News Note: What is the Impact of All the Current Political Uproar in Washington DC?

By now the American public is no longer surprised when they wake to up supposedly earth shaking "breaking political news" out of Washington. At some point endless "major political news" that leads to nothing actually happening other than political operatives spouting off their sides political talking points for the day just falls flat for most people. They simply ignore it and go on with their daily routine. Get back to me when something actually happens seems to be the mood.

Our advice here is to ignore all the meaningless noise and just watch the markets. They will tell you if anything truly serious is happening. If you see stock markets nose diving into severe decline that does not bounce back, you have a legitimate indicator something might be up. If you see perceived "safe haven" investments (US Treasuries, gold, silver, etc) suddenly going into a sustained sharp rally beyond normal market behavior, you have a legitimate indicator something significant may be happening. 

Otherwise, you just have a lot meaningless noise that markets are completely ignoring and so should we. So far, based on the reactions of the markets above, there is nothing meaningful to report in terms of all the current "breaking news" coming from Washington D.C. The ongoing unusual activity by the Fed in the repo market had much more potential to rattle markets and even that has had very little impact so far (still bears monitoring). At this point, we certainly see nothing to indicate the stability of the system is at risk which is what we try to monitor here.

-------------------------------------------------------------------------------------------------------------

Added note: Upcoming on the blog will be a three part series of articles that will examine an innovative new proposal for monetary system reform. First an article that explains the basic idea of the proposal and then a two part interview with the author of the proposal. This proposal is one we will add to our marketplace of ideas for monetary system reform.

Update to news note (9-30-2019): Still nothing to really report for now as we appear to just have an intense political dogfight that has just ramped up to a higher level of intensity. This is something we did predict here was likely to happen although it obviously does not take a rocket scientist to make such a prediction. Just continue to watch the markets (which are still ignoring it all so far) to see if there are signs something significant might be happening.

If you are a glutton for punishment and like to follow all the politics of things like this, at the end of the day the only things that will matter in regards to impeachment are:

1- Does the House vote to impeach? Until that happens, all this really is a complete waste of your time to get worked up about. The Democrats have the majority in the House to get that vote, but there are 25-30 in tight districts who risk losing in 2020 on a vote like this, so just watch to see what that group decides to do.

2- If the House votes to impeach, are there 38 Senators who will vote to acquit the President? If there are, the whole exercise will be a colossal waste of time and energy. If two thirds of the Senators are willing to convict and remove the President, VP Pence would become President. While that could shake up markets to some extent, even that might not rattle them too much. No major policy changes would result from that change and then the 2020 elections would still determine if there will be a major shift in direction or not. Those are still over a year away.

So, if all that is interesting to you, then those two things are the bottom line. All the rest is political noise by political partisans on both sides leading to nothing that will directly impact our daily lives as far as I can determine. Personally, I find the whole process a waste of time and have no interest in following it at all unless something that matters actually happens that impacts people's daily lives. No further updates here on this topic until there is at least some indication that might happen.

BIS Issues Reports on Blockchain Regulation and Stablecoins

This blog has followed the emergence of Bitcoin/Blockchain/Cryptocurrencies/Stablecoins for some time to watch for any indications that any of that may have significant impact on the current monetary system. While a lot of activity has taken place in the arena, so far there has been no significant impact on the present monetary system in our view here. As the old saying goes, "don't mistake activity for achievement".

However, it is pretty clear that the announcement of Project Libra by Facebook has gotten the attention of monetary officials around the world (as we noted in this recent article) This is probably because Facebook has the resources and potential user base to actually make some kind of more significant impact if Project Libra comes to fruition as they have vaguely described it. We have covered that here as well.

The Bank for International Settlements seems to be keeping sort of a wary eye on all this activity and has been busy trying to put together some kind of plan to deal with the issues related to non state sponsored forms of would be money. Below are links to two recently released reports that may be of interest with some excerpts from each one. (underlines were added for emphasis) Further below are a few added comments.

