An iPhone crypto-wallet; a Facebook cryptocurrency?

Hi and welcome to TechTalk I’m Ken
Mingis executive editor Computerworld I’m here with Lucas Mearian also of
Computerworld senior reporter with Michael Simon from Macworld and PC world
afternoon afternoon morning yes we’re gonna talk a little bit about what’s
going on with basically tech firms and financial services stick around okay so Lukas I wanted to start off with
you because you were writing about this in the wake of WWDC this year that Apple
seems to be at least edging toward a situation where they could be turning
iPhones into crypto wallets mm-hm and I was curious because it’s obviously
not something that they talked about during the Developers Conference but
they’ve rolled out this what’s it called crypto cat ripped okay crypto cat so
what what do we think is going on there why do we think Apple may be moving in
that direction well because other phone companies have
moved in that direction namely Samsung and HTC they’ve already announced that
they’re going to have the ability for native digital wallets to exist on their
phones and then of course Apple announced crypto kit which is this
framework that allows developers to build into iOS applications
Sarris wouldn’t buy OS 13 right build into iOS applications all this
cryptography functionality like hashing in public and private keys and
encryption and that’s what you need in order to create a crypto wallet and
store these hashes that represent cryptocurrency and the problem that
people read these stories and they’re like Apple would never do that you know
it’s it’s a Ponzi scheme well it might be but krypton wallets or a real thing
that’s the point this isn’t based on supply and demand like Bitcoin right
this is based on fiat currencies so basically these are tokens that
represent fiat currency which means they represent real money it’s not yes
exactly right so you have money in the bank these tokens let’s say dollar for
dollar so one token represents one dollar in your bank account
and these are digital tokens that can then be stored in this digital wallet
this online wallet in this case your iPhone yeah exactly and then you can use
this to buy things or give other people money or cashing in
at some point and what’s wonderful about that is there’s no middleman so you have
no central bank or clearance or fees associated with that it’s your money and
they’re particularly interesting is that it creates this whole new marketplace
for developing countries many of them many of which do not have a good banking
system and in other countries like Venezuela the banks are right now ya
know you probably want to put your money on Venezuelan Bank right now not a good
place for it I was thinking of opening an account too but so they don’t really
have banking services this is a banking service and it’s highly secure and it
can be used anywhere in the world there regulate the regulatory landscape right
now for cryptocurrency is a Wild West and there isn’t really much regulation
around it right now so you can create a wallet if this eventually comes to be
create a wallet on your Apple iPhone fill it with cryptocurrency which
represents real money and then you can you’ll buy anything cross-border you can
send money home so like if you’re in a if you’re a migrant worker and you want
to send money home to your native country you know you can do that with
this okay and it’s interesting that you know as noted apple hasn’t been talking
about plans to do this but you know eagle eyed you you figured out that
they’re putting the parts in place that would allow it to do so if it chooses to
at some point down the road after after iOS 13 rolls yeah I mean it’s part of a
trend you’re seeing more and more financial fin tech companies startups
and financial a big stalwarts like JP Morgan Chase going down this route to
create crypto currencies that they can use cross-border which saves them money
it’s it’s faster and they’re really meeting a demand out there because a lot
of Millennials see the value in cryptocurrency not bitcoins so let’s
move in there these digital tokens that represent real money or goods real
estate you know automobiles whatever right well what’s interesting is you
know Mike and I were talking about this earlier this also follows from Apple’s
announcement earlier this year of the Apple card which at the time I remember
thinking why do I need to know the credit card
but then I thought oh it’s Apple I have to have one now so I did sign up for the
police and the information on the apple cart when it’s available and have you
are you getting an apple cart or well I don’t use an iPhone exclusively but my
wife yeah it’s from a consumer ended circle it’s a decent card you get and
there’s no yeah there’s no fees yeah but there is an APO yeah so you will get you
know you don’t pay your bill yes looking them well yeah you’re gonna write
interest rates yeah most most credit cards they charge you the whatever
fifteen percent and then they also say well here’s a twenty five dollar fee
