Be on the smart side of the Great Reset

planet earth

Children’s Digital Rights

mother helping her daughter with her homework

At Consult Hyperion we frequently discuss the implications of financial crime migrating online. You’re less likely to be mugged at the cashpoint but the online environment is of course open to a wider range of attackers, often well hidden, and operating in diverse geographies. Personally, I have little patience with those who cite the Four Horsemen of the Information Apocalypse’: terrorists, drug dealers, kidnappers and child pornographers. It is, therefore, particularly refreshing to see a genuinely practical approach to child protection being promoted by TrustElevate, drawing on opinions expressed by young people themselves.

CONSULT HYPERION ANNOUNCES NEW BOARDROOM APPOINTMENTS TO DRIVE NEXT PHASE OF GROWTH

On Mondex and CBDCs (again)

Introduction

We were delighted to get a lot of good feedback on Neil’s previous blog on Mondex Memories and CBDCs and its relevance to CBDCs and thought it would be interesting to respond to some of the more interesting – and difficult – points raised in a follow-up blog. Before addressing those I wanted to put the Mondex program into some historical context. They were very different days – we didn’t have an intranet until 1996, let alone internet access. There were no SDKs – although actually we did build a precursor to one of those – or APIs and the idea of remote payments was still in its infancy (although we did that too).

Mondex Memories and CBDC

Mondex paraphernalia

Deep in the mists of time (that is to say, the early-1990s), I led the team from Consult Hyperion responsible for Mondex specification, design and development. For those not familiar with paleo-payments, it was one of a clutch of (contact) smart card based electronic cash systems, none of which survived beyond, let’s say, early adolescence. There were two main reasons for their demise, one technological and one business. The concept was ahead of the capabilities of the underlying technology. Transactions took about the same amount of time as cash plus change, which wasn’t a compelling reason for anyone to leave their wallet behind. The promoters of the schemes (retail banks and payment brands) did not target particular niches where there may have been a business case (I always thought car parking might work) but instead blanketed retail outlets in particular cities or small countries. So, mostly unused devices were put under the counter, and people forgot about the schemes after an initial blaze of publicity.

#IWD2021 – Cybersecurity really is a great place to work

photo of people reaching each other s hands

As an example of creative thinking in promoting inclusion, I would like to highlight John Patrick Crichton-Stuart, 3rd Marquess of Bute, a thoroughly modern Victorian, educated by his mother until the age of 12. He was ridiculed by society for his progressive views in paying great attention to the education of his daughters as well as his sons. Considered the richest man of his time, his hobby was building the finest fairy tale castles. He also built a magnificent building for the medical school at the University of St Andrews and endowed the Bute Chair of Medicine. When the male anatomy lecturer refused to teach women, he simply hired a woman as an additional lecturer, to teach any students who wished to learn with her. In this way, he managed to provide an environment in which women and men could train alongside one another, without coming into conflict with the existing hierarchy. Perhaps surprisingly, we still have lessons to learn from his approach.

Ruby reflections, 40 years of technology change at work

silver and gold coins

At this time of year my colleague, Dave Birch looks forward, his annual “Live Five” started as a bit of fun, but over the years has become a thought provoking look at what might impact our industry in the coming year, if you haven’t read it yet, please follow this link.

As we come to the holiday season, we know that we will be bombarded with reviews of 2020 on television, in our newspapers and online. A conversation with some colleagues about how long they had worked in the payments industry, prompted my own review when I realised that on the 8th December, I clocked up 40 years in the industry, how technology has changed our lives in that time.

City Currency

The pandemic has revised interest in a topic that has surfaced repeatedly in Tomorrow’s Transactions events over the years, and that is the issue of local and complementary currencies. The Bristol Pound, the Brixton Pound, the Lewes Pound and many other experiments have sprung up around the country (indeed, around the world) to try to stimulate and regenerate local and regional trade and prosperity in response the changing economic circumstances. We tend to think of currencies as being instruments of the nation state but that’s actually a recent invention in the great scheme of things. There’s no reason to see optimal currency areas as inviolable laws of nature rather than transitional borders under prevailing monetary and financial arrangements.