-------------------------------------------------------------------------------------------------------------------------

Embedded supervision: how to build regulation into blockchain finance   (full text)

Abstract

"The spread of distributed ledger technology (DLT) in finance could help to improve the efficiency and quality of supervision. This paper makes the case for embedded supervision, ie a regulatory framework that provides for compliance in tokenised markets to be automatically monitored by reading the market's ledger, thus reducing the need for firms to actively collect, verify and deliver data. After sketching out a design for such schemes, the paper explores the conditions under which distributed ledger data might be used to monitor compliance. To this end, a decentralised market is modelled that replaces today's intermediary-based verification of legal data with blockchain-enabled data credibility based on economic consensus. The key results set out the conditions under which the market's economic consensus would be strong enough to guarantee that transactions are economically final, so that supervisors can trust the distributed ledger's data. The paper concludes with a discussion of the legislative and operational requirements that would promote low-cost supervision and a level playing field for small and large firms."

Global Conference on Stablecoins

(conference agenda)

"Senior officials from public authorities worldwide met in Basel on Monday (9-16-2019) to discuss policy and regulatory issues posed by the emergence of "stablecoin" initiatives backed by financial institutions and large technology companies.

The conference was hosted by the Bank for International Settlements (BIS), and included presentations by Fnality International, the Libra Association and JP Morgan.

"A key part of assessing new initiatives is to understand the details," said Agustín Carstens, General Manager of the BIS. "When such initiatives cross national borders, it's important for regulators to coordinate and come to a common understanding."

The event was convened by the Group of Seven working group on stablecoins chaired by Benoît Cœuré, Chair of the BIS-hosted Committee on Payments and Market Infrastructures. The group will produce a final report on its work by mid-October.

"As a new technology, stablecoins are largely untested, especially on the scale required to run a global payment system," said Mr Cœuré. "They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high."

-----------------------------------------------------------------------------------------------------------------------

My added comments: As this whole industry has emerged and progressed, central banks and organizations like the IMF and the BIS have clearly been struggling to keep up with rapid changes in technology that are taking place. It is clear that there is deep concern that various attempts to disrupt the existing state sponsored currency system operated by central banks and the private banking system may allow for something to eventually rise up and challenge the existing system before it is well understood by monetary authorities. The response we usually see from these authorities is usually along the lines that change and progress can be good, but not any kind of change that bypasses the regulatory control of those running the present system. 

So far there has not been any need for them to be too concerned because the entire combined universe of Bitcoin/blockchain/cryptocurrency/stablecoins has such a tiny market share that it has posed no serious threat to the status quo. It seems like Project Libra from Facebook is the first one of these to be taken as some kind of actual potential threat that must be dealt with one way or another. 

At this time, my expectation is that whatever has to be done to prevent anything like Project Libra from posing any kind of serious challenge to the present monetary system will likely be done. While the central banks, IMF, BIS, etc. seem to be starting off kind of behind the curve and have been trying to catch up just to understand the various technologies, they retain the regulatory power to cripple anything that might try to become a serious threat to the status quo. These reports are reminders that regulators won't sit by idly while something arises to threaten the present system.

Once again, as we have written here many times. changing the status quo is extremely difficult. It is unlikely in our view here that any sudden major radical change to the status quo system will take unless a new financial crisis so disrupts the present system that it cannot function. That is what we advise readers to monitor over time. All the rest is probably just a lot of activity, but not much achievement that would significantly change things.
------------------------------------------------------------------------------------------------------------------
Added note: The BIS also publishes this speech by a member of the Executive Board of the ECB which summarizes where things stand with digital currencies, etc. Again, in this speech, we see not much change on the immediate horizon as monetary officials continue to try and figure out which way to proceed. Do they just heavily regulate private efforts to create new payments systems and forms of money or do they push forward with their own state sponsored versions?

Is China Trying to Create a "Digital Currency" that Works the Same Way Paper Money Does?

A big thank you to a reader who pointed me to this blog article which suggests that the PBOC in China may be working on something related to "digital currency" that I have not seen anywhere else. I wanted to feature this article for readers here since it talks about a concept from a central bank different than anything else I have seen while looking for various ideas for monetary system reform. 

Below I have pasted in some key paragraphs from the article. It sounds as if the PBOC in China is actually trying to create a new digital from of the Yuan that people can use the same way they would a paper note (or like a ten dollar bill if this were in the US). The article explains why this is such a different concept. It could certainly push China towards a "cashless" society if you define "cash" as actual paper notes.

