The Uberization of Money

Of course it buys happiness
Of course it buys happiness…

I hadn’t considered this angle, but it seems as if this will be an interesting development in the near-future. As an aside, I had to go to my bank recently to get a check reissued, and needed to get my form letter notarized by a banker. The banker had to stamp the document, and then scribble a handwritten record of it in some ancient log book. I joked with the guy that this procedure probably hadn’t changed in 200 years, he smirked agreement. Amusingly, there was an advertisement on the banker’s desk touting their smartphone payment options. Yet the notarization process was slow, and analog.  Ripe for change, just like financial transactions. Have you ever looked at a mortgage document for instance? Pages and pages of crap that nobody reads, or comprehends. Anyway…

Over the next decade, the familiar 20th-century modes of banking and investing will give way to something very different. We are on the verge of the Uberization of finance, which will bring multiple new opportunities but also a range of new risks.

The ubiquitous ride-sharing company uses a simple device—the smartphone—to connect people who want rides with people who want to drive them. Uber is a high-tech middleman that is making the intermediaries of the past obsolete. The financial world is one of the most mediated industries on the planet, and that is precisely what is about to change. Uberization also means using vast amounts of data to make those connections feasible.…

Technology is one source of this shift, but so is legislation. The JOBS Act of 2012 contained a seemingly innocuous provision making it easier for startups to raise money from investors previously deemed too poor to dabble in such ventures. At the end of October, the Securities and Exchange Commission finally approved the rules, which will go into full effect early next year. As a result, any company or person with an idea can solicit and raise up to $1 million without most of the onerous regulatory and reporting requirements of the past.

So what lies ahead? Retail banking is the one area of the financial world that has undergone tremendous change over the past decade. Bank tellers are now scarce, and many consumers use smartphones for payments and deposits. It also has become much easier to trade shares online.

But core services such as lending money, raising capital and investing for clients still depend on a firm to act as a conduit—and as a choke point. With many promising startups already launched and with venture capital funding new ones every day, here’s a glimpse of what we can expect in the years ahead.

Loans to large companies are up over the past decade, but lending to small business has contracted, from more than $700 billion in 2008 to less than $600 billion today, according to the Small Business Administration. As for the Silicon Valley ecosystem of venture capital, it certainly doles out funds to dreamers, but it excludes many types of businesses, especially brick-and-mortar ones.

All of this explains why new funding ventures have received such a boost from the JOBS Act. Kickstarter is the most familiar, with Indiegogo close behind. These crowdfunding platforms let almost anyone announce an idea and solicit money for it, usually in chunks of $1,000 or less. No established venture-capital firm or large bank would dole out such small amounts. Their overhead alone, for due diligence and compliance, would mean steep losses on investments that size.

But the new crowdfunding sites remove those layers, and for now they have few of the regulatory burdens or scrutiny. It is the Wild West of fundraising. The most recent success was Oculus Rift, a maker of virtual reality headsets that raised $2.4 million on Kickstarter and then was bought by Facebook a little more than a year later for $2 billion.

The big hitch? A Kickstarter contribution is a donation. When people fund projects on the site, it is out of passion for the product, not any hope for a financial return.

The next wave of crowdfunding, through sites such as SeedInvest and Fundable, will offer equity ownership to those who throw money into the ring. This new model could upend the insular world of venture capital and business loans while at the same time providing new opportunities for small investors. As for a would-be innovator, if you can post an idea online, raise a million dollars for it and (most important) choose how much equity you want to part with at what valuation, why go through the gauntlet of a commercial loan application or make the rounds at the VC firms on Sand Hill Road?

The result is likely to be billions of dollars of new funding, which would spur lots of good ideas—and lots of bad ones, too. The prospect of unconventional new funding sources has already prompted comparisons to 1999, when millions of individual investors joined the IPO craze only to see their shares of become worthless. Such risks are very real, but either way, much more money will be in motion.

(click here to continue reading The Uberization of Money – WSJ.)

After Hour Deposits
After Hour Deposits

I better start polishing up our business plans so we can tap into some of this pending sweet, sweet funding…

Dollar Dollar Bill Y’all (Don’t Put It In Your Mouth)

Beer Money at the MCA
Filthy Lucre, Literally

In case you didn’t have enough to worry about – NYU researchers have confirmed what we long have suspected, namely that your money is in need of laundering, perhaps in a vat of bleach, or radiation, or whatever it is that kills pathogens like Staphylococcus aureus, Escherichia coli, Helicobacter pylori and Corynebacterium diphtheriae.…

In the first comprehensive study of the DNA on dollar bills, researchers at New York University’s Dirty Money Project found that currency is a medium of exchange for hundreds of different kinds of bacteria as bank notes pass from hand to hand.

By analyzing genetic material on $1 bills, the NYU researchers identified 3,000 types of bacteria in all—many times more than in previous studies that examined samples under a microscope. Even so, they could identify only about 20% of the non-human DNA they found because so many microorganisms haven’t yet been cataloged in genetic data banks.

Easily the most abundant species they found is one that causes acne. Others were linked to gastric ulcers, pneumonia, food poisoning and staph infections, the scientists said. Some carried genes responsible for antibiotic resistance.

“It was quite amazing to us,” said Jane Carlton, director of genome sequencing at NYU’s Center for Genomics and Systems Biology where the university-funded work was performed. “We actually found that microbes grow on money.”

