WinPoker Becomes First Major Gambling Operator To Adopt Bitcoin

By Jon Matonis
Forbes
Wednesday, March 13, 2013

http://www.forbes.com/sites/jonmatonis/2013/03/13/winpoker-becomes-first-major-gambling-operator-to-adopt-bitcoin/

WinPoker in Curaçao announced that it will now begin accepting bitcoin as a deposit and withdrawal method to their WinPoker accounts which are on the iPoker network.

Consisting of over 30 different brands, including large European bookmakers like Paddy Power, Bet365, Betfair and William Hill, iPoker is the largest network of online poker rooms operating internationally. According to Pokerfuse, iPoker sits behind only the independent rooms PokerStars, Full Tilt Poker and PartyPoker in terms of cash game action.

The attraction of bitcoin to the online gaming community is obvious. Funds clearance is near immediate and the transactions are irreversible. Payment processing fees are a fraction of what they are compared to other payment methods.

James Lewis, Head of Poker Games for WinPoker, says, “We can take very small or very large deposits quickly, with little or no risk of fraud. As a result, players can access our games from areas of poor financial infrastructure, or can play exciting high stakes games quickly without waiting for a bank wire transfer to be processed.”

WinPoker has structured the process so that players choosing to utilize the bitcoin payment method do not also assume currency risk along with the inherent risk of casino gambling. Therefore, all bitcoin deposits convert into the user’s account currency (USD, EUR, or GBP) at the current market rate without currency conversion fees and then funds are credited to the player account within minutes. When processing a withdrawal, funds are converted back into bitcoin is credited to players’ bitcoin e‐wallets. No currency conversion fees are charged at any point in the process.

Although bitcoin has optional anonymity properties that would protect the identity and country of the player, those properties are not leveraged by WinPoker. As a licensed and regulated gaming operator, WinPoker must adhere to the regulations of the jurisdiction that they operate within. Lucas explains:

"Due to regulatory requirements, and to prevent fraud, collusion, money laundering, and ensure a safe and honest gaming environment for our players, we are required to adhere to strict KYC and AML policy. Players are required to produce documents to verify their identity, address, and source of funds where relevant, before they are able to withdraw any funds."

Of course player identification would be required when a real-money, licensed casino mingles bitcoin with other online payment methods that include legal tender.

The jurisdiction-less SealsWithClubs, which competes in the poker space as a bitcoin-only site, is not concerned about the news from WinPoker. “The bitcoin poker space will explode in 2013, so it’s something that is totally expected when I see other online poker rooms and casinos transitioning to bitcoin,” says Bryan Micon of SealsWithClubs.

Micon adds, “In this particular case, it doesn’t excite me all that much because first off no U.S. players are allowed and secondly WinPoker is only using bitcoin as a deposit option, not as a currency to gamble for.” When bitcoin is the currency of record and unit of account for gaming, it is less likely that funds could be frozen or confiscated through the actions of one of the casino operator’s bank accounts.

Another significant but less noticed advantage of using bitcoin ‘tokens’ directly as the gaming unit is that before a game can be declared gambling for regulatory purposes, there has to be real money involved. In the case of bitcoin, a strong case can be made that, even with secondary markets, certain virtual currencies lack the legal elements of material value and property.

When I asked Micon about future regulation of his play money bitcoin poker room, he said “I’m confident there will be other U.S.-facing, bitcoin-accepting poker sites in the near future and SealsWithClubs is growing extremely fast. As for licensing and regulation, it is something we are always exploring.”

First Bitcoin Hedge Fund Launches From Malta

By Jon Matonis
Forbes
Friday, March 8, 2013

http://www.forbes.com/sites/jonmatonis/2013/03/08/first-bitcoin-hedge-fund-launches-from-malta/

Ever since the bitcoin cryptocurrency first launched and achieved initial success, institutional investors and hedge fund managers have secretly sought a regulated investment vehicle for bitcoin placements. Malta-based Exante Ltd. has the solution with their new Bitcoin Fund.

"I hope our fund will be the first hedge fund to take advantage of using bitcoins," explains Managing Partner Anatoliy Knyazev. Exante actually announced the fund in October last year, but they did not make a serious effort to market it. Now, with more institutional interest emerging, they agreed to provide this update to Forbes.

Although any person or entity can acquire and store bitcoins on their own, institutional investors are typically restricted in the types of assets available within their investment charter. Similar to a mutual fund or hedge fund for alternative assets, Exante’s Bitcoin Fund permits institutions and high-net worth individuals to access the vibrant bitcoin market with a licensed product and this alone is an innovative development.