The day that digital currency started

Mondex paraphernalia

We’ve just had an important anniversary. I’m sure you are all thinking of July 4th and, of course, who can forget it! It’s a date that is very important to many people because it is the anniversary of the birth of The Clash, who played their first live gig on 4th July 1976. But for me, there is a much more important and personal anniversary. Here is the front page of the Swindon Evening Advertiser from 4th July 1995. The day I finally made the front page of my home town newspaper. Got to see my picture on the cover, got to buy five copies for my mother…

MONDEX-History in the making

Yes, I was there on 3rd July 1995 in Swindon town centre when the Swindon Evening Advertiser vendor Mr. Don Stanley (then 72) made the first ever live Mondex sale. And here is the photographic evidence of same — in case you don’t happen to have copy of that Swindon Evening Advertiser — as I emerge Zelig-style from the crowd to watch Don take the e-cash. It was a very exciting day because by the time this launch came, my colleagues at Consult Hyperion, who were instrumental in creating Mondex devices and software, had been working on the project for some years (and for the first three or four years it was entirely in secret).

So for those of you who don’t remember what all of the fuss was about: Mondex was an electronic purse, a pre-paid payment instrument based on a tamper-resistant chip. This chip could be integrated into all sorts of things, one of them being a smart card for consumers. Somewhat ahead of its time, Mondex was a peer-to-peer proposition. The value was transferred directly from one chip to another with no intermediary and therefore no cost. In other words, people could pay each other without going through a third party and without paying a charge. It was true cash replacement, invented at National Westminster Bank (NatWest) in 1990 by Tim Jones and Graham Higgins. Swindon had been chosen for the launch because, essentially, it was the most average place in Britain. Since I’d grown up there, I was rather excited about this, and while my colleagues carried out important work for Mondex (software specification, development and testing for all of the core components), I watched as the fever grew out in the West Country.

Many of the retailers were quite enthusiastic because there was no transaction charge and for some of them the costs of cash handling and management were high. I can remember talking to a hairdresser who was keen to get rid of cash because it was dirty and she had to keep washing her hands, a baker who was worried about staff “shrinkage” and so on.

The retailers were OK about it.

“From a retailer’s point of view it’s very good,” said news-stand manager Richard Jackson. “But less than one per cent of my actual customers use it. Lots of people get confused about what it actually is, they think it’s a Switch card or a credit card.”

That’s if they thought about it all.

It just never worked for consumers. It was a pain to get hold of, for one thing. I can remember the first time I walked into a bank to get a Mondex card. I wandered in with 50 quid and had expected to wander out with a card with 50 quid loaded onto it but it didn’t work like that. I had to set up an account and fill out some forms and then wait for the card to be posted to me. Most people couldn’t be bothered to do any of this so ultimately only around 14,000 cards were issued.

So, why I am wallowing in this nostalgia again? Why do I think more people should be celebrating the Mondex Silver Jubilee? Well, look East, where the first reports have appeared concerning the Digital Currency/Electronic Payment (DC/EP) system being tested in four cities: Shenzen, Chengdu, Suzhou and Xiong’an. DC/EP is the Chinese Central Bank Digital Currency (CBDC).

with the kind permission of Matthew Graham @mattysino

The implementation follows the trajectory that I talk about in my book The Currency Cold War, with the digital currency being delivered to customers via commercial banks. The Deputy Governor of the People’s Bank of China, Fan Yifei, recently gave an interview to Central Banking magazine in which he expanded on the “two tier” approach to central bank digital currency (CBDC). His main points were that this approach, in which the central bank controls the digital currency but it is the commercial banks that distribute it, is that is allow “more effective exploitation of existing business resources, human resources and technologies” and that “a two-tier model could also boost the public’s acceptance of a CBDC”.

He went on to say that the circulation of the digital Yuan should be “based on ‘loosely coupled account links’ so that transactional reliance on accounts could be significantly reduced”. What he means by this is that the currency can be transferred wallet-to-wallet without going through bank accounts. Why? Well, so that the electronic cash “could attain a similar function of currency to cash… The public could use it directly for various purchases, and it would prove conducive to the yuan’s circulation”. How will this work? Well, you could have the central bank provide commercial banks with some sort of cryptographic doodah that would allow them to swap electronic money for digital currency under the control of the central bank. Wait a moment, that reminds me of something because… yep, that’s how Mondex worked.

MONDEX wallet

That was the big difference between Mondex and other electronic money schemes of the time, which was that Mondex would allow offline transfers, chip to chip, without bank (or central bank) intermediation. Offline person to person transfers. Just like cash. That’s huge. Libra can’t do it, and never will be able to because, like Bitcoin, it needs to be online to check for “double spending”.

Mondex was a window into the future of money.

