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In Fifty Days, Payments Innovation Will Stop In Silicon Valley

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Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#121

Post by aduric »

yoyar wrote: post #52

So, a new startup comes along, and things are going well. The have new, innovative ideas that satisfy the needs of consumers. They manage to get a few hundred thousand dollars from a VC so that they keep operating for another 6 months. This startup offers a service that is cheaper, safer, quicker and generally more efficient that what is currently available. All of a sudden they'll be breaking the law unless they han…

If said company was truly innovative and satisfies the interests of consumers, I'm sure it won't have much trouble raising the cash necessary to continue being a law-abiding citizen.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#122

Post by eropple »

gokka wrote: post #19

Here goes one more reason to use Bitcoin, that's where the real innovation is.

Sure is! A great reason to use a rapidly inflationary currency with no promises of stability or reliability.

Oh, wait. Those are reasons not to use it. My bad.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#123

Post by eropple »

thinkcomp wrote: post #5
stephenr wrote: post #4

They want companies that operate like banks, such as PayPal, to be licensed. I'm not sure I see the downside. PayPal has a shocking record of abusing it's customers, and it can only do so because it isn't bound by the same laws as banks are. Personally, I think if you rely on PayPal/etc for your business, you're asking to get financially raped.

If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barri…

Sounds to me like the bond needs to be a couple tens of millions, then.

If you want to get into banking, you had better have the chops to be able to treat your customers correctly. It's not a hard concept.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#124

Post by hnsmurf »

hnsmurf wrote: post #80

Every company in Silicon Valley is actually a Delaware corp anyway..

I think it's a relevant distinction. Clearly the California company doesn't apply to all corporations in the world or even country. The point is there's likely a loophole that for an interstate or international software corporation will render the regulation toothless.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#125

Post by anamax »

bugsbunnyak wrote: post #87
dpatru wrote: post #70

Earlier quoted context omitted.

An unregulated market will spawn entities that provide the services it needs. This includes security and trust. Insurance companies, for example, are entities that people trust to protect them against loss. Rating agencies are entities that people trust to provide risk assessment. The difference between non-coercive (private) entities and government is that non-coercive entities adapt better. So, for example, if you'…

You were alive three years ago; no? AIG, "AAA" rated CDOs, any of that ringing a bell?

You weren't paying attention.

The ratings were issued by companies that had been given a monopoly by govt. Securitized mortgages were a creation of govt.

The idea that you're missing is regulatory capture combined with govt encouraging transactions that didn't make economic sense otherwise. (One of the underappreciated consequences of RC is that it amplifies "private" bad behavior and shuts out good behavior.)

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#126

Post by lhnn »

ra wrote: post #74
hristov wrote: post #16

In the interest of correctness I should point out that the half a million fee is not a fee but a bond. The state does not take it but it is kept in a trust for people that may be injured by the particular money transmission business that gets a license. Thus, if a money transmission business steals someone's money you can sue them and when you win you can take your money from the 500,000 bond so you are sure they wil…

Thanks for clarifying. I'd like to add that this is a good practice in the financial industry, and isn't a bad thing at all. It's consumer protection. And, $500k is actually a pretty low figure for this type of 'bond'. For example, in Australia I believe you would need a banking license (or a guarantor with a banking license) which requires a deposit of at least $40M in to an escrow account which is managed by the ce…

I'd like to say this should not be legislated, and people should choose who to do business with on their own. If they offer the government a bond to cover losses, then people might go to that business instead of some startup. OTOH, perhaps I don't care when all I'm investing in my "Silicon Valley Facespacecash" bank is $20.

Another reason to use alternative currencies...

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#127

Post by daniel_solano »

jrockway wrote: post #48

Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas…

> Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.

This is not necessarily the case. Often times, regulation is put in place to address some high-profile case, but ignores the consequences of the regulation.

Currently, infants less than two years of age can fly in an airplane without a separate ticket. Years ago, after some instances where such children were injured/killed in accidents, there was talk of forcing parents to buy separate tickets for infants and require them to use an approved child seat. However, had this regulation gone into effect, the extra cost of flying would have forced many families to drive instead of fly, resulting in a greater amount of injuries/deaths.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#128

Post by lhnn »

jrockway wrote: post #48

Doesn't all regulation stifle innovation? If I wanted to sell a homes in a skyscraper made of papier-mâché, building codes would prevent me from doing that. But that's not necessarily a bad thing: the first time someone leaves their soldering iron on while they're not using it, the building burns down and we have five hundred dead families on our hands. "Innovators" tend to think about the good aspects of their ideas…

People should have full information.. I should know if the building I move into is made from plaster of paris. However, if I still want to move into it... I shouldn't be passing on my genes.

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#129

Post by shadowfox »

hammock wrote: post #113
tptacek wrote: post #84

Earlier quoted context omitted.

The question was not whether unregulated markets spawn "trusted rating services". It's whether society could function with private rating services in lieu of regulation.

http://en.wikipedia.org/wiki/Moving_the_goalposts#As_logical... Go back and read your exchange. It looks to me like he answered your question, and you're changing it now.

But it does appear that he has a legitimate question (whether it is different from his original question or not)

Re: In Fifty Days, Payments Innovation Will Stop In Silicon Valley

#130

Post by tptacek »

hessenwolf wrote: post #116
tptacek wrote: post #108

Earlier quoted context omitted.

Then your other company in California have to post the bond. The software has nothing to do with it.

The company in California produces software components. It is not involved in any financial transmissions whatsoever. That is my point.

Then as long as you don't transfer money in California, you're fine. If you do, you need a license. Note the part of the law that refers to the travel costs incurred to get an inspector to whatever part of the country you domicile the business-end of your business in.
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