Quotes from Are On-line Currencies Virtual Banknotes
I’ve been thinking about the article that I read several months ago written by Stephen F. Quinn and William Roberds titled Are On-line Currencies Virtual Banknotes?. Here are quotes I thought to record here:
Page 1:
“Cash is increasingly being displaced…”
“Exchange using debt ties up fewer resources than does exchange using costly coin.”
“…money like property of finality—of being able to extinguish other debts by the virtue of their transfer from debtor to creditor”
“Monetary history is punctuated by innovations—deposit banking, checks, banknotes, credit cards—that have expanded the role of inside money.”
“The finality of card based payments does not extend to every transaction environment, however.”
Page 2:
“…merchants bear most of the cost for chargebacks in the form of liability for chargebacks from the card issuer.”
“Trade publications have reported rates of credit card fraud as high as 2.1 percent for Web-based transactions, roughly ten times the rate for face-to-face transactions.”
“This article examines the likely success or failure of on-line currencies by means of a historical analogy. Specifically, the discussion compares the introduction of on-line currencies to the debut of the bearer banknote, the direct predecessor to modern currency, in late-seventeenth-century London.”
“In particular, the article argues that the key innovation of the earliest banknotes was to provide finality under circumstances in which extant payment systems either could not ensure final payment or could do so only at an unacceptable cost.”
Notice in the first two pages the word finality is repeated by the author at least three times. The money like property of finality is one that interests me. The dictionary says “conclusiveness” or “decisiveness”. It seems clear to me that businesses prefer transactions with finality. Charebacks are not considered a happy thing to a business owner.
What do you think about the finality property of money?