The fund shares are distributed exclusively through the Exante Hedge Fund Marketplace platform. Authorized and regulated by the Malta Financial Services Authority, Exante offers the Bitcoin Fund with an initial minimum subscription of $100,000 and a 0.5% upfront subscription fee.

However, U.S. persons and U.S. institutions will not be able to access the fund directly, because according to the Fund Disclaimer, “U.S. Persons may not subscribe either directly or indirectly for shares.”

Knyazev told Forbes that “the U.S. jurisdiction is tricky.” This is mostly due to the securities registration that the company is currently not prepared to complete and more recently the FATCA reporting implications for foreign financial institutions. “Typically, a feeder fund is established in the U.S. (commonly Delaware) to facilitate the investments. We are in the process of estimating our costs on creating one,” added Knyazev.

Founded in March 2011, the 60-person Exante team operates from offices in Malta, Singapore, and Russia. The Bitcoin sub-fund was incorporated as a Bermuda exempted company and is registered as a segregated account company receiving funds at Citibank London. From the Bitcoin Fund’s web site:

"We are the first fund that invests in core-level infrastructure of the new generation economy. We invest into Bitcoins. In 2011 internet transactions volume exceeded $500 billion. We believe that to win you have to be at the cutting edge. Bitcoin, based both on common and new technologies, is a perfect extension to traditional currency."

Current assets under management in the Bitcoin Fund are $3.2 million (2.5€ million) and there is no performance-based fee. However, the fund charges an annual management fee o.5% of Net Share Value payable monthly in order to provide the sophisticated security and wallet management that one would expect with such large amounts at stake.

The threat modelling approach addresses data loss risk, hardware failure risk, jurisdictional risk, external hacker risk, dishonest employee risk, and employee death or disability risk.

The private key itself is AES-256 encrypted. After exporting Bitcoin private keys from wallet.dat file, data is stored in a TrueCrypt container on three separate flash drives. Using Shamir’s Secret Sharing algorithm, the container password is then split into three parts utilizing a 2-of-3 secret sharing model. Incorporating physical security with electronic security, each flash drive from various manufacturers is duplicated several times and, together with a CD-ROM, those items are vaulted in a bank safety deposit box in three different legal jurisdictions. To leverage geographic distribution as well, each bank stores only part of a key, so if a single deposit box is compromised, no funds are lost.

As the fund does not employ leverage or derivatives for risk management, Exante intends to provide a two-way secondary market for the trading of fund shares. Similar to a contract for difference (CFD), this would allow existing Exante customers to trade in and out for Bitcoin Fund shares without going through the subscription or redemption process. It would also provide shorting opportunities without having to own the underlying asset. Customers will be vetted according to the regular Exante capitalization requirements and margin funds would be provided through institutional broker financing at a fixed % over LIBOR.

A New Challenger in the Bitcoin Merchant Processing Race

By Jon Matonis
PaymentsSource
Friday, March 8, 2013

http://www.paymentssource.com/news/a-new-challenger-in-the-bitcoin-merchant-processing-race-3013477-1.html

The large payment brands fiddle while Rome burns, seemingly unaware of the approaching bitcoin onslaught that is free of processing fees and political boundaries.

One of those barbarians at the gate, formerly known as WalletBit, has broadened its functionality and cut its pricing to expand directly into merchant processing. The company, based in Denmark, has rebranded itself Bitcoin Internet Payment System, or BIPS.

Best of all is that BIPS’ merchant tools and digital wallet services will be free unless, of course, conversion to national currencies is required, in which case it will charge 2.5% to convert out of bitcoin. Denmark and Canada have special reduced cash-out rates with same-day interbank transfers for Canadian accounts, says BIPS Director of Marketing Adam Harding. The strategy is to make it easy for merchants to get started and then aggregate their bitcoin balances with the company, which will make money over time providing foreign exchange conversion and premium services to the client.

This approach directly challenges the leading bitcoin merchant processor, BitPay, which just received yet another follow-on round of funding, and U.S.-only Coinbase, which appears to have a good future on the merchant side of the business.

Bitcoin's appeal to merchants is not only the lack of chargebacks and interchange fees but also the broadening of the customer base to include consumers from about 60 countries not served by PayPal. Also, traditional credit card products are typically not available in many countries either for political reasons, higher fraud rates, or lack of retail credit infrastructure.

