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The Cashless Citizen
Is Money about to be Recycled?
Fintech is Funtech
If you haven't been scanning the internet lately or just stick to your local websites and TV channels then you may have missed the newest, perhaps greatest evolution which has ever occurred in the area of financial technologies. They call it "Fintech" and by all appearances, they are serious.
At first, when perusing the various Fintech websites one will come to understand that there are so many of them. Many companies started small, grew in spurts and succeeded. Others companies, seeming to chase some personal fictive goal, short circuited in no time. Obviously, some companies popped up, took your money and disappeared from the internet. This last problem gives us all pause. It is still very easy to steal using technology, but that is changing.
Fin·Tech noun : an economic industry composed of companies that use technology to make financial systems more efficient.
Okay, what is Fintech?
Actually, it seems to mean different things to different people. An organization called Wharton Fintech has given a definition for the new word. Fin·Tech noun : an economic industry composed of companies that use technology to make financial systems more efficient. The definition was posted by a Daniel McAuleyon September 4, 2014. Interestingly enough, the new financial technology wilderness encompasses, according to many, a plethora of companies working on and in different parts of the money universe. Transmission of monies, however, appears to be one major benefit. Efficiency has become a byword. Safety and security is the norm.
What has sparked this new need? A primary driving factor are the many thefts. In the United States it is now commonplace to receive a call from your bank or other financial institution, asking you if you bought a pizza in Guam the previous evening. We are not surprised when we see a strange charge on our credit cards and many of us will no longer consider using our debit cards, especially when they are connected directly to our bank accounts.
Shopping can be hazardous if you do not Fintech
We've all heard about The Home Depot*, Target* and many more companies, having been hacked. The criminals stole our credit card numbers, our social security numbers – all the data they needed to pretend they were us. Then the bad guys spent our money. Usually the spending was far from home and our banks and credit card companies caught on quickly. Luckily, for most of us, these companies covered our loss, but the worry has remained. The pain in the arse account holds, numerous phone calls to various agencies and all the rest, became our collective nightmare.
Identity Theft results in losses exceeding 50 Billion dollars a year!
(Source: 2012 Identity Theft Victim Statistics article by www.identitytheft.info.)
Attempts to battle this encroaching fraud include various services. One such well known service is a company called Lifelock*. They run all kinds of advertisements and the company protects your identity, watches all of your credit cards, bank accounts and beyond. There are different plans and each has its associated fee, but they are just a small part of this new Fintech wave.
Paypal* is can be considered Fintech company. It has been around for a while now and simply moves money from your bank account to their system for use. You can obtain a debit like card or use a code at the register. Personally, I don't like the long code method and prefer something fast and easy – like a card I can swipe. But wait, I already have tons of cards, why should I get another? Security? Let me see. I can tie all my accounts to Paypal* and just feel warm and fuzzy inside? I'll sit this one out. But Paypal* does have a new and pretty website. Sometimes I just leave it on an stare. Not really. Okay, maybe for a few seconds.
Green Dot* (cards) is another company in this arena, but it is less well known and unfortunately can be used by anyone, including criminals since one can use these accounts without revealing their identity. Well, don't let that fool you. Once you go online and move your cash around do you really think that you cannot be traced? Additionally, Green Dot* has a rather cheesy and clumsy website. But feel free to use them. The money moves quickly from your pocket to theirs.
The Avant Garde
But the the birth of Fintech holds even more promise. It endeavors, at many levels, to grease the parts between us and the shopkeeper. It also opens avenues for international trade, secure transactions, and fast service, to name just a few benefits. One unique aspect of Fintech, however, is a mountain mover and perhaps the reason many of us have never heard about Fintech to begin with. Alan Greenspan might have called it 'creative destruction' and not the next financial bubble as he has more often quipped. If Alan ever actually quipped. I'll get to the mountains in a bit. First, let me list some rather interesting Fintech ideas.
Firm or System
What they do
Alerts about bank charges
Small Business Focus
Mortgage & Real Estate
The Currency Cloud
International (low fees)
Peer-to-Peer Credit Lender
You and I
Peer-to-Peer Social Net with AMPS "Attention Currency"
Transfer / Exchange Money
Payments / POS
Public "Block Chain" Currency
Public "Block Chain" Internet of Things
Buy and Redeem Gold
Public Blockchain Currency
Public Blockchain, Kept Private
London's Fintech workforce is reportedly 40% of the total workforce
According to Wikipedia, global investment in Fintech has grown from 930 million dollars in 2008 to 3 billion dollars as of 2013. In fact, again using the same source, London's Fintech workforce is reportedly 40% of the total workforce. But the driving force behind this geometric expansion is of course, profit. Profit obtained by lowering the cost to do business, which, in the end, helps us all. Right? So far my banking fees have remained unchanged. Maybe I'll just wait a bit longer.
Why I really wrote all of this was not to advertise any one company, but to expose you to Fintech, if you have not already been befuddled by the thousands of companies and no few countries, beginning to conquer this new global paradigm. Just search "fintech" and become educated – again and again. But I also have a more sinister reason and I'll tell you about it soon. The questions which parade across the internet, coupled with a myriad of colorful responses on various blogs, argue about it. Some of those argumentative types need the knout, daily. I'm all for free speech, but sometimes my cortex spasms after a bad read.
