Friday, June 20, 2014

Analytics, and a new Virtual Currency

Bitcoins created a new category of payment system, which I called a gross delayed payment system. The worldwide demand for a payment system that is cheap, safe, and fast settled for cheap because nothing else existed.

An earlier post described the single “on-us” small value gross real-time payment system (SVGRTP) and showed how money moved instantaneously on the receipt of instructions from the payer. (See .) Amazon comes close to something similar with Paypal, but uses a deferred netting system (such as ACH) to settle accounts (this is a presumption on my part based on my experience with the service). 

The question haunting this blog is a simple one, why doesn’t one of the big network data companies create real-time accounts containing real credits based on a fiat currency? There seem to be plenty of banks for sale that could form the base of such a system. It’s not like the Googles, Amazons, or other major internet firms don’t have the cash to do it, and it’s not because they don’t have the know-how, and it’s not because they can’t make a lot of money from such a platform?

Once one of these firms does create the SVGRTP, the scary bit also becomes a reality. All the data needed to monitor the flow of money becomes an instant reality as well. The firm that sees in minute detail the flow of a $79 trillion dollar river will have a license to print cash. So the world waits and sees who will build it first, government or the private sector.  My guess is the private sector because government in the US is not capable of seeing the harm in it, and does not take its responsibility of regulating the flow of money seriously.

Once in place in the US, the SVGRTP can connect to other banks purchased in the Group of 20, so the international flow of money without the credit card will become the dominant form of retail payment.

Next Blog: Can Hybrid Payment systems work with small values?

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