It’s Not All About Winning, Unless You Win

I had a wonderful time at the City Debate last night, Tuesday, 6 March.  Here’s a photo of all of us at the start:

CSFI & CISI City Debate:

  • Antony Jenkins (10x)
  • Nikhil Rathi (London Stock Exchange)
  • Michael Mainelli (Z/Yen)
  • Ruth Wandhöfer (Citi)

You can spot Ruth on the left, with Angela Knight in the centre who chaired proceedings, and Alderman Alan Yarrow both as Chairman of CISI and as Lord Mayor Locum Tenens.  The pre-debate vote was neck-and-neck, 51% “no” (Antony and my side) and 49% “yes” (Ruth and Nikhil’s side).

From the questions it appeared a hostile audience to Antony and me.  I had that queasy feeling you don’t like when you’ve volunteered for a competition just for the fun of it, then suddenly realise you could lose in front of all your friends.  How can one’s self-esteem ever recover?

Now you can see me in full ‘must win’ mode, or as my friend George Littlejohn would have it – “Michael could be up for playing Churchill come the next biopic.”

City Debate 2018

Thus it was a genuine surprise, and relief, to find that we moved the audience significantly to our side, 73% to 27%.  Whew.

In case my position had anything to do with swaying opinion, I set out the case against, below:

“This House Believes That Fintech Will Save The City” (NOT)

Lord Mayor Locum Tenens, Your Excellencies, Fellow Aldermen, Distinguished Guests, Ladies and Gentlemen.

You heard Antony’s compelling words.  My argument balances his.  If Fintech doesn’t destroy you, then … Fintech will remain, a small comfortable parasite on the technology and trade centre that is our global City.  So what is the City, what is Fintech, what needs saving?

Yesterday, the Inspector of Ancient Monuments assured me that London’s archaeological evidence proves over 100,000 years of trading.  I ask you, many of you too also ancient monuments before me, to join together and take a long-term perspective.  Bloomberg across the road sits above two millennia of Londinium.  We convene over a millennium old stocks market.  Gresham’s Royal Exchange opposite is over 450 years old.

With the tragic exception of Edward I’s expulsion of the Jews in 1290, what distinguishes London is that, by comparison, it has treated all comers from outside the walls fairly, so long as they adhere to “meum fidem, meum pactum”.  Lombards, Huguenots, Rothschilds, Warburgs … Mainellis.

We are an SME City.  24,000 businesses provide 483,000 jobs in the square mile, with 1,200 more each year.  Yes, 250 firms provide 50% of the jobs, but they work with 23,750 deal-making SMEs.  Large and small produce 3% of UK GVA from less than 1.5% of the workforce, three quarters of the UK’s services trade surplus, some £68bn.

Urban legends mislead us.  The City was a deal centre before and after WWI, but was a feeble financial centre from 1939.  The finance legend was kept alive by Italians and Americans, Autostrade in 1963 creating Eurobond markets on neutral territory.  When Thatcher lifted exchange controls in 1979 and Big Bang broke cartels, financial services boomed.  Most of today’s behemoths were SMEs 30 years ago.  Bloomberg dates to just 1981.

You’ve heard of a Baker’s Dozen, 13?  I recently learned that a Banker’s Dozen is 11.  Just seven banks, not even 11, gets you to over 95% UK market share.  Cartels remain.  Domestic banks pursue a decades old, yet rational, strategy of hampering account switching.  If you want to be a success in retail Fintech, go to a country with over a thousand banks, Germany, or over six thousand banks, America.  Make some marketing director’s career rather than annoy a UK bank strategist.

Our retail fintech story is government lies for children, baubles with no Christmas tree:

  • M-Pesa in Kenya dates to 2007, eight years before the UK notices Fintech.
  • Retail Fintech kids unable to afford desks sit in Level 39 beside the compliance & admin battery hens of Canary Wharf, while Berlin, a quarter our size and not a global financial centre, raises more Fintech finance than we do.
  • China has 13 Fintech unicorns to our four. Even that requires forward-dating things like WorldPay, 1995, just to  fake our numbers up.

Then we put our regulator in charge of a sandbox, letting government bottlenecks choose our winners.  Any country whose regulator is in charge of innovation has deep problems.  The wider City is lawyers, accountants, maritime, insurers, not a fintech pimple.

