Archive for month: February, 2020

Scotcoin - ARE we going cashless

ARE we going cashless?

There has been much talk of the UK going cashless, particularly because of the relentless drive of contactless. ATMs are reducing in number, especially as the banks in the UK now rake in £100 million a year in fees from the consumer. That machine that charges £1.99 to take out £20 is now a profit centre not a cost centre.

There is great gnashing of teeth about how certain sectors of society rely on cash and “don’t” do internet, and the closing of branches means some areas are slowly but surely being strangled in terms of that good old economic axiom, the Velocity of Money.

However, amidst all the “woke” trumpeting, a fact has been completely ignored.

Over the last 5 years, the amount of cash in circulation has risen by 24% to top £70 billion. Some of that is accounted for by inflation (perhaps 7% or so) but the rest is pure increase.

How and why?

People are making fewer trips to ATMs (not least because that £1.99 charge is a real disincentive) but are taking out larger sums. They are storing around the same amounts in the wallets in their pockets, but are very definitely sticking more under the mattress. This is confirmed by the lack of use of for example £2 coins, but the relentless rise in the number of £50 notes.

In Sweden a similar crisis of cash happened a couple of years ago when both IKEA and their equivalent of the NHS stopped taking cash – card only please. There was such an outcry that the government of the day enacted certain measures to ensure that cash would not disappear and would always be useable. We may have to do the same thing here (indeed, all countries may need to), but we have a very much larger cash circulation both absolutely and per head of population than Sweden, and indeed than most countries.

People have come to the realisation that cash is a good store of value. As of now, the interest you can earn on money in an account is so pathetic that you might just as well keep it in cash. The banks aren’t helping themselves here – Halifax recently dropped an account yielding 1.5% to 0.1% – and wondered why most of the deposits disappeared.

Crypto is helping people realise that stores of value are increasingly important. I’ve argued before that cryptocurrency should be viewed as another asset class and store of value. Yes flows of money are important, but the “sitting still” of money is equally so.

So let’s hear it for cash – “The Cash is dead, Long live the Cash”

BBC news

A timeline for Blockchain Development

BBC business had an article recently : “Blockchain: the revolution that hasn’t quite happened.”

The first thing about it is the timeline for blockchain as we know it and Bitcoin itself has only been around for ten years. In financial terms that’s nothing.

I have to say I think that sounds a bit smug and arrogant.

I like to start the talks I give now with a couple of questions to the audience.

A timeline for blockchain development

When was the first debit card issued?

And when was the first bank website put up? That’s website mind, not internet banking.

Questions Temple asks at blockchain presentations

A little history. Barclays was the first British bank to have adding machines in its branches. That was in 1914 – 106 years ago. It was 1961 before the first UK bank computer centre was set up – that was Barclays too. It took them thirteen years to set up two more centres and get every branch connected. THIRTEEN years more.

Barclaycard (first UK credit card) took until 1966 swiftly followed by the first cash machine in 1967. Thankfully, banks have been better at having women working for them and now something like 63% of all bank employees are women – a great result.

But think back to where this article started.  That cash machine is over 50 years ago. And my little questions took even Barclays another 20 years (first debit card 1987) and another 8 to get to the website (1995). So the first internet, digital, bank website was a mere 25 years ago.

So to say the blockchain revolution hasn’t happened after a mere ten years seems to me incredibly short sighted and rather smug.

There are thousands of teams across the world working on blockchain solutions for different problems and slowly but surely they are making progress. Large IT projects require massive input of time, money and manpower, and that is happening.

The corona virus outbreak shows just how fragile our world is

The corona virus outbreak shows just how fragile our world is

Quite apart from the disruption that has been caused, China has printed $170BILLION of extra cash to pump into the economy. There’s no guarantee that’s enough, and in fact it’s unlikely to be. In 2008, the US Treasury printed $600 billion, and that wasn’t enough to prevent widespread bankruptcies and zombie companies. The IMF only has about $3-4 triilion available to it and the dollar derivatives and swaps are now around $18 trillion, so a real disruption (people asking for their USD back) would have a catastrophic effect on the world economy. Far from reducing reliance on dollars, the crash enhanced and strengthened its hegemony.

So – at the risk of stating the obvious – there needs to be something else that can be used if dollars start to become unavailable. I’m not for a moment suggesting that cryptos – with a current value UNDER $300 MILLION – will replace it, but if your bank started not honouring your bank card, you just might like to have some cryptos available to buy that pint of milk.

Twenty years from now

Twenty years from now you will be more disappointed by the things that you didn’t do

I’ve had a number of interesting meetings with random people over the last couple of weeks. They were all related to different business aspects, but the one thing that came across quite clearly was the growing realisation that blockchain – and by extension, cryptocurrency – was going to be THE future.

At least two of the people I was talking to had had virtually no knowledge of blockchain until very recently, and one of them only started to look at it when I arranged to meet him a couple of days ago. If anything he was the most evangelical about it.

One of the most important aspects is how people are perceiving digital currency. I have already argued that it is now another asset class alongside stocks and shares, art, fine wine, bonds, gold, commodities and so on, and this idea is already taking hold. I had a very interesting conversation with a Polish lady who had never even heard of blockchain, but knew of Bitcoin. As soon as I explained about the asset class ( ok maybe you should only have 1% of your wealth in it) she rushed off to talk to her business manager, and splurged on a basket of cryptos. I’m not sure she has all the right ones, but hey, that’s her business. As an aside she’s already made money on them.

It remains true that if you had that 1% just in Bitcoin 5 years ago, your total portfolio would have out-performed nearly all others. Far be it from me to say it but if you had included Scotcoin in that same portfolio, you would have outperformed ALL others.

The countries, ecosystems and companies that embrace the possibilities of blockchain and crypto now are those that will inherit the future.

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover.”

It is a misconception that Mark Twain said that (along with lots of other things he said)

Mark Twain did NOT say that.

The quote belongs to H. Jackson Brown’s mother. See page 13 in Brown’s 1991 book: P.S. I Love You: When Mom Wrote, She Always Saved the Best for Last.

But Twain DID say “Denial is not just a river in Egypt”

Have a great future.