The business model for bitcoin merchant processing was bound to mature and evolve, because an intermediary processor is not inherently required in this alternative payment system. In the world of Visa and MasterCard, it makes sense to have someone process transactions because authorization and settlement services are needed. But with bitcoin, the pure merchant processors are an interim step at best since third-party authorizations and chargebacks are not part of the architecture due to the distributed nature of transaction confirmation on the bitcoin block chain.

What's important to merchants is the coin management with various mobile apps and shopping cart plug-ins as well as the optional foreign exchange conversion. This is where the industry is headed and BIPS realizes that.
Merchant plug-ins are becoming commoditized and foreign exchange options are driven by strong partnerships with domestic and international financial institutions. This leaves the wallet technology as the wedge for innovative differences, such as management reporting capabilities and online secure access. All of the current so-called merchant processors offer online wallets that are under the control of the operator, meaning that bitcoin private keys are stored and protected by the operating company.

Smartly deploying two-factor authentication for wallet account access with a one-time passcode technique, BIPS (the former WalletBit) uses Secure Card and Google Authenticator, BitPay uses Google Authenticator, and Coinbase uses Authy.

I believe that online wallets, or eWallets, that do not store the client’s private key, such as BlockChain's My Wallet and StrongCoin, have an advantage in the long term because this setup removes the need to trust and audit the company's procedures. Although performing the cryptographic operations in the browser has its own challenges, the risks are reduced substantially compared to a localized breach since the threats to non-private-key-holding wallets are limited to a man-in-the-middle attack or a court order demanding “rogue” javascript delivery (the browser equivalent of a wiretap).

As bitcoin wallet functionality becomes more mature and robust, merchants will simply elect to partner with the best standalone client wallets and the best eWallets. If and when those accumulated bitcoin balances need to be exchanged for national currencies, then the wallet providers with the most attractive conversion options and limits will be the leaders.

BIPS has an advantage here because it supports 42 different currencies for converting out of bitcoin at 2.5%, whereas BitPay supports 11 different currencies at 2% fee, and Coinbase offers cash-out only in U.S. dollars at 1% with strict limits. Additionally, the cost of conversion has to be looked at in conjunction with the merchant processing fees. On that score BIPS and Coinbase are free while BitPay charges 0.99%. So, for merchants choosing to store bitcoin with the processor rather than convert it to government currency, BIPS and Coinbase are zero charge. (For a merchant that takes in 10% or less of its monthly sales in bitcoin, storing it with the processor can be an inexpensive way to acquire the currency and have a market position.)

Looking towards the future, barriers to entry are very low for the bitcoin merchant processing business. The differentiators for success will be online wallet security configurations, foreign exchange conversion options, and merchant software tools – in that order. With the market spread regionally now, it's still a jump ball.

Bitcoin Exchange Deal Repatriates Assets To U.S.

By Jon Matonis
Forbes
Saturday, March 2, 2013

http://www.forbes.com/sites/jonmatonis/2013/03/02/bitcoin-exchange-deal-repatriates-assets-to-u-s/

Although the deal for Mt. Gox bitcoin exchange and CoinLab to partner on U.S. customer business was brokered by Seattle-based CoinLab, it would not have been possible without a solid and willing financial institution in the United States.

Innovative Silicon Valley Bank stepped up to the plate and agreed to facilitate the U.S. dollar financial flows for individuals and businesses managing trading accounts on bitcoin's largest floating-rate exchange. For better or worse, this launches the exchange directly into the world of the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) as SVB already adheres to those strict reporting requirements. "Like any new business we are looking at it very carefully and we are willing to entertain the idea while monitoring the industry closely," says Carrie Merritt, director of public relations at SVB.

Japan-based Mt. Gox sees about 80 percent of their traffic originating from North America. The new deal should vastly improve the speed of Mt. Gox account setup and funds clearing which improves overall liquidity. Additionally, with a bank in the U.S. providing smooth transfer of funds, it paves the way for hedge funds and other institutional investors to enter the market because investment charters can sometimes limit new placements to U.S. entities only.

Speaking to Forbes, CoinLab CEO Peter Vessenes explained that the exclusive 10-year deal will bring "a specialized user interface to the Mt. Gox platform and facilitate larger transaction sizes for better liquidity, maybe even adding forex trading APIs and FIX protocol support." Structurally, with CoinLab providing back-end clearing services and local customer support, Mt. Gox eliminates the need to open a U.S. subsidiary on their own which would have involved a significant investment in administrative overhead.

