stories filed under: "currency"
DailyDirt: Spare Some Change?
from the urls-we-dig-up dept
There have been proposals to stop minting the US penny for decades, but the little copper-colored coins are simply too beloved to remove from circulation. Rounding to the nearest nickel also probably rubs people the wrong way, but it seems like Canadians are going to find out how that works. Here are just a few other interesting articles on coins.- Recently, Canada has killed its penny -- which cost more to mint than it was actually worth. In the US, it costs more to mint both pennies AND nickels, but it doesn't look like we're going to stop making them. [url]
- It's been difficult to get Americans to use dollar coins over paper bills. Dollar coins last longer and are cheaper to produce in the long run, but the Fed has just accumulated a collection of about 1.4 billion unused dollar coins that it's just storing in a vault. [url]
- Canada currently mints a $100,000 gold coin that weighs 10kg, but that's nothing compared to the proposal that the US treasury could mint a trillion dollar coin. A coin worth a trillion bucks was a crazy idea for solving the US debt crisis last year because there's no statutory limit on the amount of coinage the Fed can produce (while there is a limit on paper currency). [url]
- To discover more stuff on economics, check out what's currently floating around the StumbleUpon universe. [url]
Filed Under: canada, coins, currency, gold coin, money, nickel, penny
If You Want To Compete With Free, This Is What You Need To Know
from the not-just-cash-money dept
When it comes to competing with piracy, one of the talking points of copyright maximalists is that content creators "can't compete with free." These people complain that because pirates don't have to cover production costs, competing with them is a losing venture. What these people have not learned, despite our many attempts to teach them, is that price is not the only cost considered when consumers choose between buying legally and pirating. Over at Gamasutra, one expert blogger, Lars Doucet, has shared a very profound look at four "currencies" people consider when making such a choice.The problem with most piracy debates is that the only "cost" they discuss is money-dollars.Lars explains what these are as follows:
This is wrong because there are at least four currencies involved here, not just one (money-dollars).
I propose the following:
- ($M) Money-dollars
- ($T) Time-dollars
- ($P) Pain-in-the-butt-dollars
- ($I) Integrity-dollars
For the purpose of this article Money-dollars will be denominated in USD, Time-dollars will be denominated in hours, and Pain-in-the-butt-dollars will be denominated in SI standard units of "amount-of-aspirin-I-have-to-take-after-beating-my-head-against-the-wall-for-an-hour." Feel free to measure Integrity-dollars in Hail-Marys, or hours spent lying awake at night.Using these new variables in the consumer decision-making process, we can see quite clearly that even though the pirates have content creators beaten on the money-dollars aspect, there are still three other currencies through which content creators can compete. So let's take a look at these other currencies and see exactly how content creators can leverage them.
First, we have Time-dollars. This is how long it takes the consumer to get from deciding he wants the product to enjoying it. Any road block in this process increases this cost. So the goal as a content creator is to reduce that time. The easiest way to reduce the time cost is to take your content to the consumer. The internet is an amazing tool to do just that. People spend a lot of time online and use a variety of tools on it. For movie and television, people are spending their time on Netflix, Hulu and Youtube. For music, they are spending their time on Pandora, Spotify and Grooveshark. For games they spend their time on Steam, Kongregate and Impulse. These and many other places online are where the customers are. If the content is not there, they have to spend time looking for it elsewhere, thus driving up the cost in Time-dollars. If they can't find the content they want quickly and legally, they will be more inclined to find it quickly and illegally.
Next, we have Pain-in-the-butt-dollars. This is how hard it is to get from wanting the content to enjoying the content. When most content creators attempt to compete with pirates, they often choose to battle through this currency. This is where laws like the DMCA and SOPA come in. These laws are conceived as a way to increase the $P cost of piracy. Unfortunately, by creating these laws, the $P cost of legal content has also risen. With the DMCA came the anti-circumvention clause, which prevents owners of legal content from bypassing DRM which increases the $P cost of content. We have learned repeatedly over the years that the $P cost of DRM is often far too high for legal customers and pirates have been able to bypass it, thus dropping the $P cost of the illegal offerings. If content creators truly want to compete through the $P cost, then they need to offer convenience for their paying customers. The more barriers put between the paying customer and the content, the less likely they will value the legal offering.
