Bitcoin transaction to credit card. Currency exchange concept

Extraordinary Ordinary Things: Credit cards and beyond

The first part of this two-part blog, published last month, explored the fundamental ideas of money. Here are some key things to bear in mind as we continue our exploration of this endlessly fascinating subject.

  1. Money is a universal token (metal coins and paper bills) having a value that is expected, but not guaranteed, to be stable over time and is trusted by the people. This trust is usually established by a national government issuing and standing behind its currency (dollars, euros, francs, kroners, pounds, pesos, etc.).
  2. Money is a great facilitator of exchange transactions (buying and selling), the core of commerce.
  3. Money has no intrinsic value. Even when money is equated with silver or gold, the value of money can fluctuate with the prices of these metals.
  4. Money must move quickly and seamlessly from one place to another in today’s largely integrated worldwide society, which was not previously the case in local, largely isolated agricultural societies.

In short, to a large extent, the legitimacy and value of money is whatever a national government says it is.

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Benjamin Franklin close-up from one hundred dollars bill

Extraordinary Ordinary Things: Money Moves

The theme of this series explores items that have become so integrated into our lives that we barely notice them; yet have completely transformed how we live. The first item in the series was the elevator—try to imagine modern high-rise cities without them. The second item was the pre-printed adhesive postage stamp—try to imagine sending and receiving letters and other things through public postal services without them. The third item was going to be about money, specifically the credit card. This  little bit of plastic  ensures we  always have access to money to buy virtually anything we want virtually anywhere in the world. Continue reading

Extraordinary Ordinary Things: The Adhesive Postage Stamp

“Wait a Minute Mr. Postman” (The Marvelettes) and “Return to Sender” (Elvis Presley) were two major pop hits of the 1960s. Among many others songs, they tell the story of young lovers desperately trying to communicate with the object of their affection via hand-written and posted letters.

Wooing and winning one’s teenage heartthrob through hand-written letters! To many of the modern generation, this must seem like a quaint, and perhaps even crazy idea. With email, SMS, social media, and other electronic revolutions in communication, no one would rely on “snail mail” to achieve such an important purpose.

However, in a certain sense the humble hand-written letter, and the humble adhesive postage stamp used to send it on its way, represent a more far-reaching revolution in human history than all of these new-fangled electronic communication media combined. The adhesive postage stamp truly deserves a place of honor on my list of “extraordinary ordinary things.” Continue reading

The 50-year Inflection Point

A strategic inflection point is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.

—Andrew S. Grove, Only the Paranoid Survive (1988)

In the late 1960s Intel sniffed the winds of change and made a dramatic decision to build microprocessors instead of random access memory, RAM. Former Intel CEO Andy Grove describes this abrupt change in Intel’s strategy as an inflection point. As we know from mathematics, the coordinates of an inflection point are where a curve changes direction—typically from up to down or the reverse. In the case of young Intel, the RAM business was no longer profitable, and yet, the profitability of microprocessor chips was totally unknown. It was a choice between dying along with the RAM market or possibly dying with an unproven product in a non-existent market. We now know Grove was right, but he could have been wrong. Such is the life of an entrepreneur.

It has been 50 years since Intel’s inflection point was recognized and then mostly forgotten. But the company and the industry it grew up with is facing another inflection point—the demise of Dennard scaling—the 1974 rule that the power consumption of CMOS chips remains constant as transistors are scaled down in size. Continue reading