in 2008, the industry’s lobbying organisation, the Managed Funds Association, spent $17 billion on donations to politicians with influence.374 An increasing number of companies and countries came to know only too well what it was like to be on the receiving end of hedge fund speculation. Because of this ‘active’ management—a strategy of moving huge sums of mobile money in and out countries, markets, commodities and companies often at great speed—they have the firepower to do serious economic damage. Moreover, while hedge funds rely heavily on wealthy individuals, an increasing share of their funding has been coming from once risk-averse endowments and institutional investors. In 2010, Yale University had 28 per cent of its endowment fund invested in hedge funds and 27 per cent in private equity. 375 In the same year, despite the lack of transparency, the high charges and the greater risk involved, UK pension funds invested an average of 8.1 per cent of their portfolios in hedge funds.
Money: The Unauthorized Biography by Felix Martin
bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, call centre, capital asset pricing model, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, credit crunch, David Graeber, en.wikipedia.org, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, Fractional reserve banking, full employment, Goldman Sachs: Vampire Squid, Hyman Minsky, inflation targeting, invention of writing, invisible hand, Irish bank strikes, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, mobile money, moral hazard, mortgage debt, new economy, Northern Rock, Occupy movement, Plutocrats, plutocrats, private military company, Republic of Letters, Richard Feynman, Richard Feynman, Robert Shiller, Robert Shiller, Scientific racism, seigniorage, Silicon Valley, smart transportation, South Sea Bubble, supply-chain management, The Wealth of Nations by Adam Smith, too big to fail
The great fear associated with the transgression of customary rules of conduct had always been that the result would be anarchy: the traditional social order claimed to represent the sole bulwark against civil breakdown and a war of all against all. The monetary enlightenment argued otherwise. On the political and economic level, money promised something unprecedented: that it would combine social mobility with political stability. With money, society could have its cake and eat it too. The sterile constraints of an immutable and absolute social system could be jettisoned in favour of ambition, entrepreneurship, and social mobility: money would be the universal solvent that could dissolve all traditional obligations. Crucially, though, the society that resulted would not collapse into chaos. Because money, the concept of universal value, and the idea of an objective economic space, were founded upon the ancient institution of communal sacrifice; and as such upon the invisible but irresistible communality of mankind. And money made its miraculous promise to combine apparent opposites on the personal level as well.
The Industries of the Future by Alec Ross
23andMe, 3D printing, Airbnb, algorithmic trading, AltaVista, Anne Wojcicki, autonomous vehicles, banking crisis, barriers to entry, Bernie Madoff, bioinformatics, bitcoin, blockchain, Brian Krebs, British Empire, business intelligence, call centre, carbon footprint, cloud computing, collaborative consumption, connected car, corporate governance, Credit Default Swap, cryptocurrency, David Brooks, disintermediation, Dissolution of the Soviet Union, distributed ledger, Edward Glaeser, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, fiat currency, future of work, global supply chain, Google X / Alphabet X, industrial robot, Internet of things, invention of the printing press, Jaron Lanier, Jeff Bezos, job automation, knowledge economy, knowledge worker, litecoin, M-Pesa, Mark Zuckerberg, Mikhail Gorbachev, mobile money, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, open economy, peer-to-peer lending, personalized medicine, Peter Thiel, precision agriculture, pre–internet, RAND corporation, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, social graph, software as a service, special economic zone, supply-chain management, supply-chain management software, technoutopianism, underbanked, Vernor Vinge, Watson beat the top human players on Jeopardy!, women in the workforce, Y Combinator, young professional
The mobile penetration rate: “Democratic Republic of Congo—Telecoms, Mobile and Broadband—Market Insights and Statistics,” Market Briefing, October 2014, http://www.telecomsmarketresearch.com/research/TMAABOEF-Democratic-Republic-of-Congo---Telecoms--Mobile-and-Broadband---Market-Insights-and-Statistics.shtml. What goes for the Congo is: Matt Twomey, “Cashless Africa: Kenya’s Smash Success with Mobile Money,” CNBC, November 11, 2013, http://www.cnbc.com/id/101180469. Today that number is over: John Koetsier, “African Mobile Penetration Hits 80% (and Is Growing Faster Than Anywhere Else),” VentureBeat, December 3, 2013, http://venturebeat.com/2013/12/03/african-mobile-penetration-hits-80-and-is-growing-faster-than-anywhere-else/. By 2012, 19 million M-Pesa: “Is It a Phone, Is It a Bank?” Economist, March 27, 2013, http://www.economist.com/news/finance-and-economics/21574520-safaricom-widens-its-banking-services-payments-savings-and-loans-it.
