Tag Archives: money

BitCoins: an unpolicable p2p e-currency?

I’ve got a whole bunch of stuff that needs to get done over the next few days, so blogging here will perforce be of the drive-by link-drop variety for a few days or so. Today’s nugget of interest is BitCoin, a peer-to-peer electronic currency which, according to the folk behind the LAUNCH Conference at least, is “the most dangerous project [they’ve] ever seen”. Why so? Well…

According to companies like SoFi, Bitcoins are virtual coins in the form of a file that is stored on your device. These coins can be sent to and from users three ways:

1. Direct with peer-to-peer software downloaded at bitcoin.org
2. Via an escrow service like ClearCoin
3. Via a bitcoin currency exchange from Amazon Aktien kaufen

Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.

The benefits of a currency like this:

a) Your coins can’t be frozen (like a Paypal account can be)
b) Your coins can’t be tracked
c) Your coins can’t be taxed
d) Transaction costs are extremely low (sorry credit card companies)

It’s a “technotarian”political statement, apparently. not to mention a grenade in the nation-state punchbowl, to start investing, check this guide about how to Buy bitcoin with bank account transfer. Here’s a cuddly and very contemporary-looking promo video:

Given the global discontent with banking and finance right now, Bitcoin UP Seriös estimates BitCoins could look very attractive to a lot of people. Unsurprisingly, no “normal” financial system will let you buy them, and as the LAUNCH folks point out, legislation against them is inevitable. But would legislation be enough to stop them if enough people started bartering real-world goods and services for them? [Tip o’ the hat to Adam Rothstein]

The golden age of egalitarianism is twelve

Ars Technica reports on a research paper that suggests children abandon egalitarianism and develop meritocratic attitudes as they enter adolescence:

… they set up a game where teams of children in grades five through twelve were given access to two websites. One allowed them to earn credits by completing tasks, an analogue of hard work, and the other let them play games or watch videos. At the end of each round, each pair of kids was awarded either 8¢ or 4¢ for each credit he earned, a measure that introduced an element of luck.

The researchers then added the pairs’ earnings together, and asked one of the kids to divide the  money between them. They found that kids in fifth grade tended to be more egalitarian, dividing the money equally regardless of how much either had earned.

However, meritocratic views began to sneak in as the subjects’ age increased: older adolescents not only gave partners less money for earning less, but also awarded themselves less when they had not been as productive. There was also a small but steady number of what the researchers termed  “libertarian” subjects, who divided the money exactly as it had been paid out, without considering the aspect of luck.

Interesting results. However, the real question here is an old favourite: nature or nurture? Is the emergence of meritocratic thinking hardwired into our development, or is it learned socially, from family, friends and media? Plenty of opportunity for further research, methinks… would these results pan out in societies with notably different attitudes to wealth and property ownership?

Humans may have a brain-deep aversion to income inequality

… or at least that’s the case according to researchers at CalTech, who’ve been using fMRI to examine how the human brain responds to rewards [via Freakonomics; image by jsmjr].

… what was unknown was just how hardwired that dislike really is. “In this study, we’re starting to get an idea of where this inequality aversion comes from,” he says. “It’s not just the application of a social rule or convention; there’s really something about the basic processing of rewards in the brain that reflects these considerations.”

The brain processes “rewards”—things like food, money, and even pleasant music, which create positive responses in the body—in areas such as the ventromedial prefrontal cortex (VMPFC) and ventral striatum.

Procedural and methodological stuff follows, so let’s skip to the kicker:

As it turned out, the way the volunteers—or, to be more precise, the reward centers in the volunteers’ brains—reacted to the various scenarios depended strongly upon whether they started the experiment with a financial advantage over their peers.

“People who started out poor had a stronger brain reaction to things that gave them money, and essentially no reaction to money going to another person,” Camerer says. “By itself, that wasn’t too surprising.”

What was surprising was the other side of the coin. “In the experiment, people who started out rich had a stronger reaction to other people getting money than to themselves getting money,” Camerer explains. “In other words, their brains liked it when others got money more than they liked it when they themselves got money.”

“We now know that these areas are not just self-interested,” adds O’Doherty. “They don’t exclusively respond to the rewards that one gets as an individual, but also respond to the prospect of other individuals obtaining a reward.”

That’s a lovely interpretation that I’d dearly love to believe in, and I have not even a fraction of the medical knowledge I’d need in order to attempt to refute it, nor refute the way the research was framed.

So instead I’ll pose a question: if we’re so hardwired to loathe income inequality, and those starting with greater fortunes are supposed to enjoy seeing others rewarded more than themselves, why exactly is income inequality such a widespread feature of almost every culture on the planet?

Capitalist education? Kids get better grades if you pay for them

Here’s your second “well, duh” story of the day – experiments in New York schools that serve high-poverty demographics indicate that offering kids financial rewards for good grades makes their average results skyrocket.

About two-thirds of the 59 high-poverty schools in the Sparks program — which pays seventh-graders up to $500 and fourth-graders as much as $250 for their performance on a total of 10 assessments — improved their scores since last year’s state tests by margins above the citywide average.

The gains at some schools approached 40 percentage points.

For example, at PS 188 on the Lower East Side, 76 percent of fourth-graders met or exceeded state benchmarks in English — 39.6 percentage points higher than last year, when the kids were in third grade.

At MS 343 in The Bronx, 94 percent of seventh-graders met or surpassed state standards in math this year — 37.3 points higher than last year, when the students were sixth-graders.

In all, of the 61 fourth and seventh grades involved in the pupil-pay program, only 16 improved less than the citywide average gain in math since last year, while 21 did so in reading.

Principals at the highest-scoring schools cautioned that the Sparks program was just one of many factors in the test-score jumps.

But many reported seeing indisputable academic benefits — including more motivation, better focus and an increase in healthy competition for good grades among students.

Now, there’s probably an argument to be made about the sanctity of education and the corruption of kids with money here, but I’m not sure it holds much water beyond staff-rooms. What matters in education is results, right? If you can get kids who are otherwise completely unmotivated to put some effort into learning and bettering their prospects, where’s the problem with spending some cash to do it?

You might say that education should be pitched as being its own reward, and that’s a charming philosophy familiar to me from my privileged middle-class background, but I think it’s pretty safe to say that system evidently isn’t working well among those who most need it. And hey – if you’re preparing kids for entry into a capitalist economy where making money is a tangible and observable benefit by comparison to the more nebulous notion of “bettering oneself intellectually”, why not use money as the carrot at the end of the stick? When idealism has failed, maybe pragmatism deserves a a crack of the whip. [via SlashDot]

Geithner kinda backs world reserve currency

euro_coinsHighlighted because I have a penchant for old school technocracy that can only be assuaged by stories of mass graves and pyramids of skulls.

Here we have news of US Treasury Secretary Tim Geithner hinting support for a global reserve currency run by the IMF:

The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.

The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.

Mr Geithner’s friendly comments about the SDR plan seem intended to soothe Chinese feelings after a spat in January over alleged currency manipulation by Beijing, but he will now have to explain his own categorical assurance to Congress on Tuesday that he would not countenance any moves towards a world currency.

New World Order anyone?

[image from helmet13 on flickr]