My previous article in which I highlighted my concerns about the Crypto Currencies and Ripple has naturally irritated many Crypto fans.
I thank one of the comments from Netizen Thes made on this blog which I would like to answer this point by point. (Comments of Thes in italics)
... Instead of complaining about Ripple, maybe you should encourage banks to innovate and give customers more value.
I agree with Thes that “innovation” is a constant process of any service and Bankers need to keep on increasing the value of their service through innovation.
I have been supporting “Innovation” to strengthen the services while at the same time being in the forefront of urging Bankers to be “Responsible” and “True to their responsibility to the society” while delivering their services. In the process I have been a pioneer in holding Banks liable for negligence in case of Banking frauds. In one of the cases, the Tribunal adjudged that “lack of security is passive assistance to a fraudster”.
I consider that “Security” of funds entrusted by a customer to the Bank is a major part of the contractual obligation of a Bank and any innovation cannot be reckless and an experimentation on the security of the customer’s money.
Innovation can be “Disruptive” but not “Destructive”. “Innovation” has a place in a “Sandbox” until it is proved that it is safe to be used in a customer live environment. Customers of a Bank or citizens of a society cannot be the Guinea pigs on which Banks can build their profits.
Some of the innovations in Banking including the “Cryptos” as suggested, indicate that there is no understanding of the role of Banking in the economy. It is as if these “innovators” are treating Business of Banking as a Computer Game where you can afford to die many times only to abort the game and re-start. In the real world there is only one loss of life and there are no cheat codes to continue playing even after losing once.
Just because there is profit for the technologists, if we push reckless innovation, it should be considered as irresponsible and selfish.
….For years, traditional banks have taken advantage of customers by charging high fees for services such as loan management, and extremely high fees for international remittance
Need for improvement is not a justification for extermination of the Banking system. Exploitation of services and increase in price of commodities and services is a natural process of development and even Bankers are increasing their costs. We all justified technology as a means of better efficiency and lower cost. But with increased use of technology, Banking cost has inly increased and frauds are more disastrous. The “Innovators” have there fore failed the system and are also responsible for the increased cost. Today’s Bankers are Technologists and hence it is unfair to blame the Bankers for increased cost. Perhaps we need to blame it on the Technology providers for increasing the cost of Banking or accept it as part of the development process. If a Pizza 10 years back used to cost a fraction of what it costs today, we cannot only blame the Pizza makers for the increase in the cost and destroy all of them.
….Also, traditional banks have been hugely involved in money laundering. This is almost impossible with companies like Ripple since the blockchain is immutable, secure and transparent.
While honest and dishonest persons can be found everywhere including within the Ripple like system (Please treat this as a reference to the system and not a single company or the executives of a company), we are only discussing the system here and not individuals. If money laundering is possible in traditional Banking, it is the essence of the Crypto innovators and the system of exchanges based on the premise of “Decentralization” and delinking of traditional Bankers and Central Bankers..
The reliance placed on Blockchain to prevent money laundering is not realistic. Any blockchain, public or private or permissive, is as trustworthy as the participants. While in a Banking transaction there may be two authenticators supervised by a system, Blockchain may have more number of “Record keepers” and no “Authentication”. It can be more unreliable than the traditional system since there is no “Accountability” for authentication with a closely identifiable authenticators. Blockchain held in multiple copies may be immutable the same way as you may hold multiple back ups of your traditional data. Mere fact that more number of people are aware of a transaction does not necessarily make it more authentic. Transparency in block chain is a myth since “Privacy” is the basis of block chains systems maintained by private crypto currency issuers. I am not sure if Ripple is different.
….It is ridiculous to say “Crypto Currencies are the currency of the corrupt and corruption is all over our country”.
I disagree. Crypto Currencies are “Digital Black Money” and the most prominent use of Crypto is for Criminal activities. I accept that traditional money is also used for criminal activities and Cryptos can also be used for good activities but the essence of Cryptos is to remain outside the radar of law enforcement and this means that it is the preferred system of value exchange for the corrupt and the criminal. Even if we consider Bitcoins as “Assets” we can say that most of the assets in circulation have a tainted past having passed through the hands of a criminal. Since they are outside the regulatory radar, they are used for all criminal activities.