--------------------------------------------------------------------------------------------------------------------

from the article:  (I added bold and underline below for emphasis)

"When I wrote about this back in 2018, I said that I thought it was unlikely that the PBoC would allow anonymous peer-to-peer transfers, so I was very surprised to see a Reuters report [6th September 2019] quoting Mu Changchun, deputy director of the PBoC’s payments department, saying about the proposed Chinese digital currency that “its ability to be used without an internet connection would also allow transactions to continue in situations in which communications have broken down, such as an earthquake”.

This would seem to mean that the system will allow offline transactions, which means that value can be transferred from one phone to another via local interfaces such as NFC or Bluetooth. If so, this would be truly radical. I wondered if something was mistranslated in the Reuter’s piece so I went to the source speech (albeit via Google Translate!) and I discovered that this is in fact precisely what he said. Talking about the project, which is called the DC/EP (digital currency and electronic payment) tool, he said that it is functionally “exactly the same as paper money, but it is just a digital form” and went on to confirm that

DC/EP can realize value transfer without an account. In the specific scenario, as long as there is a DC/EP digital wallet on the mobile phone, no network is needed, and as long as the two mobile phones touch each other, the transfer function can be realized… “Even Libra can’t do this,” Mu Changchun said”.

Wow. That’s huge. Libra can’t do it, and never will be able to. To understand why, note that there are basically two ways to transfer value between devices and keep the system secure against double-spending. You can do it in hardware (ie, Mondex or the Bank of Canada’s Mintchip) or you can do it in software. If you do it in software you either need a central databse (eg DigiCash) or a decentralised alternative (eg, blockchain). But if you use either of these, you need to be online. I don’t see how to get the offline functionality without hardware security.

If you do have hardware security and can go offline, then we are back to the question of fungibility again. Here the PBoCs principle is both clear and very surprising.

Mu Changchun said that the public has the need for anonymous payment, but today’s payment tools are closely tied to the traditional bank account system, can not meet the consumer’s anonymous payment needs, and can not completely replace the cash payment. The central bank’s digital currency can solve these problems. It can maintain the attributes and main value characteristics of cash and meet the demands of portability and anonymity.

Wow. They are serious. He goes on to say DC/EP will work the same way as banknotes.

Commercial banks open accounts at the central bank, paying 100% of the total amount, and individuals and businesses open digital wallets through commercial banks or commercial organizations. DC/EP is still replaced by M0 and is legally compensated. For users, just download an app to register, you can use a digital wallet, and recharge cash withdrawals need to dock traditional bank accounts.

I wonder if this will bring interoperability? If DC/EP is really to work as banknotes do then the e-RMB in my bank app and my Alipay app and my WeChat app much be interoperable. I must be able to transfer value from my Alipay app to your WeChat app. If PBoC cracks that they will be on the way to one of the world’s most efficient electronic payment infrastructures.

There was a final part to the speech which I did not understand at all, so perhaps a Chinese correspondent more familiar with DC/EP can clarify the meaning. The speech covers “smart” “contract” by which I assume PBoC means apps that use the DC/EP to execute on the handset (since there is no blockchain), but this is my assumption.

Mu Changchun said on several occasions that the central bank’s digital currency can load smart contracts. However, if a smart contract that exceeds its monetary function is loaded, it will be degraded into a value-for-money ticket, reducing its usable level, which will adversely affect the internationalization of the RMB. Therefore, digital currencies will load smart contracts that favor the monetary function, but remain cautious about smart contracts that exceed the monetary function.

I am baffled by this, which I am sure reflects my ignorance of advanced electronic money technologies, but I don’t think that this deflects from my overall observation that if the PBoC goes ahead and launches a person-to-person offline capable CBDC then that will be not only a nail in the coffin of cash but an event as significant and momentous in monetary history as the paper notes of the Khan a millennium ago."

Please click here to read the full blog article

--------------------------------------------------------------------------------------------------------------------

My added comments: To be sure you find the source for the information quoted above (in brown bold type), here again is the link cited to the google translated speech  the article author Dave Birch quotes from.

It will be interesting to see what comes of this and readers should watch for any news out of China from the PBOC on this. As I read this article, it sounds as if the prospect of the Libra from Facebook has created a sense of urgency in China to move forward on this concept.

Added note: This recent Reuters article points out the Libra is also causing a sense of urgency to respond in some way in the EU as well. But exactly how to respond appears to be an unsettled issue at this time. 