Fintech...relies upon the current financial systems
The Weakness of Fintech
Fintech, as it stands, relies upon the current financial systems, for the most part. These systems, run by various banks and governments from Shanghai to London, are the backbone of our money-moving world. They furnish the lifeblood for the system, the actual fluid in the veins of illusory wealth which we attempt to keep in our electronic wallets – our banks. Well, at least my wealth seems rather illusive, but I'm still working on it. But I digress. That fluid I mentioned, the money provided in trust by our governments, may be in danger of extinction, with the advent of Fintech. But for now, the Fintech Clan places its faith within our current monetary-governmental systems. Some consider that a bad thing when they factor in the state of the currencies around our globe.
The Demon Seeds?
Do these shifts in technology give us more or less control over our financial world? Depends upon your take of things. If you think that all the global governments are doing a 'bang up job' keeping their financial houses in order, then you should stay with the 'old guard'. Remember, he is guy sleeping in the back, leaning on his rifle. The rest of us, who do not think most corporations are evil and feel that governments screw up more often that not, especially when it comes to the finances, will continue to innovate. The innovations sometimes polarizes people, but that can be dealt with.
As all of these Fintech companies begin to flourish, a new breed of money transmission began to surface. Initially, big banks tried to quash the process and in some cases, rightfully so. But the demon seeds became a way out and now banks and other entities are backtracking. They are getting all warm and fuzzy inside. I wonder why? Did I mention profits?
The Money Mountains and Volcanoes
No doubt you have read or even purchased Bitcoins or some other "blockchain" type of money. I can't actually call it money, I know, but I will. You may have seen Bitcoin's boom and bust cycles. At its peak, Bitcoins were over a 1,000 dollars each. Then it was a mountain, but next, like Mt. St. Helens, the volcano let loose. Litecoin, Dogecoin and the rest, with few exceptions, appear to be following the same Bitcoin pattern. You may have watched as any number of blockchain-type cash mountains tried to grow, only to crater, literally, back into the ocean of ideas from whence the sprung. That's the nature of the game, I think.
They call them "cryptocurrencies" of course and boy are they numerous, but so were bottle-caps some time ago. Most of us will continue watch from the sidelines, waiting to see if one or two cryptos will succeed and if the government won't crush them afterwards. Others of us scoff at the whole idea of it.
What is interesting is how the cryptocurrencies, with few exceptions, use the same technology. Sure, the programming is different, the process is slower or faster, but the meat of it is the same. Transmission of information over an open network in a secure fashion using unbreakable codes. Unbreakable for now, anyway. And a ledger of transactions is copied across the network of users for comparison and or reward purposes. Yes, some of the cryptos award you more cyptos if you just leave your computer on and hold stacks of – I mean ledgers of – their cryptos. Okay, sounds fun. Not really.
There are problems with these infant currencies, however. You can be forked. That sounds painful, I know. It just means that the blockchain, the ledger, is now keeping two sets of books. When that happens all the brownish matter hits the fan, but usually it gets fixed. By the time it's fixed, your crypto is worth spitto, however. There are software glitches too, but I just uninstall then. The end of that crypto.
All of these cryptocurrencies are high risk investments and I am not giving anyone financial advise here. Blow your money if you like. That said, the banks and even Paypal* appear to be warming up to a few Fintech cash cows. I'm talking about Ripple* and Stellar*. I call them private Bitcoins. Aside from all the history of the guys who got these two ships out to sea, it should be said that both companies' transmission speeds are very fast, but you are playing in their backyard. You send and receive the native currency (Ripples or Stellars) almost as fast as you can swipe your bankcard. And that is a plus in my book. I'm sure this speed thing rankles the nerves of every bank CEO or do they call them CFO's? These banks also foam at the mouth like hungry saurians, after they realize that these two new currencies can be traded for almost any other type of currency on the globe at a fraction of fraction of the cost banks charge, even on double-coupon days.
Did you know that Arthur C. Clarke wrote a book titled The Fall of Moondust indicating that people in the future were using a currency called 'stollars'? Correct me if I'm wrong. Just going from memory. It seems odd and I wondered if the Stellar* people knew.
The way through
Currently, I don't see any new world currency, although the idea is batted around the internet often enough. You always read or hear about the next grand conspiracy regarding the new world currency and how it will soon supplant the current financial system of fiats on an international scale. I have looked, but only a little. I even tried using an aluminum foil hat, but no luck. The old back ups still reign. Gold is cool, but heavy. Silver tarnishes. Diamonds can be manufactured now. Commodity prices will fall anyway, according to Harry Dent - into the foreseeable future. (You should buy his newsletter. Let me know what it says.) My point? That no Fintech startup has solved the problem, long term, of the devaluing currencies upon which they rely. Furthermore, the backup plan to use or supplement with crypto technologies, may only be a temporary trip in the Fintech follies. In the meantime, keep your eyes on Fintech.
About the Video below
I added this video just so you can get an idea about Fintech. This is just one of many and yes it is from those semi-socialists across the pond, but hey the video is nice. Make it your jumping off point, if you like. A lot of the other videos are dull, professorial nerd-snore interludes. But remember, nerds make the world go round. I don't know if that is true, but that is what they say.