Tuesday, July 22, 2014

A Vision of Money in the Next Generation

I want to use the virtual bum’s pocket (VBP) small value gross retail payment system (SVGRTP) to construct a possible retail payment system in a future time. (The model is defined in http://paymentnetworks.blogspot.com/2014/07/indian-tribal-organizations-as-model.html and explored a bit more in a few blogs that follow it).

Our wallets in 30 years will never be inside a pocket or a purse. Our wallets will be in our phones, our watches, our glasses, and our gloves. For the purposes of this blog, the VBP spread to every corner of Earth. Whole industries issue currency without fear of antitrust complaints. For example the travel industry has one currency universally accepted by many small towns, by casinos, by ski resorts, and by car rental agencies.

Attackers swarm trying to capture the data flow between personal electronic devices and the entry points of presence (POP). Fake POPs routinely fool cheap wallets built to protect fast food and convenience store purchases. Attackers divert coins that buyers thought were on their way to purchase native arts and crafts, but wind up purchasing a turn of a roulette wheel on some distant shore instead.

The insurance industry captures perpetrators and recovers losses with sneaky code such as turning on the insurance tracker for all coins stored in its wallet. Scammers wind up mostly with revoked coins, worthless almost everywhere. Insurance only pays after an issuing payment hub pays consumer redemption of stolen or compromised currency.  Consumers do not know that their purchase did anything other than make the desired purchase. Crime novels describe sophisticated attacks and Hollywood makes the plots blockbusters. However, currency insurance rates remain low.

The drop in the cost of payment acceptance has a benign effect on worldwide trade. Ridiculous fees disappear (such as card not present (CNP) surcharges regardless if the buyer must appear and show government issued ID to complete a purchase). Insurance costs reflect real risk. Industries use a perpetual pool of cash float to grow and establish reserves at new hubs with common consumers.

New governments establish currencies quickly and use independent highly rated insurance to establish universal acceptance and meet the critical needs of its constituents. The need for International oversight of loaned money diminishes drastically as loans create the reserves of currency and the new government can show instantly the aggregate values outstanding and to some extent the physical location of circulating currency. Schoolchildren can independently verify their government’s accounting.

Underground economies grow and shrink according to the definition of contraband by their hosting country. Too many banned goods or services results in the growth of issuing hubs that rely on thugs for its protection, diminishing tax revenues, and increasing insurance costs for government issued currency.

All government policy results in increased or decreased tax revenues from payment hubs. Too many wars increase the cost of payments in real time, reducing velocity, and causing people to reflect on current government activity.   

Next Blog: Protection for retail payment hub misuse

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