Despite the fact that foreign dollar deposits are already held at correspondent money center banks in New York, the centralized and unfettered enforcement access to customer data becomes the single greatest aspect of this new deal. The move to domicile in the U.S. may prove counterproductive if bitcoin trading volume is driven to smaller, less regulated offshore exchanges.

As nonpolitical cryptographic money, bitcoin is not recognized as legal tender in any jurisdiction so exchanges are technically not considered to be 'foreign currency dealers' nor is bitcoin officially recognized as a 'prepaid access' device. Nonetheless, CoinLab took the step last week of registering with FinCEN to become a Money Services Business (MSB) and their entity and registration number are available here. Since they are a self-declared seller of prepaid access (MSB code 413), they now must comply with a litany of Bank Secrecy Act requirements, including Suspicious Activity Reporting.

According to Vessenes, the arrangement involved several high-level discussions with Silicon Valley Bank on the legalities and merits of entering the bitcoin business. Asked if the federally-chartered, FDIC-insured banking partnership would mean fewer compliance responsibilities for CoinLab, Vessenes replied, "I wish. We will be increasing both compliance and customer support staff in the coming weeks." He added that, "CoinLab's new Anti-Money Laundering (AML) program and Know Your Customer (KYC) controls will be reviewed periodically by Silicon Valley Bank and certain employees will have to complete regular AML training."

Mt. Gox grew to its current size before the strict regulatory framework advanced around them and they genuinely seem like a reluctant participant in the strenuous and exhausting labyrinth of compliance measures. Although a more free market approach would have been to establish banking relationships in a variety of jurisdictions and challenge the perceived status of bitcoin trading as "currency trading," I don't get the sense that they intend to use the issue of regulation and a licensed U.S. bank as a tool for competitive advantage.

It's more likely that Mt. Gox's local banking partners did not want to be involved with such a large U.S. customer base requiring adherence to the U.S.-led  Foreign Account Tax Compliance Act (FATCA) monitoring and reporting regime. Japan has agreed to become FATCA compliant by 2014.

For the U.S. citizens that make up the majority of the exchange's customer base, FATCA ensures that it doesn't really matter where they maintain customer fund accounts, so for those customers the deal primarily improves transfer fees and clearing time for U.S. dollar funds. Mt. Gox's non-U.S. customers (except Canadians) are not affected by the change and they continue with procedures as before the announcement.

The transition of customer business from Mt. Gox to CoinLab involves three phases and yes it will include Canadian customers too.  Phase one is alpha with about 100 customers starting in a few days, phase two is beta with 5,000 customers on March 15th, and phase three is all accounts going live on March 29th. Account transitions are voluntary for customers, otherwise affected accounts will be closed. All trade matching will still occur on Mt. Gox systems.

Mark Karpeles is Managing Director at Mt. Gox, part of Tibanne Co. Ltd. (Japan), which is self-funded without venture capital. Peter Vessenes as CEO of CoinLab, Inc. previously took $500,000 in start-up funds to leverage bitcoin mining opportunities for gamers. Greg Becker is President and CEO at Silicon Valley Bank.

Tabletop Bitcoin ATM Is Huge for Payment Privacy

By Jon Matonis
American Banker
Wednesday, February 27, 2013

http://www.americanbanker.com/bankthink/tabletop-bitcoin-atm-is-huge-for-payment-privacy-1057110-1.html

It looks like a high school science project, but this countertop machine may be a bulwark of financial privacy in the age of digital money.

Last weekend at the Free State Project's annual Liberty Forum in New Hampshire, entrepreneurs Zach Harvey and Matt Whitlock advanced the anonymous purchasing of bitcoin with their new Bitcoin ATM. The little machine, about 24"H x 12"W x 12"D, exchanged and dispensed over $5,500 worth of bitcoin in one weekend.

Similar to the way a vending machine operates, the orange prototype accepts cash bills and reads a QR code containing the depositor's Bitcoin address. After subtracting a 1% transaction fee, it delivers bitcoin to the address in about five seconds. The Bitcoin Machine can accommodate paper note denominations up to $100.

Previously, individuals who wanted to purchase bitcoin privately without revealing personal details had to arrange face-to-face meetings through LocalBitcoins.com; make use of bitcoin-otc, an online marketplace where participants take counterparty risk and rely on user reputations measured by an e-Bay-like ratings system; or make a cash deposit at a bank or retail location, under the watchful eye of security cameras.