Microtrends: The Small Forces Behind Tomorrow's Big Changes by Mark Penn, E. Kinney Zalesne
affirmative action, Albert Einstein, Ayatollah Khomeini, Berlin Wall, big-box store, call centre, corporate governance, David Brooks, Donald Trump, extreme commuting, Exxon Valdez, feminist movement, glass ceiling, Gordon Gekko, haute couture, illegal immigration, immigration reform, index card, Isaac Newton, job satisfaction, labor-force participation, late fees, life extension, low skilled workers, mobile money, new economy, RAND corporation, Renaissance Technologies, Ronald Reagan, Rosa Parks, stem cell, Stephen Hawking, Steve Jobs, Superbowl ad, the payments system, Thomas L Friedman, upwardly mobile, uranium enrichment, urban renewal, War on Poverty, women in the workforce, Y2K
As a percentage of the world’s billion or so Muslims, that’s .004 percent. So it is far below a 1 percent microtrend, but it ranks as a critically important and obviously dangerous nanotrend. It does not need to become a mass movement to be successful. Rather, it needs a growing cadre of smart, sophisticated, tough operatives. Its growth now depends not on attracting hundreds of millions but on successfully creating a leadership class that can mobilize money and resources and carry out operations. While poverty is often cited as a prime reason for the growth of fundamentalism, the founders of the terrorist movement come from surprising backgrounds. In fact, poverty and despair are remarkably unrelated to either the rich and well-educated founders like bin Laden or to many of the frontline terrorists, including the 9/11 hijackers or the July 7 train bombers in London.
Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, asset-backed security, Atul Gawande, bank run, barriers to entry, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, cloud computing, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, search engine result page, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks
Furthermore, even as critical power over money and new media rapidly concentrates in a handful of private companies, we remain largely ignorant of critical ways in which these companies interact 10 THE BLACK BOX SOCIETY (and conflict) with public powers. Though this book is primarily about the private sector, I have called it The Black Box Society (rather than The Black Box Economy) because the distinction between state and market is fading. We are increasingly ruled by what former political insider Jeff Connaughton called “The Blob,” a shadowy network of actors who mobilize money and media for private gain, whether acting officially on behalf of business or of government. 24 In one policy area (or industry) after another, these insiders decide the distribution of society’s benefits (like low-interest credit or secure employment) and burdens (like audits, wiretaps, and precarity). Admittedly, as Jon Elster has written in his book Local Justice, there is no perfectly fair way to allocate opportunities.25 But a market-state increasingly dedicated to the advantages of speed and stealth crowds out even the most basic efforts to make these choices fairer.
Poisoned Wells: The Dirty Politics of African Oil by Nicholas Shaxson
Asian financial crisis, Berlin Wall, blood diamonds, business climate, central bank independence, clean water, colonial rule, energy security, Exxon Valdez, failed state, Fall of the Berlin Wall, Hernando de Soto, income per capita, inflation targeting, Martin Wolf, mobile money, offshore financial centre, Ronald Reagan, Scramble for Africa, Yom Kippur War
See Ken Silverstein, “The Crude Politics of Trading Oil,” Los Angeles Times, December 12, 2002, and http://www.publicintegrity.org/about/release.aspx? aid=21. Quote from Ken Silverstein, “U.S. Oil Politics in the ‘Kuwait of Africa.’” See http://www.nci.org/05nci/02/IPC-feb7.htm, or http://www.iranpolicy. org/index.php?option=com_content&task=view&id=19&Itemid=29. Senate Hearing, page 593. The joint venture was called Nusiteles; Senate Hearing, pages 302, 346–356, and 693–695. McColm admitted that IDS and IFES received Mobil money, in an e-mail to journalist David Hecht, July 2, 1999. CMS, which sold out to Marathon, also provided support. See, for example, Duncan Campbell, “Marketing the New ‘Dogs of War,’” U.S. Center for Public Integrity, October 30, 2002, available at http://www. publicintegrity.org/bow/report.aspx?aid=149. Two sources who attended the meeting differ as to whether a coup plot was explicitly predicted or not.
