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