News Note: Fed Has a Repo Problem

The Federal Reserve has been forced to take an action it has not taken for a long time that harkens back to problems that arose during the 2008 financial crisis. This Reuters article explains the problem very well. While there is no indication at this time that this problem has gotten out of control, it is something to keep an eye on. Below are some excerpts.

-------------------------------------------------------------------------------------------------------------------

"As if the U.S. Federal Reserve didn’t already have enough on its plate heading into its meeting on interest rates this week, chaos deep inside the plumbing of the U.S. financial system has thrown policymakers an unexpected curveball.

Cash available to banks for their short-term funding needs all but dried up on Monday and Tuesday, and interest rates in U.S. money markets shot up to as high as 10% for some overnight loans, more than four times the Fed’s rate.

That forced the Fed to make an emergency injection of more than $50 billion, its first since the financial crisis more than a decade ago, to prevent borrowing costs from spiraling even higher. It will conduct another one on Wednesday."

. . . . 

WHY IS THE REP MARKET IMPORTANT?


"The repo market underpins much of the U.S. financial system, helping to ensure banks have the liquidity to meet their daily operational needs and maintain sufficient reserves."

Click here to read the full article on Reuters

Added notes: 

Street.com article on this same situation

CNBC article

Jim Rickards offers this comment on Twitter

Judy Shelton posts this on her Twitter feed on 9-20-19
    (she points out this news posted by the Fed)

Jim Rickards: In Depth Discussion of How He Sees the Aftermath of the Next Financial Crisis

Readers here know that we have long featured interviews and writings from Jim Rickards here on this blog. There are some simple reasons why. Jim is a recognized expert on financial and monetary systems and the problems that can result in major changes over time to those systems. Of course that this what this blog is all about. 

Beyond that, Jim has worked with various government agencies that try to anticipate how things might change in the financial system under different possible future scenarios. This means he is well versed on the thinking behind the scenes on that and also has been asked to provide input into that process. All of this makes him a valuable resource for anyone trying to learn about these issues.

Below I have embedded a very recent in depth interview Jim did while in Australia to deliver a presentation. This is very good discussion for those who want to hear Jim's latest thoughts on where things stand and what he continues to see coming at some point in the future (with the timing unknown to anyone per Jim).

------------------------------------------------------------------------------------------------------------------

link to video (from Smallcaps.com)

-------------------------------------------------------------------------------------------------------------------

My added comments: This interview is somewhat of summary of Jim's most recent book Aftermath (available here), but with some interesting add on questions from the interviewer that you may enjoy. 

In the last half of this interview, in reply to questions about his work with various government agencies that try to anticipate future possible problems and scenarios in the financial system, Jim offers an interesting observation.

Jim says that while he has no problem in getting meetings with officials who are concerned about these issues, for the most part they do not really have any serious contingency plan ready if the kind of crisis he talks about does eventually come to pass. He says they will listen and even do financial war games, but don't really believe a crisis of the nature he talks about will actually happen.

These comments caught my attention because I have gotten the same impression from experts around the world that I do get input from now and then. There are many very bright people who constantly work on ideas and proposals for how a new or reformed monetary system might best serve the public (whether in a crisis situation or not), but my take on things is that they all pretty much agree that no consensus plan for what to do (that is ready to be implemented) actually exists at this time in the event of a failure of the present monetary system.

Jim talks in this interview about what he sees as being possible in the next big crisis. However, my take is that he also does not see that there is any real contingency plan on hand that could get the broad consensus needed to move forward very quickly. He notes that gaining consensus between IMF member nations is unlikely to be an easy task.

I believe this is why we are seeing more and more discussion of a future world where there are perhaps at least two major global blocs in competition to reform the present system. The western bloc led by the US and including the UK and the EU and the eastern bloc led by China and including the BRICS nations and Asia in general. Jim talks about the kind of negotiations that might take place between these two major blocs to try and move forward with some kind of new monetary system in the event the present one did fail and suggests the IMF is the most likely place for that to happen. He further explains how the member voting system at the IMF comes into play in any kind of effort to get a consensus plan. This is something we have emphasized here for some time based on input from experts who know how the IMF system works.

The primary point  to emphasize here is that we should not assume that there is some kind of agreed upon grand monetary system reset plan lurking in the background waiting to emerge in the next major crisis. All of the available evidence I have indicates that at this time, there is no global consensus for anything like that. 