Apple won’t be charging on top of that yeah but there is um I think the APR is
thirteen to twenty six depending it’s it’s relatively low compared to the
industry but it’s still you know it’s still thirteen percent is still it’s not
a bargain that’s for sure but you know Apple has Apple had a card
before they it was an Apple store card and you earned iTunes points and no one
really knew about it and this is a real kind of push and coupled with this which
I didn’t know about because I’m on the consumer and an apple and talk about it
right it seems as though this is a step one towards becoming a full-blown
financial well exactly that’s and that’s what that’s what prompted my interest
because of course also this week we’ve got Facebook announcing you know its
plans right and and so yeah I just I was trying to figure out or all of these
tech firms moving into financial services I mean this is the only thing
that they don’t have well they don’t have our money but I mean setting up the
basically an entirely alternate financial system that would be you know
with which is sort of skirt the current system which could be good or bad I
suppose you know as long as it’s secure its blockchain it should be you know
doable I mean the one thing that makes the iPhone kind of uniquely qualified
for this stuff is that secure Enclave that they announced with so they
introduced with touch ID right so your fingerprint is secure like it’s your
identity on the device doesn’t know it’s not sent over through encryption it is
on your device it is secure if someone like that no one can get did I mention
that crypto kit works with Chicago so it’s
instead of have the input keys you just you you stick your thumb on there are
your face and you automatically open up access to your private keys which
represent the money yeah let me ask about Facebook too while we’re talking
about this real quick so do we know I know this doesn’t roll out until next
year yeah but what is it that Facebook is hoping to do basically turn the
social media site that it’s been into like a retail site yeah they’re giving
their offering users the capability to use crypto currencies so once again back
to cryptocurrencies right right at digital yeah it’s everywhere
yeah digital currency to make purchases on Facebook or other sites they said it
will be interoperable with with other blockchain one would assume they’d
probably try to find some hooks in the Amazon yeah absolutely I mean you’re
think what’s interesting what’s most interesting about this is they’re also
seeing a expanded market in developing countries
so countries with very weak banking systems they see a market open for new
users so enlarged user base to make purchases using this cryptocurrency
instead of having to use these credit card or bank account for that on the and
some are speculating that this also means increased advertising advertising
so let’s say you go from Facebook to make a purchase for a product those ads
will then be placed on the site where you’re making that purchase okay it’s
not it oh I see yeah it’s a way of targeting advertising is what exactly
that makes more sense to me you know in terms of Facebook then perhaps you know
an alternate currency right and people are a little bit wary Facebook doesn’t
have the greatest reputation these days well you know as we’re talking I’m
thinking to this reminds me of like there was a black mirror episode that I
watched a few years back where your popularity on social media governed you
know your value to society and I’m more popular you were on social media the
more I don’t know wait that’s not how it works it doesn’t work that way no but
it’s I mean I do wonder you know and maybe I’m being a bit of a Luddite here
but I do wonder with this rush toward cryptocurrency crypto
let’s um you know and with tech firms moving into financial services you know
what kinds of issues might come up that we haven’t seen yet I mean it’s it yes
it’s good that there’s no central regulator and you can avoid fees and
things like that but then there’s no central regulator so it’s like you know
do you really want to trust Facebook with your money
that’s like why would you possibly book with your personal information
I mean no no no they did say that it’s gonna be absolutely separate from the
social media right up front they said look we are not gonna have access we our
company will not have access to your financial information that is going to
be separate they created a separate company and a an
association made up by right now more than a couple dozen different companies
these are these various processors and FinTech companies and financial services
firms that will be in charge of governing this blockchain so it’s going
to be a probably a hybrid blockchain they didn’t get specific about that but
you’re gonna have a private blockchain that’s going to handle the onboarding of
new users so if I want to use this service I’m gonna have to first verify I
am Who I am using my driver’s license or some other form of ID and then I’m going