Finally, we have Integrity-dollars. This cost is probably the most ethereal of the four. This is based on how the consumer feels when either buying the content or pirating it. If content creators want to compete through this currency, then they need to learn how to be more human and open with fans. If the consumers would rather support pirates than the content creators themselves, then those content creators certainly have a $I cost problem. Along with being the most ethereal of the four currencies, this is also one of the easiest to be swayed by the costs in the other three currencies. For example, if the fans like a content creator, but they feel he charges too much and it takes too long to get the content legally, the $I cost of the content has just gone up. Even worse, if the content creator lashes out at fans and treats fans as criminals, the $I cost of the authorized content goes way, way up, because people don't want to support the artist.
While this is definitely not an exhaustive look at the currencies used by consumers when making their purchase decisions, it is one of the most spot on analyses of the topic. So when we ask content creators to compete with piracy, this is what we mean. To leverage the non-money currencies at their disposal. After all, the content creators are the ones who actually control these costs.
Filed Under: business models, compete with free, currency
DailyDirt: In Money, We Trust (Sometimes)
from the urls-we-dig-up dept
Money is an interesting concept. Government institutions create a supply of money and try to control the value of it within some acceptable ranges. But when the value of money goes out of control, the solutions for getting it stabilized seem a bit illogical. Still, if you can get enough people to switch their faith from one money to another, it seems to work. Here are a few more stories on the topic of money and currency.- It's intriguingly difficult for any country that currently uses the euro to try to stop using it and switch to some other form of currency. So difficult, in fact, there's a $400,000 prize for anyone who can figure out a process that would actually work and not create monetary chaos. [url]
- Some Brazilians are using locally-printed currencies instead of its national reais -- such as the capivari, which is just one of the 63 local kinds of money. The capivari is a printed bill (with a picture of a rodent on it!), equal in value to the reai, but retailers give customers discounts for using capivaris (making these local bills into fancy coupons, essentially). [url]
- Last year, the IMF's Dominique Strauss-Kahn proposed an alternative to the dollar in central banks' foreign currency reserves. A system of special drawing rights (SDRs) for central banks would be priced according to international trade instead of any single nation's currency. (It's not an entirely new idea, but it's never caught on.) [url]
- In Vietnam, there's a penalty for posting prices in dollars instead of the local currency. The local currency suffers from high inflation rates, so they might want to look into Brazil's monetary history for some lessons.... [url]
- To discover more stuff on economics, check out what's currently floating around the StumbleUpon universe. [url]
Filed Under: brazil, capivari, currency, dollar, dong, euro, money, real, sdrs, vietnam
Companies: imf
The Rise And Fall Of Bitcoin... But Is It Really Over Yet?
from the not-quite dept
Back in April, just as Bitcoin was starting to get some mainstream attention, I questioned its ability to succeed long term. Too much about it felt like a fad, and there seemed to be significant questions about it. However, over the next few months, as the price of Bitcoins rose quickly, and there was more and more interest in it, I wondered if perhaps my natural skepticism got the best of me. Of course, since then, the Bitcoin market has come way back down, and the concept has definitely lost a lot of its "shiny new thing" appeal.Wired is running a detailed article on "The Rise and Fall of Bitcoin," which is a worthwhile read. Of course, it seems to be premised on the idea that Bitcoin is more or less dead -- a fad that came and went. Indeed, my initial post on Bitcoin questioned whether it would just be a fad. I still think it's likely... but I'm wondering if the big flare up over the past few months might be good for Bitcoin in the long run. Lots of speculators came and went, and Bitcoin gets to be ignored once more. Might that create a space to allow for a more sustainable ecosystem to be built, while the speculators and swindlers have moved on? Maybe. I'm still thinking that Bitcoin is most likely a fad that will die out. But sometimes a big flame out early on is a good way to obscure work that comes out of the ashes.
If I had to guess (and it's purely a guess), I'd say that the real legacy of Bitcoin may be in how it paved a path. The more interesting area to watch might not be what happens to Bitcoin specifically, but what the next attempt at such a currency brings around. There are lots of smart people looking at what happened to Bitcoin, and someone's going to come up with a better mousetrap.