This means it is important for all of us to monitor events, stay as informed as possible, and also have some kind of personal plan in mind in case some kind of temporary disruption of the existing system does eventually take place. If there is some kind of agreed upon transition plan ready to help us move smoothly forward out of a new major financial crisis, I am not aware of it. No expert that I hear from has advised that such a thing exists.


Added note: Later this week I will run an article that provides further evidence that China may be trying to move forward independently with its own monetary system reform with a new sense of urgency because of the proposed Facebook Libra project.

Confused Markets?

One aspect of watching for any signs of monetary system change is to monitor various markets. Most the time markets tends to operate under established norms that can provide some insight into whether anything unusual is happening. If markets stray from established norms for an extended period of time, it becomes reasonable to wonder if this may mean the current financial and monetary system is under abnormal stress.

Let's discuss a couple of examples looking at where markets seem to be what we might describe as confused.

---------------------------------------------------------------------------------------------------------------------

An Inverted Yield Curve

Typically, long term interest carry a higher yield than short term interest rates and only rarely do we see this "invert" such that shorter term rates actually go higher than longer term rates. Just this year, we have seen this condition arise at times. Certainly, the spread between longer term rates and shorter term rates has stayed somewhat reduced for an extended period of time even when not inverted. Historically, when this situation occurs, many analysts predict that a recession will follow an inverted yield curve. 

But these days, there seems to be a lot of conflicting opinion on all this. Some do take the traditional view that an inverted yield curve means we will see a recession coming in the US. Others say that the current situation is different and the yield curve is only inverted because the US Fed is refusing to lower short term rates in the face of declining world wide rates and that money seeking yield is pouring into US bonds.

At this time, there seems to be a lot conflicting signals in these markets leading us to call them confused. On the one hand, we hear much of the mainstream financial media assure us that no recession is forthcoming and the US Fed is also taking this view. On the other hand, the Fed has sharply reversed its course since late last year and has started into a program of lowering short term rates (and ending their QT program) despite saying they see no signs of recession at this time. Then we have President Trump also touting the economy as "the greatest in history" even while he says the Fed must lower rates further because everyone else has lowered their rates and the US is at a competitive disadvantage. Of course we understand that their are 2020 election political ramifications to what happens with interest rates. But for now, markets seem unsure of whether to conclude the US economy is strong and healthy or needs more easy monetary policy to avoid heading into recession. The political atmosphere in the US contributes to the confusion.

Rising Gold and a Rising US Dollar 

Normally, gold and the US dollar tend to have an inverse relationship meaning that when the US dollar is strong, it tends to depress gold prices stated in US dollars. However, in 2019 we are seeing another unusual market condition where BOTH the US dollar and gold prices stated in US dollars are strong over the last several months. There are all kinds of explanations out there as to why this may be happening. I saw this one by Lobo Tiggre on  Kitco which may as plausible as any I have seen (investor worry/fear is causing money to flow into perceived safe havens and for now both the US dollar and gold are viewed that way). So what are these markets telling us? That harder times are ahead? If so, why is the US stock market holding up reasonably well since it normally looks ahead like all markets do? Various economic indicators bounce up and down, but seem to stay mostly positive. Again, we seem to be getting mixed signals from markets that appear confused.

-------------------------------------------------------------------------------------------------------------------------

Conclusion: One theory as to why markets are behaving unusually is that so much attempted manipulation of markets has taken place over the last 10 years that traditional normal market behavior has been distorted. Central banks all over the world have implemented easy monetary policies in response to the 2008 crisis. There are now trillions of dollars globally invested in bonds that pay a negative yield (the bond purchaser has to pay the bond issuer interest which is completely reversed from normal bond market conditions). The creation of various derivative products allows large market players (central banks, large multinational banks, large hedge funds, etc) to actually gain enough leverage in some markets to be able to manipulate the price direction for those markets, at least in the short term. Governments also engage in currency market manipulations when they feel it serves their purposes. On top of currency wars we have trade wars just as Jim Rickards accurately predicted several years ago (see Currency Wars - 2011).

Whatever is causing these confused markets, it appears that many traditional market norms can no longer be relied upon to try and forecast future trends. This suggests that market volatility and uncertainty for investors is likely to continue and even increase. 

