American Express on Damage Control

After our speech analysis of the “mastercard rant video,” we received some comments. They ranged from “well done! I like what you are doing and you completely HAMMERED mastercard in your analysis” to the more hilarious and troll-like responses, which makes me laugh. Now it seems that another credit card company, American Express, is bringing out their CEO, Mr. Kenneth I Chennault to do some much needed damage control. This time, we do not have a video to work off with but we will use this article from the New York times. It seems that the people over at American Express did actually read my analysis, based on what is being quoted in the Times.

“There is a reason credit cards were invented… ability to defer payments.” If you frame it in time and space, then yes, credit cards have been a useful tool for those who can afford it. Let’s look at the cold hard facts for a moment. For most credit cards you need a bank account. Yes, you have pre-paid credit cards but even then you need to give identification and other personal information that is not stored safely at all. Academic research has shown us that only 45%-50% of the world’s population actually owns a bank account. I am unable to provide links to the actual academic research papers, since you have to be a member of the publishing sites, but here are some easy to access snippets of information.

Some people might argue that the credit cards and banking services are not very helpful in the more “poorer countries,” due to their lack of general economic infrastructure. However, if we take a closer look to the “less developed countries,” we see that mostly 75% or more of the world’s population have a cell phone or smartphone. This is great for Bitcoin and other digital currencies since they have mobile apps that users can utilise on their phones. This allows the users to be their own banks and transfer their funds to where or to whom they want.

So I think that yes credit cards have their uses, but Bitcoin and digital currencies are “growing and adapting to the ever changing landscape of technological innovations.” Credit cards are more a stagnant or seeing a little downward spiral.

“There is room for a lot of players…though there are some concerns that I have with digital currencies like security for example.” This is the same old tune that is being played by the critics. I can understand where they are coming from. Way back when credit cards were first introduced, they were met with the same scepticism and mistrust that Bitcoin and digital currencies have today. It does feel gratifying to some to use the received criticisms from the past on your competitors.

Now, it is funny that he broaches the topic of security, just like his friends over at Mastercard. Let me first let me tell you that all the credit card companies In the world have had security issues. How many times in the past have we heard about “x amount of credit cards stolen by criminals?” Total security is a proverbial Utopian wet dream. Nothing, even banks, is 100% secure and safe. So is it a bit hypocritical to demand absolute security from Bitcoin and other digital currencies or digital currency-based companies, while credit cards and credit card data are being stolen by the hundreds of thousands every year.

Some people will probably say, “Serge, why not get one of those pre-paid credit cards if you want security,”  Fair point, and in theory it could possibly be a very effective method. However we all know that theory and practise do not always mix.

This is how it actually goes in most places where you can get a “pre-paid credit card.” A friend of mine actually got one of these “pre-paid” cards. She had to fill out papers, provide documents, have her identity card copied, etc. After all that, the clerk took all the papers and information and put it in a map with the sign, “personal info credit card.” After checking everything out again, my friend received her pre-paid card, but her information was simply dropped on a desk where, if you could distract the one clerk behind the counter, you could snatch that information away.

There is also an ethical and moral theme surrounding the credit cards. It’s the huge Oliphant in the room that none of the credit card companies want to approach. This Oliphant is called DEBT. There have been libraries written over debt and debt relief in the past but ever since credit cards were introduced to the general public, the people that are in debt have risen and will continue to rise, as will the interest on those debts. Here is some factual data from the European Central bank on extended credit card debt.

If the credit card companies were so “concerned about the security of the customers“ they give their services to, the debt crisis wouldn’t be so out of control. Now, here are some interesting links that will show you how some credit card companies and banks work. You might not agree with the creators of the videos but you have to look past it because there are some interesting things being said, as well as some astute observations.

“The protocol of Bitcoin is going to be important…. If the banks would follow, but they aren’t.” I can personally say that the banks are very much interested in Bitcoin and the blockchain technology. On the 11th and 12th of December, I was asked to give lectures to a select group of people about Bitcoin, digital currencies, and other developing technologies. In this closed conference, there were representatives of financial sectors (like international big banks and the likes), politicians from Belgium and abroad, national and international business men and women, etc. Just like we in the crypto-currency world are fond of our anonymity, so too are these very important people, so I will not divulge any names or companies that attended this conference. To do so would be hypocritical. I can, however, report that the banks are currently working on understanding Bitcoin and the blockchain technology, and are even trying to test how it would work in concert with their services.

This is further evidenced by 3 top banks in the Netherlands that have been experimenting and researching Bitcoin and how blockchain really works.  The banks reported to be doing this are: ABN Amro, ING and Rabo Bank. We can also add that most other banks are looking to infuse crypto-currency technology with their services through some much needed innovation.

Now, be cautious for optimism, especially when people say “the protocol of Bitcoin is going to be important.” This doesn’t signify that people are condoning Bitcoin per se or that “they are embracing Bitcoin,” It is just a little baby step in the direction of keeping an open mind and is also a “wait and see” posture.

What do you think about American Express’ comments on Bitcoin? Leave your response in the comments below!