New UK Banknote Celebrates James Watt, Patent Bully and Monopolist
from the litigation-is-easier-than-innovation dept
As do many nations, England likes to put images of its great and good on banknotes. In a somewhat quixotic attempt to stem the decline of what little manufacturing remains in the country, the governor of the Bank of England has come up with the following idea:Sir Mervyn King, the governor of the Bank of England, has often voiced his yearning for a "rebalancing" of the economy towards neglected manufacturing, and he will put the nation's money where his mouth is next month when the Bank produces a new £50 note celebrating two pioneers of the industrial revolution.Here's the orthodoxy regarding Watt and Boulton's contribution to innovation and the industrial revolution, as retold by the Guardian piece about the new banknotes:
The Bank will evoke the memory of the inventor James Watt and his Birmingham business partner, Matthew Boulton on the new note.
[Boulton] later went into partnership with James Watt, who took the Newcomen steam engine, then the latest design, and made a series of crucial improvements, improving its efficiency and making it more commercial.What's missing from this rosy picture of jolly engineers and entrepreneurs working together to apply technology for the benefit of humanity is that Watt was one of the first to exploit the monopoly power of patents to stymie innovation by others:
By 1800, Watt's version [of the Newcomen steam engine] was outselling its predecessor, and they were shipping it across the world. Boulton and Watt worked together to pioneer the use of the steam engine in the cotton spinning industry; and Boulton also used Watt's engine to power minting machines, pressing coins at his Soho Mint in Birmingham, to boost the supply provided by the Royal Mint.
Once Watt's patents were secured and production started, a substantial portion of his energy was devoted to fending off rival inventors. In 1782, Watt secured an additional patent, made "necessary in consequence of ... having been so unfairly anticipated, by [Matthew] Wasborough in the crank motion". More dramatically, in the 1790s, when the superior Hornblower engine was put into production, Boulton and Watt went after him with the full force of the legal system.So rather than representing all that is best about invention and industrial innovation, the story of Watt and Boulton turns out to be one of how the nascent patent system was abused to prevent progress in this field. Indeed, it offers one of the best demonstrations that patents often harm everyone – even patent-holders:
During the period of Watt's patents the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt's patent; while between 1810 and 1835 it is estimated to have increased by a factor of five.
After the expiration of Watt's patents, not only was there an explosion in the production and efficiency of engines, but steam power came into its own as the driving force of the Industrial Revolution. Over a thirty year period steam engines were modified and improved as crucial innovations such as the steam train, the steamboat and the steam jenny came into wide usage. The key innovation was the high-pressure steam engine — development of which had been blocked by Watt's strategic use of his patent. Many new improvements to the steam engine, such as those of William Bull, Richard Trevithick, and Arthur Woolf, became available by 1804: although developed earlier these innovations were kept idle until the Boulton and Watt patent expired.
Ironically, not only did Watt use the patent system as a legal cudgel with which to smash competition, but his own efforts at developing a superior steam engine were hindered by the very same patent system he used to keep competitors at bay. An important limitation of the original Newcomen engine was its inability to deliver a steady rotary motion. The most convenient solution, involving the combined use of the crank and a flywheel, relied on a method patented by James Pickard, which prevented Watt from using it. Watt also made various attempts at efficiently transforming reciprocating into rotary motion, reaching, apparently, the same solution as Pickard. But the existence of a patent forced him to contrive an alternative less-efficient mechanical device, the "sun and planet" gear. It was only in 1794, after the expiration of Pickard's patent that Boulton and Watt adopted the economically and technically superior crank.As such, Watt and Boulton's appearance on the new £50 banknote is not so much a celebration of engineering excellence, as a timely reminder of the harm that patents and their thickets continue to wreak on true innovators today.
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Filed Under: currency, history, james watt, patents, steam engine, uk
New Yorker Reporter May Have Uncovered Secretive Bitcoin Creator
from the in-the-clear dept
There's been plenty of press attention on Bitcoin over the last six to eight months, and many talk about how Bitcoin came about in a rather secretive manner by someone going by the name "Satoshi Nakamoto," who then basically disappeared. No one seems to know who Nakamoto is. However, in a new New Yorker article (mostly hidden behind a paywall), reporter Joshua Davis may have tracked down Nakamoto. While the New Yorker is going to lose traffic and interest in this story by not putting it online, it's opened up the opportunity for others, such as the folks at Planet Money, who have the key details: including the belief that "Nakamoto" is likely a guy named Michael Clear.So Davis, the author of the New Yorker story, emails Clear.The other key point is that Clear points out a weakness in the Bitcoin code: encryption for wallets. When Planet Money's Jacob Goldstein asks another Bitcoin expert about what's new in Bitcoin, the guy points out that the latest version... has wallet encryption."I like to keep a low profile," Clear replies. "I'm curious to know how you found me."
