Typography

In many parts of the world, cash held in ATMs or in cash-in-transit vehicles is protected by so-called intelligent banknote neutralization technology . When a thief tries to force the ATM open, plastic packs filled with dye explode, spraying both the thief and the banknotes. These notes have now been demarcated as stolen. A shopkeeper may refuse to accept marked notes or may only accept them at a large discount to their face value. At this point, cash has ceased to be fungible. One banknote is not a perfect substitute for another. The dye used in banknote neutralization is often mixed with a taggant , a chemical marker that contains a unique combination of elements chosen from thirty or so rare earth metals. This ensures that a given block of cash is protected by a one-of-its-kind dye pack. So if the authorities apprehend the ink-stained thief with the marked cash, they can actually trace the stuff back to its original owner and return it. This incentivizes any would-be ATM thief to th...

The eyes of the world are on one of history's largest cash withdrawals ever. Earlier this week, the Central Bank of Iran ordered its European banker, Hamburg-based Europaeisch-Iranische Handelsbank AG , to process a €300 million cash withdrawal. Germany's central bank, the Bundesbank, is being asked to provide the notes. If the transaction is approved, these euros will be counted up, stacked, and sent via plane back to Iran. German authorities are still reviewing the details of the request. Iran claims that it needs the cash for Iranian citizens who require banknotes while travelling abroad, given their inability to use credit cards, says  Bild . Not surprisingly, U.S. authorities  are dead set against  the €300 million cash transfer and are lobbying German lawmakers to put a stop to it. They claim the funds will be used to fund terrorism. The picture below illustrates $1 billion in U.S. dollars, so you can imagine that €300 million in euro 100 notes would be about a third of t...

Archaic and ignored monetary technologies can be very interesting, especially when they teach us about newer attempts to update our monetary system. I recently stumbled on a neat monetary innovation from the bimetallic debate of the late 1800s, Nicholas Veeder's Republic of Eutopia coin: During the bimetallic debates of the late 1800s, one of the more interesting compromises put forward was Nicolas Veeder's cometallic standard. His model 'Republic of Eutopia' coins (1866) had a plug with 12.9 grains of gold and ring with 206¼ grains of silver. A good idea or no? pic.twitter.com/6eZN2YAq6o — JP Koning (@jp_koning) May 28, 2018 If you've read this blog for a while, you'll know that I like to talk about monetary technology. Unlike financial technology, monetary tech involves a technological or sociological upgrade to the monetary system itself. And since we are all unavoidably users of the monetary system—we all think and calculate in terms of our nations unit of ...

Network view of cross-border banking, IMF, Minoiu and Reyes (2011)  PDF I recently blogged at Bullionstar on the topic of the upcoming Iranian monetary blockade. Many years ago when I was taking a political science class at university, I remember the professor teaching us two criticisms of sanctions. The first is that they don't really work—people can always get around them. And secondly, even if they are so tight that they can't be evaded, sanctions don't change the behaviour of the party being sanctioned. The Iranian monetary blockade that ran from 2010-2015 seemed to contradict both of these claims. The sanctions were very difficult to evade. And they forced Iran to come to the bargaining table and agree to end their nuclear program in exchange for economic relief. According to the International Atomic Energy Agency, Iran has complied with its promise. The Trump administration has announced that it is reneging on the nuclear deal and re-imposing sanctions in order to f...

Charles Ponzi Ethereum is being used as a platform for a bunch of ponzi schemes. Is this an indictment of the system; or is it a sign that it is generally working? For those who aren't familiar with it, Ethereum is often described as a distributed computer. A network of independent and anonymous nodes keep the system running, and on top of it developers can write smart contracts and distributed apps, known as Dapps. If you go to dappRadar , you can see what sort of apps are currently active on Ethereum. There are casino apps, including vDice, Etheroll, EOSbet. There are a bunch of distributed cryptocurrency exchanges, like IDEX and ForkDelta. And a whole range of games, the most famous of which is probably CryptoKitties. There are also a collection of ponzis and pyramids. At the time of writing, PoWH 3D was the largest with around 4,500 ETH committed ($2.3 million). There is a gang of other smaller copycat ponzis including EthPhoenix, Proof of Community, Gandhigi, POWM, Proof of Fa...

Ken Rogoff has famously called for a ban on high denomination banknotes in order to help combat tax evasion and hurt criminals. But rather than banning notes, why not implement a market-based approach such as a tax? Among other advantages, a tax leaves people with flexibility to determine the cheapest way to reduce their usage of the targeted commodity. This is how society is choosing to reduce green house gas emissions. So why not go the tax route for banknotes too? My recent post for the Sound Money Project on pricing financial anonymity delves into this idea. The anonymity provided by banknotes is both a "good" and a "bad". People have a legitimate demand for financial alone time ; a safe zone where neither their friends, family, government, nor any other third-party can watch what they are buying or selling. These days, cash is pretty much the only way to get this alone time. But cash's lack of a paper trail can be abused when it used to evade taxes. The r...

Mavrodi "biletov" In this post I'm going to outline a case for bitcoin. I still think bitcoin is a bad medium of exchange and a rubbish store of value . It's just too volatile and unhinged, and it'll always be that way. But bitcoin still has an important role to play... just not the role that most people assume. Sara Hess and Eugene Soltas recently published a fascinating article on the life of Russian ponzi-scheme architect Sergei Mavrodi, who passed away last month. I found it interesting that in the latter part of his career, Mavrodi openly advertised that his schemes were pyramids, yet people still bought in. Ponzi-schemer Sergei Mavrodi clearly advertised MMM's risks and promised nothing in return, yet still people bought in. If he didn't trick people into joining, maybe society genuinely needed him to manage ponzis? https://t.co/5RAzDFvTgx pic.twitter.com/pUghQJQB00 — JP Koning (@jp_koning) April 26, 2018 This got me thinking. I've always sor...