Now, with a device that directly converts paper cash to bitcoin anonymously, the interaction is between human and machine. The value of that subtle difference should not be underestimated. No longer does the buyer of bitcoins have to show his or her face, or trust counterparties to make good on their end of a deal. Depending on how many bills each bitcoin ATM can hold and how much bitcoin it can digitally store, users can now enter the bitcoin blockchain in a very significant and private way.

The New Hampshire-based startup, Lamassu Bitcoin Ventures, hopes to commercialize the technology and get the countertop ATMs placed in restaurants, bars and other retail businesses. Harvey told CNET's Declan McCullagh. "If we made these machines somewhere around $1,000 to $1,500 each, depending on the commission, they could be able to buy [the machine] and make it back within a reasonable period of time."

This could prove to be very profitable for the establishments hosting the machines if their bitcoin inventory gains dollar value prior to sale. Additionally, Lamassu Bitcoin Ventures could be the exclusive provider of bitcoin for the ATMs or partner with an existing exchange to provide greater risk management.

Even people who have been in the Bitcoin world for a while and have used every type of exchange are blown away by the simplicity of this machine," Harvey said. "I'm just putting in a dollar. Before they really know what's going on, their phone tells them, 'You have Bitcoin.'"

Despite media reports claiming this to be the world's first Bitcoin ATM, that notable distinction belongs to Todd Bethall of BitcoinATM.com, which dispenses plastic BitBills and sends bitcoin to a Bitcoin address.

Launched in 2011, Bethall's beta ATM comes equipped with a Genmega GK1000 Kiosk running Windows XP Pro with ActiveX drivers for the bill acceptor, printer and card reader. The California corporation that owns the original Bitcoin ATM was recently put up for for sale at the price of 1,500 bitcoin, but that was before bitcoin's recent price appreciation. At the current exchange levels, the asking price now works out to about $45,000.

Expect Blowback if KYC Rules Are Expanded

By Jon Matonis
American Banker
Tuesday, February 26, 2013

http://www.americanbanker.com/bankthink/expect-blowback-if-kyc-rules-are-expanded-1057055-1.html

The uncovering of an alleged $200 million credit card fraud scheme has triggered calls to expand know-your-customer rules. Those who prescribe ever-greater surveillance should be careful what they wish for.

In what was described as a sprawling criminal enterprise stretching across dozens of states and numerous countries, fabricated identities were used to obtain credit cards and doctor credit reports to borrow large amounts of money. At the heart of the alleged scheme were the merchant processor accounts used to accept and process the cards with stolen identities, authorities announced on Feb. 5. ATM withdrawals involve video surveillance and direct purchasing of merchandise doesn't yield cash. So the fraud ring allegedly used merchant accounts, mostly those of jewelry stores, since it is easier to obtain cash in a bank account using a fictitious sales transaction.

In some instances, sham companies were created and then those businesses established the direct relationship with the merchant processor and purchased the credit card terminals, the FBI said. Involving 25,000 fraudulent credit cards, 7,000 fake identities, and 1,800 "drop addresses," the conspirators allegedly wired millions overseas to Pakistan, India, the United Arab Emirates, Canada, Romania, China, and Japan.

For the duration of the probe, account information was known about the senders of international wire transfers, but not much was known about the recipients.

That is why experts are now pointing to this alleged scheme as justification for the expansion of Bank Secrecy Act and anti-money laundering regulations to include the identification and scrutiny of the recipients of funds associated with high-risk transactions.

Micah Willbrand, director of AML and compliance for LexisNexis' North American Financial Services Markets, told a trade publication, "Laws and regulations today only require that the bank have KYC [know your customer] in place for the sender, not the receiver of money."

"But card fraud schemes demonstrate why it's imperative to have KYC controls in place for both senders and recipients," he adds. As a result of the Foreign Account Tax Compliance Act, "all countries are realizing we need to know more about who's receiving the money. We need to be more transparent about how money is moving around the world, and that is something everyone is coming around to."

That is a very optimistic assumption, especially since considerable resistance already exists regarding global standardization of information-sharing. Ultimately, compliance would require a lot more legwork and due diligence on the part of banks, and financial institutions have been reluctant to move in this direction. If banks were required to replicate the current KYC controls for recipients as well as senders, the jurisdictional challenges would be complicated and expensive.

Willbrand justifies the investment cost in a subtle Risk.net advertorial “article”: "The implementation of FATCA will guide financial institutions … globally by providing them with a reference on what verification is required of their customers and the level of due diligence required from them based on their asset transfers. FATCA will, therefore, enable FIs everywhere to create a standardised customer onboarding process that will clearly define risk tolerances and accepted practices for engaging with customers."

