The new economics ...of valuing decimal places
The new economics is nothing special, nothing new, simply adds even more significant digits to transactions: in business, and in relationships
It’s been ….well 13 years! since the infamous “crash“ of 2008. Between the “end of the world” news and “crises“ titles, only a “small” group of people understood what was really happing to the “global economy”.
In the first decade of the new millennium, named “peace millennium“ by many, I still remember to this day, searching on the internet for the brand new PDA phone from HTC, sold with a colored LCD screen, and a simple and intuitive icon-based Apps while running the “open-source” Windows CE on the backend. It was a revolution made available by HTC at an affordable price, a move from the traditional laptop computer and into the pocket of a developer like myself, a device with laptop-like capabilities, never seen before.
At that same time, the banking sector was moving “assets“ away from themselves and into market brokers while promising investment returns close to commercial loan interest rates. Another key event worth recalling was the adoption of the Euro in Europe. The single coin promise at the turn of the century. With it, many took the opportunity to shuffle the price economics beyond the usual inflation target and alike. From that point forward, money has been perceived as losing “value“ and interest in physical paper money in favor of digital transactions. It became slower and heavier to carry around.
This shift in the perception of money can be better understood when you go to a traditional supermarket and pay with paper money and some coins. Here, in Belgium for some time now, open door businesses are mandated to round the total amount invoiced to the nearest 5 cent digit. The argument, no one really whats to carry around one-cent and two-cent small copper coins on their wallets, more so when prices are defined with just that in mind. As consequence, on top of the digitalization of money, it became more difficult to feel the true value of the smallest unit of physical money. One cent. After all, is just one simple one-cent coin, lost deep in my wallet: nothing can be bought with it …and when given away to someone, most likely be a motive for … physical violence. Almost. This is me and you. The individual consumer.
However, the financial business was determined to go the other way. Instead, and since the ’90s, the banking sector decided two decimal places was not enough for their transactions and added more. Those familiar with currency markets were the first to get in contact with such financial reality, in particular, Forex traders, with the turn of the century expansion of services into web platforms accessible to anyone with a computer and an internet connection. The extension of decimal places is referred to by those on the “markets sector” as “Pip” and is simply an increase in accuracy of money with two more decimal places plus one decimal of a Pip.
On one hand, there is the individual consumer, eager to pay with the cent coins he carries around forever on his wallet, and on the other hand, are financial institutions saying “we want more cents”, faster and with improved precision. Moved to the adjacent building of the stock market exchange in NYSE and elsewhere, installed the latest technologies in computing and communications, and began negotiating the markets, not on a daily time frame, that was in the 70’s early ’80s, not on a morning or in an afternoon timeframe, lunch breaks are now a thing of the past, and instead, moved to a timeframe where transactions are made of fractions of a second. Smaller the better, only physically limited by the type of connectivity, typically in the order of milliseconds. Business is now being made during the first 30min early in the morning when the bell rings. This “new way” of price negotiation, was part of news media for some time during the first half of the last decade. And this is where I stop.
What does it mean, in real terms, a value of just one mili of cent?
For that question to be taken seriously when socializing at the end of the day while at the plaza with a beer in one hand, was needed to chase #bitcoin to exhaustion, while others dedicated many years studying and profiting* from blockchain technology. In between, it was heard from many, the need for regulation so blockchain business as usual was made more transparent1, that is to say, and legalities aside was made less criminal, less violent.
Its been 13 years since acknowledgment by worldwide bank institutions, the idea of a single planetary bank to manage global transitions. An idea turned out not to be … profitable. During that time, it was sold in tandem the idea of bad usage of the internet, criminal-like behaviors, the dark web, Silkroad, and … social networks! in particular Twitter and Facebook. I still remember to this date, a news piece on the Portuguese national TV on prime time presented by the well-known pivot, José Rodrigues do Santos, advertising social networks as the tool of excellence for riots, while anyone watching could see on the news piece, all the protesters in Egypt, launching fire and making a total caos2 of it. To the defense of real Portuguese people, the riots happening in Portugal were simple peaceful manifestations, more like silent3 walks in huge crowds. The only damage I could perceive back then was a few individuals4 trying to pick a fight… for TV audiences.
!3 years have passed and in 2020 a #lockdown happened. This time the guilty was a virus, that could be traced, as it seems, back to Spanish influenza, oddly! even when modeling patterns of dispersion using the latest and most recent artificial intelligence tools and hardware. This was time for a … big reset!5
Over one year has passed now, and the supercomputers that run the world have been put into reboot mode with new models and new and improved datasets. While the reboot happens, we the humans, the citizens of the world, got another opportunity (and time) at searching and using the internet tools, social networks included. At some point, I got the opportunity to read some articles on dress code for online zoom meetings, or “how to look in the face without staring”. You, the reader surely have read something similar. The internet is so big, it has room for all and for all. And again, this is an opportunity to read some more about digital currencies, and more importantly “how am I going to profit my business” with simple online remote meetings.
A while back, someone whispered and made me recall what I’ve heard a few years back about a big layers office in South America planning to use the internet to extend its legal business. The main idea: price a message on a messenger app. The years went on, and the GDPR emerged as a solution to all privacy issues and concerns, but also as an opportunity to profit from the private matters of others6. The dark side of GDPR. Not all is that bad though, the document includes also the notion of data ownership and leaves this matter open for personal data to have a price.
Today, the main question is: what is the price of my personal data?
At beginning of this month, I’ve installed some data collection apps on my laptop within my mind to gain a better understanding of value, in particular the value of my personal data. Twenty days have passed and I can say, two out of three were already uninstalled. Both were claiming to pay for my CPU processing time, what in reality, I was the one paying to them to use my CPU when all energy costs equated into the financials. The third app is claiming to pay at the end of this month $3.15 for 5GB (or so) of personal anonymized data. It feels like abuse to be honest, but the fact is, I don’t have to do absolutely anything. It simply runs in the background and consumes, daily, a few hundred MB to upload data. Mind you, there are some privacy concerns here, due to the lack of transparency of data analyzed and data being uploaded. That said, you can give it a try here. It’s called HoneyGain.
Let me rewind a little bit and repeat the value to be paid: $3.15 using the traditional currency metrics. It sounds like nothing. Cheap and not worth the time. However, if I move to metrics used by financial institutions, is in fact a lump sum of ….whell something. Something I still don’t really know or understand in full. Something to be defined, that generous lump sum amount of 315 000 …Pips. This is one of the main arguments at debate behind the scenes in politics and in business, what are the meanings of value that can be defined to digital tasks, with the property of not producing any physical goods, instead only increase the total cost and expenses to businesses and to individuals. This is a task, worth the effort to discover, at a personal level, as open data and transparency themes evolve in Europe during the upcoming years.
An insightful Friday to all.
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recall my open data references on previous articles.
to the eyes of a Spock-like mind, we Europeans like to brag about.
this is actually a really bad thing due to the tendency of social censorship a social behavior still echoing through time from the not-so-recent history of fascism and dictatorship in the country.
one wanders still today if those individuals were in fact put there deliberately to at least show some rage and discontent !!! of the crowds.
a term coined by McKinsey in its daily articles and newsletters.
recall my open data references on previous articles.
This article took around 2h30 hours to write.
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