The DNA was as diverse as New York. About half of it was human. The researchers found bacteria, viruses, fungi and plant pathogens. They saw extremely minute traces of anthrax and diphtheria. They identified DNA from horses and dogs—even a snippet or two of white rhino DNA.

“We had a lot of the spectrum of life represented on money,” said NYU genome researcher Julia Maritz, who did much of the DNA analysis.

(click here to continue reading Why You Shouldn’t Put Your Money Where Your Mouth Is –

Moto and the devouring of money
Don’t Eat Your Money

The research hasn’t been finished yet, nor published, I’ll be curious as to what else they find.

So far, Carlton and her colleagues have sequenced all the DNA found on about 40 dollar bills from a Manhattan bank. Their findings aren’t published yet. But she gave Shots a sneak peak of what they’ve found so far.

The most common microbes on the bills, by far, are ones that cause acne. The runners-up were a bunch of skin bacteria that aren’t pathogenic: They simply like to hang out on people’s bodies. Some of these critters may even protect the skin from harmful microbes, Carlton says.

Other money dwellers included mouth microbes — because people lick their fingers when they count bills, Carlton says — and bacteria that thrive in the vagina. “People probably aren’t washing their hands after the bathroom,” she says.

What about the traces of anthrax DNA? Not a cause for alarm, Carlton says.

“Anthrax is a very common bacteria in soil,” she says. “People who work with soil, like farmers, are often exposed to it. It’s only when anthrax is weaponized and sent through the mail that it causes those issues.”

The DNA survey also detected genes that make bacteria impervious to penicillin and methicillin. The latter make MRSA bacteria such dangerous pathogens.

(click here to continue reading Dirty Money: A Microbial Jungle Thrives In Your Wallet | Boise State Public Radio.)

Public Toilet Soho
Public Toilet Soho

Cosmo Kramer was on to something1

“A body-temperature wallet is a petri dish,” said Philippe Etienne, managing director of Innovia Security Pty Ltd., which makes special bank-note paper for 23 countries.

A human touch compounds the problem. Bacteria can feed on the waxy residue of skin and oils that builds up on bills in circulation.

“We provide the nutrients when we handle the bank notes,” said Brown University physicist Nabil Lawandy, who is president of Spectra Systems Corp. in Rhode Island, which designs currency-security features for 19 central banks.

Researchers have also explored the fibrous surface of paper money. Using traditional cell-culture techniques, research groups in India, the Netherlands and the U.S. have isolated about 93 species of bacteria clinging to paper bills. In 2012, microbiologists at Queen Mary University of London found that about 6% of English bank notes tested had levels of e.coli bacteria comparable to a toilet seat.

a partial list of the findings:

  • Total DNA found: 1.2 billion segments
  • Percentage human: 27%-48%
  • Bacterial DNA: 54 million segments
  • Sampler of bacteria identified:
  • Acinetobacter species:antibiotic-resistant infections
  • Staphylococcus aureus: skin infections
  • Bacillus cereus: food-borne illness
  • Escherichia coli: food poisoning
  • Helicobacter pylori: gastric ulcers
  • Corynebacterium diphtheriae: diphtheria

The simpler solution is to have a strong immune system, but it wouldn’t hurt to wash your hands more often…

  1. On Seinfeld, a running theme was that Kramer didn’t carry a wallet []

Stop Making Pennies

And change the composition of nickels right now! Tradition is one thing, but if the government makes these coins at a loss, why not do something about it!

Nickles Not Pickles

It costs the federal government up to nine cents to mint a nickel and almost two cents to make a penny

(click to continue reading Feds Likely to Face Uproar if They Overhaul Pocket Change –

But of course, nothing is ever simple to accomplish in Washington:

The president’s plan to save money by making coins from cheaper stuff seems simple on its face. But history shows it would rekindle an emotional debate among Americans who fear changing the composition of their currency will hurt its value.

On top of that, trade groups from the coin-laundry owners to the Zinc Association have lobbied for years to keep small change just the way it is.

Like many things produced in Washington, U.S. coins aren’t what they seem. A penny is a copper-coated token made mostly of zinc. The nickel contains more copper than it does actual nickel. And no coin contains silver anymore.

Market forces, not metal prices, determine the value of American currency. Yet Americans persist, on websites like, in tracking the value of the metal in their currency.

“People believe that we are still on some sort of precious-metal standard,” says Rod Gillis, educator at the American Numismatic Association.

As the White House looks to cut costs across government, “making coins from more cost-effective materials could save more than $100 million a year, which isn’t just pocket change,” says Dan Tangherlini, the Treasury Department’s chief financial officer.

Imperial Gold Buyer's (sic)

And there the nutjobs, Glenn Beck fans probably

Already, Mr. Gillis spends a chunk of his day at the coin-collectors association taking calls from Americans worried that the Obama administration will confiscate their gold coins to prop up the economy.

He often asks people what gives a paper dollar its value. “Eight in 10 people make some sort of reference to the gold in Fort Knox,” he says. But America has been off the gold standard since 1971, and gold currency stopped circulating in 1933.

We should listen to Frank Abagnale1

Convicted forger Frank Abagnale pooh-poohs that idea. “People would be more apt to counterfeit casino chips than American coins,” says Mr. Abagnale, who advises governments and companies on how to avoid fraud and forgery. “I’m one of these people who would be in favor of doing away with the penny. I’m always in airports, and people just leave them all over the place.”

  1. you know, the guy that Leonardo DiCaprio played in Catch Me If You Can []