DJ Monday Afternoon



An inquiry from one of our readers to help try and explain some of the new financial tools and services, has come in. First off, they refer to an Intel source as “Goldilocks” where a large amount of this info is coming from. I am unfamiliar with Intel source or its content. But there is a term in the business world called “The Goldilocks Effect—or the Goldilocks Principle” Which is the premise that people are inclined to seek “just the right amount” of something.


In reference to various new financial tools and services and how will they be utilized? It can be best understood by looking at the fundamentals of finance. Which ultimately we are talking about currencies. All financial instruments are tied to some form of currency. Any currency is defined as “a system of money in general use in a particular country”.


Currencies make up a small amount of the overall money supply, much of which exists as credit money or electronic entries in financial ledgers. While currently currency values are based on supply and demand, future systems of value will be controlled by specific algorithms, literally by the second.


Certain things have to occur for a given currency to work. First the public has to have faith in the currency and by proxy, the issuer of the currency. This in turn creates “velocity” (or the rate at which consumers and businesses in an economy collectively spend money).


Then you have to analyze how money (or other financial instruments) is moved or its delivery systems. Delivery systems take various forms. Credit or debit cards are a delivery system. Interbank and cross- border transfers require a delivery system. SWIFT, PayPal, CIPS, Money-gram and many many others worldwide are all delivery systems. The delivery systems that have plagued the world for decades are all corruptible. Access to whatever system is being used allows the “accessor” to manipulate the outcome of the transaction. The new systems will utilize “quantum encryption”. Without getting into an explanation of quantum entanglement , basically a quantum encrypted message, if interrupted, will dissolve the message. Making it non corruptible.


The question of “cryptos” is brought up. “Are cryptos going to be necessary initially then go away?” There is a distinction between “ Crypto currency” and digital currency. Technically crypto is not a currency. The functional definition of digital currency means you can hold traditional currency in physical or digital form depending on how you store it. Dollars, pounds and euros can exist as digital currencies when they’re held and moved online. Cryptocurrency is purely virtual currency, meaning that it has no official physical asset that is recorded and stored on a blockchain database. When you own a cryptocurrency, you literally own an entry in a database. Profit or loss occurs when the entry is sold, or passed, to a new owner.


With the adaptation of these new financial tools and services we will see various new revenue creating streams for the banking industry. We are already seeing it. Instead of banks making their money off a variety of interest bearing instruments they are charging fixed fees for services and particular customized accounts. In reality we are already a digital world, now we just have to put our hands up and admit it. There will always be a need for physical currency in some amount. It won’t completely go away. Point of sale transactions or emergency situations will require physical currency.


For the past 20 years we have seen the slow but methodical transition to digital processes. The new systems are the natural metamorphoses needed to accommodate these processes to make them acceptable by the public, safe and secure.