Davis eventually cuts to the chase:
Finally, I asked, "Are you Satoshi?"
He laughed, but didn't respond. There was an awkward silence.
"If you like, I'd be happy to review the design for you," he offered instead. "I could let you know what I think."
"Sure," I said hesitantly. "Do you need me to send you a link to the code?"
"I think I can find it," he said.
In the end, Clear says he's not the guy — but his denial leaves the door open just a crack:
"I'm not Satoshi," Clear said. "But even if I was I wouldn't tell you."
Filed Under: bitcoin, currency, michael clear, satoshi nakamoto
South Pacific Island To Use Star Wars Coins As Currency? Or Just As A Publicity Stunt?
from the does-george-lucas-get-a-cut? dept
The islands of the South Pacific have some odd views on currency. In the past, we've discussed how the Island of Yap famously used massive immovable stones as its currency. And now the island of Niue is prepared to recognize collectible Star Wars coins as official currency. Of course, the whole thing seems more like a publicity stunt by the New Zealand Mint, which is making these coins. They're still being sold at collectible prices -- meaning coins with a face value of $1 (New Zealand) will actually sell for $23.50 NZ. So even as they'll be recognized as legal currency in Niue (but not New Zealand), it seems unlikely that anyone will use them as such, as their face value will be significantly below their market value.Filed Under: currency, new zealand, niue, star wars
Can Bitcoin Really Succeed Long Term?
from the questions-to-ponder dept
For quite some time, I've been interested in the general concept of currencies and how money works in general. I remember an early episode of NPR's Planet Money podcast, in which they tried to answer the simple question: what is money? They quickly discovered it's not an easy question to answer (and, in fact, those working on the podcast have revisited the question many times in many interesting ways -- including a fascinating episode a few months back looking at the Island of Stone Money. That episode discussed the island of Yap in the South Pacific, that for many years used massive limestone discs as money. And, by massive, I mean sometimes weighing upwards of a ton. In other words, it didn't have one of the key features that many normally associate with "money," which is that it's a "currency of exchange." In theory, you can't easily "exchange" a giant rock.But the clever islanders on Yap came up with a solution. It was made clear who actually owned which stones, and then you could effectively transfer "title" to the stones, even if you didn't move the stones themselves. There was even the story of boat that was bringing in a new giant limestone disc (the limestone all came from another island), and due to a storm, the boat capsized and the stone sunk to the bottom of the ocean. However, it still counted as money, just so long as everyone knew whose it was. Now, when you hear that at first, it sounds ridiculous, but as the Planet Money folks pointed out, is it really all that different than your bank account? The only reason you have "money" in your bank account is because the bank marks it in its database. The bank isn't literally holding a stack of cash for you. In fact, as soon as you give it your money, it's probably handing it out to someone else.
All that brings me around to the question of Bitcoin. In various techie circles, there's been a fair amount of buzz about Bitcoin lately. Especially following efforts by other payment companies like Paypal and Mastercard to cut off contributions to Wikileaks, there's been a lot more interest in figuring out what infrastructure pieces in today's world should be more decentralized, and an obvious target is "money."
And that's where many point to Bitcoin. Jerry Brito has a nice writeup on Bitcoin about how it's a decentralized digital currency that is growing in popularity, and, in theory can resist attacks and problems of previous attempts at various digital currencies, while providing significant anonymity. Tim Lee quickly responded with skepticism about whether or not Bitcoin can really work, looking both at the demand side of the question and the supply side. I'm not sure Lee's specific arguments are entirely accurate, but I think his general arguments may be.
This doesn't mean Bitcoin (or something like it) can't be successful. It's just that it has an uphill battle. I think it's already useful in certain areas, but that's a big step away from getting to where it really needs to be to succeed in the long run -- and those steps can be much bigger than most people imagine. However, I could certainly envision scenarios that lead to rapid Bitcoin (or similar offering) adoption. I just wonder how sustainable it would really be vs. how much would just be a fad. In the end, I have to admit that I'm torn on this one. While I appreciate the concept of Bitcoin, and think that it might be nice if something like it was really popular, I do wonder if it really has the legs to reach such a level of success. One thing I do know for sure, however: I'd certainly like to hear the folks at Planet Money examine Bitcoin and how it plays into their sporadic explorations of money itself.