This could explain why gold has now reached all time highs in many major currencies around the world and seems to be heading that way in US dollars even as the US dollar itself remains relatively strong thus far. Click here to see how gold has fared against the major global currencies (average annual gain of 9-12% since 2004 with a huge surge across the board in 2019 averaging around 20%).

Will any of this lead to some kind of major reform or reset of the present monetary system? Is it even possible to get the kind of political consensus needed to do some kind of major monetary system reform? Only time will tell us the answers. That is what this blog attempts to monitor. There are many ideas for potential system reform as we have noted here. But there seems to be very little political consensus around any one idea at this time. 

Followup: CNBC - Most Americans Don't Use Mobile Payments

This is a followup to our recent articles here and here that discuss how and why most people in the US have not moved towards new payment applications for paying normal daily expenses. CNBC runs this article which again points out that most people are simply happy with the debit and credit card system available to them. Below are some excerpts and then some added comments.

-------------------------------------------------------------------------------------------------------------------------

"Despite growing smartphone dependence, most Americans still aren’t using the devices to pay for things."

. . . . .

"It seems odd considering the ubiquity of iPhones and Androids in the United States. More than 81% of Americans own a smartphone, up from 35% just eight years ago, according to Pew Research Center. While experts say mobile payments in the U.S. will eventually close the gap, they see legacy financial systems, a lack of a need for other options, and rewards cards as major headwinds."

. . . . .

"But in the U.S., the credit and debit card system is well-established and works just fine for most people.

“A big driver of mobile adoption is just how big an improvement is it,” du Toit said. “When it comes to the U.S., there is a good enough solution there already.”

. . . . . 

"U.S. consumers aren’t lacking options when it comes to paying on their phones. There’s Apple Pay, Google Pay, Samsung Pay, PayPal, Venmo, Square Cash, Zelle and newcomers looking to disrupt that entire list. But in order to use these apps, merchants such as coffee shops and retail stores need the proper hardware.

“It’s not the consumer mobile experience — they’ve done a pretty good job,” said Peter Gordon, CEO of PRMPayments. “It’s acceptance, meaning the merchant has to sign up for it. It’s expensive.”

-------------------------------------------------------------------------------------------------------------------

My added comments: Here again we have a mainstream publication article saying essentially the same thing we have said here on this topic. But really, this is just an example of why ALL change tends to take place gradually. Unless there is some kind of major problem/crisis that causes people to abandon what they have been doing, people tend to stay with what has been working for them. 

This may even offer another reason why the US dollar has become so entrenched globally as the reserve currency of choice. Once anything gets established as the standard, it tends to stay in that position for a long time unless something unusual comes along to disrupt the status quo.

So far, at least in the US, most people are still quite content to use debit and credit card for payments that are denominated in US dollars issued by the Federal Reserve. Here, we just continue to monitor events to see if anything will come along to change that.

Bloomberg - Americans Stick with Credit Cards

Over the last decade all kinds of new efforts to get people to change the way they pay for things have arisen. We have covered many of them here. But this article appearing in Bloomberg notes that, at least in the US, the use of plain old credit cards still wins out. Below are some excerpts and then an added comment.

------------------------------------------------------------------------------------------------------------------------

"Will anything ever pry old-fashioned credit cards out of Americans’ hands?

Even as the rest of the world embraces the idea of paying for stuff with their smartphones, the U.S. is clinging to its cash and plastic -- so much so that even the nation’s biggest bank is struggling to persuade people to switch. Starting early next year, JPMorgan Chase & Co. customers will no longer be able to use the Chase Pay app to pay with their smartphones when shopping in stores, the bank said Wednesday (8-21-19)."

. . . . 

"In the U.S., digital-wallet transactions represent only 5% of the $2.6 trillion market for in-person purchases and 20% online, while cards accounted for 80% of spending at physical stores and 70% online."

. . . . 

"The U.S. market has been slower to develop partly because merchants have been slow to accept such payments and consumers haven’t found new options convenient enough to give up paying with cards that offer lucrative rewards."

Please click here to read the full article in Bloomberg

-----------------------------------------------------------------------------------------------
My added comment: The last paragraph quoted above makes a significant point in my view. It's why I use credit cards for most payments and why most everyone I know does as well. Other payment options simply are not competitive in offering sufficient rewards to get people to change engrained behavior (both merchants and end users). I talked about this a bit in this previous blog article that compared using credit cards to using Bitcoin or other similar kinds of payment options.