In 1993, Charles Sanford---then CEO of Bankers Trust---gave a speech entitled "Financial Markets 2020" http://www.kc.frb.org/publicat/econrev/pdf/1q94sanf.pdf.
One of Mr Sanford's predictions was for the appearance of a "wealth account" -- an electronic store of information about an individual's (or institution's) complete financial position. In other words, a trusted, comprehensive and up-to-date financial statement.
Such accounts are touted to offer users rich rewards such as increased liquidity and superior risk management possibilities (see the transcript for further details).
Is the only technology preventing us from implementing this in the area of trust management?
The primary issue with this is that having centralised financial details and actually taking the value from that means those details need to be essentially correct. This exposes the investor to several problem areas. All related to security, legality and trust. This issue may be related to centralisation/decentralisation issues of other kinds.
- Others accessing full financial information and using it to harm the investor or improve their own position at the expense of the investors interests. Include here collated knowledge in the mode Google uses.
- Investor is now more legally exposed meaning dubious or outright illegal investments might be more difficult to undertake.
- Could become another social standards measure limiting or possibly improving employment prospects, financial prospects and other things, much like credit agencies and criminal records operate.
-- AaronPoeze
I agree that there are important considerations arising from a decision to centralize as opposed to distributing information (especially in our modern era where electronic records have effectively displace hard currency). I even agree that there is a need to be diligent in ensuring data is correct and this this is particularly true when the data represents larger ("material") amounts of wealth. However, let's not assume that the decision to centralize is an "all or nothing" decision. After all, it would not be prudent to place all of one's assets under the care a single institution. Hence some diversification will always exist in practice. The degree to which assets are then distributed will likely depend on each individual's Risk/Reward ratio in weighing the options.
-- HansWobbe
A WealthAccount might not be the actual finances centralised but your information about your finances centralised. Financial decisions about decentralising or centralising the wealth can be made but the information itself is centralised and this is what I primarily refer to in the above. At a secondary level a WealthAccount will suffer from the problem of being exclusively inclusive in a commercial sense by which I mean it is likely only companies with an agreement to share financial information easily (instantly) may then share access to business (customers). I want to add that in terms of OpenHonesty this might be a very useful tool. I'm relating to your work here in OpenBusiness and UseRealNames the problems I outlined above may become benefits instead. It's like WealthAccount can be a decisive divisive between OpenHonesty and ClosedDishonesty. --AaronPoeze
Aaron... for quite some time now, it has become increasing true that...
Banking is no longer about the custody of cash (a tangible and fungible asset) but rather deals with bits (of information) about the accumulated difference between Income and Expense.
For this reason alone, I care more about the centralization of the Information, than I do about the centralization of the asset. After all, if someone steals my cash, I am at least aware it is missing, just as soon as I try to use it. Information on the other hand, can be copied and used for much more devastating, asynchronous attacks at a future time.
One way of assessing how people feel about centralized information, is to ask them to publicly disclose their income (much less their assets)! I leave to your imagination the "typical" response (and suggest you wear protective equipment, before trying this). There are many examples that can be cited to support the view that centralized information is unlikely to become popular (at least not in our contemporary societies). Leaving that theme, though, I am curious as to what your Objective(s) may be for these posts, so that I have a better understanding of where this may lead. -- HansWobbe
A good example for decentralization of money management is given by http://ripplepay.com -- FridemarPache PS.: To invite people from the DiiGo community/ies, I commented an annotation of Hans and left a Diigo pragma at the bottom of the page.
That's an excellent example and possibly a good idea too. It reminds me of the most decentralised open system I know of called [LETS] which means Local Exchange Trading System which has an infinite money supply concept interwoven. LETS has been operating for some time in MeatSpace and is very much a local community system. -- AaronPoeze
Can you outline what you mean about banking going from cash custody to dealing "with bits (of information) about the accumulated difference between Income and Expense"? I do not understand the point you are making. Yes I fully agree with you on the centralisation of information. It is part of the point I was attempting to make.
Because I am new my primary objective in posting in general is to contribute and experience contributing. I have little agenda behind my words apart from expanding the wiki and making myself useful and better known. Or so I hope anyway. In this page specifically I am trying to show a centralised WealthAccount carries risks like you outline above yet does have the usual advantages of centralisation and in an OpenBusiness (Open anything possibly) context it can be very useful where such negatives issues become more positive issues. For then doing things like exposing the entire financial position may be a way of reducing costs and corruption among other things. I do not see WealthAccount as a fantastic idea but rather a good idea in certain contexts. I see this also being related to OpenBusiness, UseRealNames and SecuritybyObscurity. I also wanted to emphasise that technology is not the problem for implementing a WealthAccount (according the BankersTrust) which I see as technologically trivial, but rather security and trust issues. I hope this helps you understand my position. -- AaronPoeze PS well now I know what happens when the page you are working on is edited.
- Aaron... Thanks for clarifying your interests.
- As for my views of "bits" of information, I've come to the personal conclusion that there really aren't many "fungible" currencies left, since we've come of the "gold standard" and replaced currencies with an electronic record of the "bits, nibbles and bytes" in computers.
- Fortunately, as a programmer, I understand the value of being able to "shift" these bits about.
- As for my views of "bits" of information, I've come to the personal conclusion that there really aren't many "fungible" currencies left, since we've come of the "gold standard" and replaced currencies with an electronic record of the "bits, nibbles and bytes" in computers.
-- HansWobbe
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