That’s why this week’s special webinar is a Mondex reunion! Tim Jones, one of the co-inventors and Mondex CEO, will be joining with Debbie Gamble who was head of Mondex North America. On our side, our CEO, Neil McEvoy (who led the Mondex specification and implementation team) and Tim Richards (who designed the underlying portable, secure operating system), will join Tim and Debbie to reminisce and have a bit of fun, but much more importantly, to talk about the lessons learned from that incredible experiment, and to share ideas for the coming generation of digital currency innovators. And there may be one or two special guests…

Those who cannot learn from history are doomed to repeat it!

The Machine Stops – Predictions & Reflections on Technology Strategy

Predictions from 1909

This essay is about a work of science-fiction, of which many features have come to pass. I re-read it this week, as it seemed that even more might be, and not necessarily to our advantage, in the world of Covid-19, and I wanted to confirm or deny my memory. In any case, science-fiction is a great background for technology strategising, helping to get beyond limited thinking based on incrementalism.

I took my English Literature ’O’ Level in 1974 and three works from the syllabus have stayed with me since: Macbeth, Lord of the Flies (which I had read a couple of years earlier) and one that no-one’s ever heard of: a science-fiction short story, The Machine Stops, by E.M Forster. That’s right, E.M. Forster, better known for acute observation of middle-class Edwardian manners (A Passage to India, A Room with a View, Howard’s End…). Apparently, he wrote it to demonstrate how easy it was to generate science-fiction akin to H.G. Wells. Indeed, it bears a certain resemblance to The Time Machine, except for an inversion: in Forster’s dystopian far-future, the effete leisured class live underground, while the rough outlaws live on the surface.

Forster’s ‘civilised’ tribe live in a world of pure ideas, only loosely connected, if at all, with sensory perception. I think what I found shocking was the protagonist flying over the Himalayas, glancing out and immediately shutting the blind, with the dismissive thought “no ideas here”. Having shuttled back and forth between England, Australia and America for much of my life until then, at a time when few did, I was appalled. I used to strain to remain awake, whenever it was even half-light, in order to take in everything, and speculate (and later research) on the physical make-up of the land and the people it supported. In fact, I still do!

Air travel was by fleets of airships, so Forster backed the wrong aeronautical horse, so to speak. Although, he explicitly stated that civilisation had given up the dream of beating the sun in Westward travel, as we have, having attained it in a limited fashion with Concorde, for not quite three decades. For the same reason, partly: the availability of real-time electronic communication.

The civilised world is run by ‘the Machine’; a kind of internet, with mechanical appendages; imagine the Internet of Things is an established reality. FaceTime has been invented, and so has Zoom: people’s time is mostly spent in isolation in their identical cells, giving or receiving webinars, on abstruse but useless topics. Alexa will pick up on any expression of discomfort and diagnostic kit and treatments will be lowered from the ceiling, in the manner of oxygen masks in planes. People never travel to things, but things to people, as if by Amazon. “And of course she had studied the civilization that had immediately preceded her own — the civilization that had mistaken the functions of the system, and had used it for bringing people to things, instead of for bringing things to people. Those funny old days, when men went for change of air instead of changing the air in their rooms!”. Not all predictions were correct in 2020; Google was just a big book, which everyone had, principally as a manual for getting the machine to satisfy all reasonable wants.

The natural atmosphere was supposed to be not capable of supporting human life and a respirator was needed at all times, in the unusual event that anyone had—how shall we say—a reasonable excuse to leave the home. I re-read the story partly to determine why that was, imagining disease. Actually, the supposition was either false or greatly exaggerated; what was the case was that the atmosphere stimulated the senses in a way that overwhelmed those used, and possibly adapted, to the sterile air produced by the machine. Notwithstanding the lack of a pandemic, it was certainly the case that humans physically repelled each other and social distancing was the norm.

The denouement has an increasing level of seemingly random and, at first, minor breakdowns in the operation of the machine. In my mind, these were because the machine’s designers could not anticipate all changes in its external environment.

There is, however, a ‘mending apparatus’ which automatically patches the machine. But when that starts to malfunction… The moral is that society should not, by becoming completely dependent on its own creations, become detached from understanding the nuts and bolts of technology. That is something your favourite consultants will never do!

Back to the story. It is clear that the Chinese had taken over the world at some earlier time. Perhaps when, as now, they concerned themselves with acquiring and applying the whole gamut of technical skills.


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