to have to say and this is where I do my banking this is where you’re going to be
able to fill my wallet with or empty okay in that case but so once you’re
onboard and now you go on to a public blockchain where you can use that
blockchain to then spend this cryptocurrency I can understand now you
know you’ve written a lot about blockchain over the last few years and
we’ve seen lots of hype that blockchain is going to reorder how everything is
done I can certainly see building blocks here for how certainly financial
services could be disrupted in a lot of ways by a lot of these hugely and I what
I’m wondering I’m gonna be writing about it as you know today I’m gonna be also
looking further into that how this is going to affect the financial services
industry I’m wor gonna be jumping onboard yes
absolutely I think you can receive more and more financial services companies
banks processors jumping into the blockchain marketplace we don’t have a
choice because other people are going to start to eat their lunch it’s like
healthcare you know you have all these other Amazon
and Google and other companies that have never traditionally been in health an
apple an apple that are now getting into Apple especially they’re now getting
into health care they’re either eating their traditional
industries lunch but doesn’t so maybe I’m misunderstanding it but doesn’t so
Facebook needs city bank citizens who ever do very verify that you have the
funds right but but they’re not gonna charge fees for that charge fees from my
for verifying funds that I have there’s got to be they did say there is gonna be
a small fee I’m sorry shouldn’t say that no there will be a small fee but it’s
not going to be anything compared to what we paid today for a traditional
bank okay interesting so coming to a social media site or an iPhone or some
other tech device I mean you know people like us we’re wary of trusting Facebook
but you know there was a time when people didn’t trust chase or so you know
as you get bigger and become more involved you know you become more part
of the site in the lexicon Facebook oh yeah sure I’ll give Google my money I’ll
give Facebook my money more Amazon I mean their their household names they’re
big companies and there’s a certain trust fund you know we’re very us
centric we’re you know these headlines these Facebook headlines and the
election or less yeah there’s other parts of the world that is that’s not a
story yeah well and that’s the point you’re
making is that this is really geared globally toward you know economies and
parts of the world where financial services are not as readily available as
they are I expect heavy marketing in those third-world countries in the
developing countries it’s a global play basically absolutely and it will
probably spread out from there so you’re probably gonna see in in those regions
and then it’ll slowly increase in popularity as it’s proven out you know
this is still a very nascent market place’s blockchain marketplace and we’re
gonna have to find where things settle and the experts that I’ve talked to some
of them are saying this could be a decade away that it’s really mainstream
it could be two decades away but this is a huge step right here some of there’s
someone like Facebook coming into this I just had this horror scenario of my mom
calling me and she’s bought something on Facebook using Bitcoin and God knows
what and she’s ahead of it you’re out what happened
you know Facebook made its bones by being ahead of being first yes no they
were the first big giant social network yep make an investment they got enough
money right you know if it doesn’t pan out of the pan tells me that they
probably have suss this out enough to know or to at least feel like it’s gonna
panic yeah on some level it might not be we might not all be using it in five
years but yeah it’s definitely their real thing the guy in charge of this
effort was a former president of PayPal they have done their research on this he
they’ve been working on this for from what I understand over a year now so
they have done their homework their due diligence
they’ll probably roll it out slowly and see how it works yeah well it’s adopted
but this is a big step okay so I mean just think about where we are you’ve got
the Apple card comes out this year you’ve got Apple putting the pieces in
place to pretend perhaps turn your iPhone into a crypto wallet and Facebook
planning on 2024 it’s you know crypto currency so times are changing you won’t
need a while in any loss for like you guys go I’m I think we put him on asleep
no I’m look I’m as skeptical about my stuff is anyone reporter you’re supposed
to be no and I try to keep that that you know level of skepticism and every story
I write but Matar for me not to say these are exciting times yeah it’s
really remarkable that’s why we’re talking about it yeah okay
Michael thanks for being here Lucas thanks for being here for now that’s a
crypto wallet wrap Thanks

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