Expanding KYC guidelines to include the recipient of funds would require a massive uniform international process that is continually monitored and updated. Additionally, the cross-border sharing of customer information could realistically lead to equally determined calls for reciprocity on the part of U.S. financial institutions. U.S. banks that act on behalf of the recipients of international funds could find themselves swarmed with overseas requests for KYC information prior to any funds transfer.

For Willbrand, it's a Big Data problem of not enough domestic and international information available to detect anomalies and potential risks earlier. Automated third-party systems are more efficient than the manual review systems in place at some banks today. Willbrand says, "Data about identities is not combined internationally. The only way to get an accurate profile is by cross-checking public records with utility bills and bank accounts around the world."

Willbrand's call for expansion of money transfer surveillance powers represents an overreach that merely attacks the symptom of the problem. Privacy and data security rules vary, and sometimes conflict, in the many jurisdictions around the world. Big Data might be the answer, but it should be Big Data at the front end, during the credit card account opening process and the determination of spending limits – not Big Data that extends privacy violations worldwide.

The Cashless Utopia Mirage

By Jon Matonis
Forbes
Sunday, February 24, 2013

http://www.forbes.com/sites/jonmatonis/2013/02/24/the-cashless-utopia-mirage/

David Wolman's article The Anonymity Fantasy gets off on the wrong foot by claiming to know what we all "deserve" or "what we all want." As a reader, this is aggravating on multiple levels, but the pretentious fun doesn't stop there as we later learn that anonymous cash does not equal freedom and that "clinging to cash" is misguided.

I could be cynical here, but I really don't think it's about perfidiously advancing a thesis to promote his new book. I think David actually believes all of this despite what history teaches us.

Let's not kid ourselves, because the end of money, as we know it, really means the beginning of the transactional surveillance State, which makes this a serious debate about the boundaries of State power and the dignity of an individual.

Unfortunately, the real world extends beyond Wolman's polite corner of Oregon.

There are activists and dissidents in hostile regions paying for Internet blogs, food supplies, and safe harbor. There are payments being made to border guards on a daily basis to flee a murderous government somewhere. There are women selling baskets and blankets at street markets to feed their hungry families. There are cancer patients buying weed from a friend if their state doesn't accommodate medical marijuana. And even before and after the Third Reich, persecuted peoples have always needed a way to protect and transfer what little remained of their wealth.

The persistent war on cash has more to do with moralistic society than it does with civil society as Wolman claims. With ultimate tracking capabilities, how does Wolman decide when a government's "right" becomes a wrong? Does he defend the victimless crime laws against online gambling and consensual sex for money between adults? Does he defend confiscation of private sector wealth when a socialistic regime runs out of funds? Does he defend an orchestrated payments blockade against whistleblower site Wikileaks? Does he defend brutal government law enforcement measures in Syria and Gaddafi's Libya?

Anonymity and civil society do mix --- it is omnipotent violent government and civil society that do not mix.
Wolman is thinking like a technologist when he promotes the cashless utopia and, as a technologist, he's probably correct because paper cash is inefficient, problematic, and dirty. But it's mostly inefficient and problematic for the overzealous regulators and tax collecting apparatus.

Efficiency happens to be a very short-sighted and unintellectual argument. Selective breeding for certain 'preferred' traits is a vastly more efficient method and so is the training-from-birth selection criteria employed by totalitarian states that place athletes in the modern Olympics. I doubt Wolman would want to live in those efficient societies --- cashless or not.

Also, it's a good thing that Wolman partially credits consultant David Birch with his un-semantic argument about the differences between anonymity and privacy, because that way he doesn't have to shoulder the sole blame for such an untenable supposition.

Privacy, especially user-defined privacy, sits on a sliding scale that is defined by the individual. One person's idea of privacy may be anonymity from all and another person's idea of sufficient privacy may be privacy from aggressive marketing companies and governments but perhaps not from banks. The point being that it is the prerogative of the individual, not book authors or digital money consultants, to determine where one sits on that personal sliding scale.

Cash is not the enemy of the poor. Nor are the poor hurt by anonymity --- they are the ones who desire it the most. If that were not the case, we would see the informal, unlicensed economy shrinking rather than expanding. It's only the global repressionists who cannot accept human nature without moralizing that promote the end of anonymous cash.

As Web anthropologist Stowe Boyd proclaims, anonymous cash equals freedom and we should rejoice in that.