algorithmic trading, asset-backed security, bank run, banking crisis, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, collateralized debt obligation, computer age, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency peg, diversification, Doha Development Round, energy security, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, George Gilder, housing crisis, Hyman Minsky, imperial preference, income inequality, index arbitrage, index fund, interest rate derivative, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, large denomination, Long Term Capital Management, market bubble, Martin Wolf, Menlo Park, mobile money, Monroe Doctrine, moral hazard, mortgage debt, new economy, oil shale / tar sands, oil shock, peak oil, Plutocrats, plutocrats, Ponzi scheme, profit maximization, Renaissance Technologies, reserve currency, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, The Chicago School, Thomas Malthus, too big to fail, trade route
Part of the reason for sketching some of the realignment of wealth that has flowed from the rise of the financial sector is simply to underscore how yesteryear’s support for the creative destruction of a free and fast-flowing marketplace would logically have evolved into support for an assets “Plunge Protection Team” or a federal assets-maintenance strategy instead. Keep the markets up. Please, gentlemen, especially with all of those crazy people in the Middle East and the dollar coming unglued. Meanwhile, the new economy is breeding more stratification and inheritance than mobility. Money makes money. When Barron’s published its 2007 survey of the top forty wealth-management firms in the United States—most part of banks or other large financial institutions—among them they appeared to have some seventy thousand private client managers.47 Wealth management has become a large and growing business in the United States, and wealthy Americans are no more likely to submit their swollen and cherished assets to the unfettered whims of the free market than Japanese asset owners were when Japan’s real estate and stock bubble began to deflate in 1989.
Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott
Airbnb, altcoin, asset-backed security, autonomous vehicles, barriers to entry, bitcoin, blockchain, Bretton Woods, business process, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Erik Brynjolfsson, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Galaxy Zoo, George Gilder, glass ceiling, Google bus, Hernando de Soto, income inequality, informal economy, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer lending, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, quantitative easing, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, social graph, social software, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Uber and Lyft, unbanked and underbanked, underbanked, unorthodox policies, X Prize, Y2K, Zipcar
According to Tyler Winklevoss, banks don’t serve most of the world and have no existing plans to serve them. However, new technology could remove that step. He said, “A lot of African countries leapfrogged the infrastructure of landline telecoms with cellular. They skipped that step. Blockchain will have the greatest impact in areas where the payment networks don’t exist or are very poor.”20 Blockchain will push many nascent initiatives, such as mobile-money service providers like M-Pesa in Kenya, owned by Safaricom, and microcredit outfits globally, into high gear by making them open, global, and lightning fast. A bank is the most common financial institution, and so we will use it as an example here. How do you open a bank account? If you live in the developing world today, you will likely have to visit the branch in person. In Nicaragua, there are only 7 bank branches per 100,000 people compared with 34 per 100,000 in the United States.
Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed
Albert Einstein, anti-communist, bank run, banking crisis, Bretton Woods, British Empire, capital controls, central bank independence, centre right, credit crunch, currency manipulation / currency intervention, Etonian, full employment, German hyperinflation, index card, invisible hand, Lao Tzu, large denomination, Long Term Capital Management, margin call, market bubble, Mexican peso crisis / tequila crisis, mobile money, moral hazard, new economy, open economy, Plutocrats, plutocrats, price stability, purchasing power parity, pushing on a string, rolodex, the market place
The Banque de France had in fact considered launching such a preemptive financial strike against Germany but rejected the idea as too risky. Moreau did not want to be blamed for a world economic collapse. Some French banks undoubtedly did pull some deposits home but this was mere commercial prudence in the light of the deteriorating turn of events. Meanwhile, in an effort to forestall a breakdown in world finances, Norman and George Harrison of the New York Fed had begun mobilizing money to support the Reichsbank. At this point, with a financial crisis looming, Lord Revelstoke saved the day by suddenly dropping dead. The consequent suspension of the proceedings forced the parties to catch their breath for a few days and step away from the brink. Schacht left with the German delegation for consultations in Berlin. There he found the cabinet up in arms. He had clearly overreached.