…You sound like you are trying hard to stop innovation so that traditional banks continue to operate freely taking advantage of their customers, or maybe you just not smart enough to know what you are talking about.
…..So because you do not have the ability to compete, you are pleading with people to destroy the innovation.
No. I only support innovation as long as it is not destructive. The CBDC is a concept of innovation which is not destructive. But CBDC cannot be a Bitcoin and hence Crypto fans would not accept it as innovation. You may also note that I was the pioneer to suggest Digital Value Imprinted Instrument system (DVIIS) as a replacement of many of the Banking instruments much before the modern day innovators came up with the idea of mobile payments and cryptos. My innovative suggestions have always tried to be “Cyber Law Compliant” and not meant as instruments for the criminals. DVIIS systems for which a patent application was pending in the USPTO when the twin towers were destroyed by the terrorists is being adopted today after 2 decades by the modern day innovators.
….Just like with the invention of the internet, there will be winners and losers,
Internet was a fundamental platform which could be adopted by all. Similarly, blockchain is a technology that can be adopted by all. I have no issue with such innovations which can be adopted by others and some will win and some will lose.
However, a specific service that runs on the acceptable innovative platform such as a Bitcoin or Ripple has a different impact. When Napster started the peer to peer service for sharing of music, I was in favour of the technology but traditional music companies shot it down. It was a service which was useful but if the society adopts IPR as an accepted principle, Napster had to yield space.
Similarly Blockchain as a technology is acceptable. But creating a network to destroy the fiat currencies or to destroy the sovereign Central banks needs to be looked at in a different perspective.
At one point of time there was only one Bitcoin. It was fun and appreciable innovation. Today Crypto currencies are in thousands. There are ICOs, NFTs, Tokenized virtual real estate and currencies of popular computer games and so on. The market capitalization of all these crypto assets not under any kind of governance by a sovereign Government is substantial and cannot be ignored.
If some innovators think that why should there be a system governed by a sovereign government, then they are advocating the Chaotic pre-historic world.
Today we may disagree with one sovereign government or the other, one leader over the other but the world is working under some order.
If we want to destroy this order and say that Government should not have control on the economic system, then such persons should not expect any other service from the Government including security of life and property.
When there is a crypto crime, the victim should not ask for the help of the law enforcement. When you want to buy a computing device, donot expect any Government to support the demand and supply or pricing or raw material supply. Donot expect the Government to mine silicon and give it to the chip makers. Let the innovative technologist develop his own organic method of developing the innovative technology.
I am sure the innovators would not like this. They want all the benefits of a civilized society and then enjoy the freedom not to contribute to the society by way of taxes or otherwise. This is hypocrisy of the highest order.
….My advice to you and your fellow banker friends is innovate and find ways to compete with companies that seem to be doing what you are doing better than you
My advice to all the “Destroy the traditional systems” is that you find a way of creating and living entirely in the Meta Society, eating Meta Food, using Meta Currency, enjoying the Meta Economic system. Have as much chaos as possible in your “Alternativelife.com” as long as you donot want a cross society interaction with the Physical society.
If you want to have the benefits of cross society interactions, earn in Bitcoins and pay for your Physical, eatable Pizza in Sterling Pounds or INR, then respect the existence of the physical society and avoid trying to destroy it for your selfish reasons.
We the inhabitants of the physical society have a right to demand that technology cannot be used to destroy us. Just as scientific inventions are welcome to create a nuclear energy source but not for making nuclear bombs, innovation in technology is welcome as long as it is supportive of life in physical society and not when it is used as a destructive force.
The Crypto Currencies and the Ripple network of exchanges outside the Central banks of different countries and mixing of Private Crypto Currencies and legit currencies is a monstrous suggestion which needs to be dismantled before it starts destroying the world.
Naavi
P.S: Kindly note that my comments above are against the system of Private Crypto Currencies and the system of global exchange system that bypasses the Central banks. It is not directed at any specific company. A reference to Ripple is made since it is the center of discussion now as a suggested alternative to SWIFT in some circles.
I am an Ex-Banker. My views are only of academic interest. Do Current Bankers and RBI have any views on the above? If so…Please share… If you remain quiet now, you will be pushed to the oblivion.
(Comments are welcome)
