Here's another scheme to create wealth, for the Mint--though they say
they don't yet know how---for government, by tracking all cash
transactions for taxation, and for hackers. Privacy issues aside,
successes in Iceland aside, shouldn't we stabilize the economy first,
make government and corporations accountable first, before committing to
more (possibly messy) technology in our lives?
I can appreciate that issuance of metals and paper add to harmful
environmental impact and bring associated costs, but if such a system
were to get hacked in a major way, the entire country could be devastated.
Pro's and con's?
Natalia
http://www.thestar.com/business/article/1159513--royal-canadian-mint-to-create-digital-currency?bn=1
Emily Jackson Staff Reporter
The Royal Canadian Mint wants to get rid of pocket change --- and it's
enlisting hacker-types for help.
Less than a week after the government announced the penny's
<http://www.thestar.com/news/canada/politics/article/1153779--federal-budget-2012-pennies-to-be-withdrawn-from-circulation>
impending death, the Mint quietly unveiled its digital currency called
MintChip.
Still in the research and development phase, MintChip will ultimately
let people pay each other directly using smartphones, USB sticks,
computers, tablets and clouds. The digital currency will be anonymous
and good for small transactions --- just like cash, the Mint says.
To make sure its technology meets the gold standard in a world where
digital transactions are gaining steam, the Mint is holding a contest
<http://mintchipchallenge.com/> for software developers to create
applications using the MintChip.
The old-fashioned prize? Solid gold wafers and coins worth about $50,000.
It's such an unusual move from the crown corporation, which has been in
the coin-making business for more than 100 years, that Hacker News
<http://news.ycombinator.com/x?fnid=xLehDc5saU> questioned whether it
was an "elaborate hoax."
It's not, the Mint's chief financial officer Marc Brûlé said Tuesday.
Commerce is changing and the Mint has always been innovative, Brûlé
said. (For instance, it did an initial public offering of exchange
traded receipts of its gold holdings last year.)
"There's been a very huge growing digital economy that is really going
to be fueled by smartphones and mobile being the next big thing," he said.
Despite the variety of payment options, he said there are "still no cost
effective electronic solutions" for low value transactions that can be
used regardless of a person's age or credit standing.
MintChip
<http://www.youtube.com/watch?feature=player_embedded&v=9PX-vW4VccY>, a
secure microchip, will be able to do this by letting people transfer
small amounts of money (for an iTunes song or a newspaper) with no
personal information attached to it, he said.
The Mint's move into the digital market is a reflection the competitive
payments industry, Interac spokeswoman Caroline Hubberstey said.
Despite a December 2011 government report
<http://paymentsystemreview.ca/wp-content/themes/psr-esp-hub/documents/rf_eng.pdf>
claiming Canada's payments system is "outdated" and "has simply not
evolved," Hubberstey said it the industry is "highly competitive and
rapidly changing."
Interac pegs the value of small cash and coin transactions (under $20)
at $90 billion, and companies big and small want a share of that market
as it turns digital, Hubberstey said.
"Players you wouldn't have thought of before" are looking for ways to
get into the market of secure transactions, she said.
"You're seeing competitors that have been in the space in a while and
new competitors looking at the payments market as an opportunity."
The payments industry's last major shake happened in the mid-90s when
debit card use took off. As more smartphones adopt Near Field
Communication (NFC) technology, which lets users hover their phones over
NFC-enabled devices to make payments, mobile payments are expected to soar.
Interac, Mastercard and Visa already have contactless cards that use
near field communication (NFC) chips for small payments at gas stations
and grocery stores.
PayPal, Google and Visa have introduced digital wallets where consumers
control all their cashless payments from one place. Companies Square and
Payfirma let people accept credit card payments on their smartphones.
The difference with MintChip is it doesn't plan to link to a person's
bank account or credit card information. And unlike BitCoin, a
peer-to-peer hosted digital currency with a fluctuating value, MintChip
is simply a new way to exchange Canadian dollars. Plus, it's backed by
the Canadian government.
It's still too early for specifics such as how the Mint will make a
profit from this, how it will prevent hackers from stealing cash,
whether the money is anyway traceable or who exactly will load a chip
with money, but Brûlé said the response to the contest has been tremendous.
Developers may have been skeptical about MintChip, but the 500 contest
spots were filled in just four days.
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