Google Trends awards the term ‘Fintech’ around 100 points.  In January 2015 it was an insignificant six points.  Our government claims creation of a sector it didn’t even notice four years ago, putting some mobile app lipstick on the antiquated systems of some oligopolistic banks.

I came to the City in 1984 to put computer technology into Messels, then Shearson-Lehman-Amex.  We old-timers should celebrate the progress of automating wholesale finance.  We’ve been doing real Fintech long before this insulting term was mashed up.  It’s as facile as saying your heartbeat keeps you from dying.

London is a science & tech city.  From Tudor ‘New Learning’ to Gresham College, Francis Bacon, the Royal Society, Industrial Revolution, Wheatstone telegraph, or DNA (the work was done at Kings, not Cambridge), London has been at least as much about science & tech trade as it has been about finance.  Technology-Media-Telecomms is a significantly larger percentage of firms under 100 employees than finance, insurance, or professional services.  Our centuries of tech drive regtech, instech, arttech, filmtech, songtech, medtech, edtech, traveltech.

Finance moves with technology too, from cuneiform to papyri to tally sticks to spreadsheets to databases and now databases-plus, smart or distributed ledgers, blockchains.  But smart ledgers are ‘wide tech’ for identity, documentation, and agreement exchanges, not just payments.  Tech is for all sectors and the City of London is the most intense place on the planet to do tech deals.

So does the City need saving from Brexit, the wider UK, perhaps AI?  To paraphrase Streisand, “people who need to trade with people, make London the luckiest City in the world”.  As long as we focus on face-to-face, commercial, global deal-making that AI and telecoms can’t replace, deal support will thrive, from financial and professional services to hotels, culture, healthcare, or entertainment.

With or without Brexit, we need quality education and training, health, infrastructure, broadband; airports (plural); an in-visa-ble as possible access to people; a functioning housing market; a simple tax system.  If Britain is open for business, try opening a bank account.  What always needs saving is the rule of law, innovation, and open deal-making.  We are deficient, but not desperate; in danger of having our Emperor’s clothes disrobed, but with time to knit some new garments.

In conclusion, profound changes would be needed to even start to be a standalone Fintech centre.  Silicon Valley, in total, is still only half the size of London.  Fintech propaganda hides three decades of wholesale finance automation.  Our real strength is over 500 years of wider technology and open trade.  Sell Trade in Tech not Fintech.

So, do you vote for deep tech or mobile gimmicks, do you vote for City deals or for Canary Wharf turkeys, do you vote for people or machines?  Our centuries of success are built on growing SMEs in open, global trade, not some three year old government mashup.  Please vote for yourselves, the deal-makers of London, not this facile motion.


From Archives To Modern Lives – Deep In The King’s College Scientific Archives

From Archives to Modern Lives: Frontiers of Trade and Technology
A survey of past and present innovation in association with King’s College London Archives, Wednesday, 15 November 2017

Surprisingly for some, London is, and almost always has been, a science city.  From the Gresham College days of the Tudor ‘New Learning’, Francis Bacon, the foundation of the Royal Society and on to the Industrial Revolution, genetics and even ‘fintech’, London has been at least as much about science & technology as it has been about trade & finance.

The World Traders had a wonderful day indeed.  Our main event, from 15:00 to 17:30, consisted of fully-illustrated presentations by six distinguished speakers, each at the very top of his or her own area of expertise. They referenced key objects of lasting scientific importance from King’s College London.

We handled numerous artefacts ranging from the original Wheatstone Telegraph of 1837 to the original DNA photo, “Photo 51”, to Barbara Cartland and Ted Hughes and Alan Ginsburg materials. Dr Brian May (yes, of Queen!) is an enormous fan of stereoscopy, heading up The London Stereoscopic Company, and created a 3D film for us. It feels like serious Livery one-up-person-ship that we can brag, “as we wore our 3D glasses Dr May leaped out from the screen to ‘Greet the Worshipful Company of World Traders’”.

The reception and dinner were on the eighth floor of Bush House in Aldwych (a building recently taken over by KCL, previously occupied by the BBC) with dramatic views from the City to Wesminster.

Wheatstone’s Cryptographs and Cipher

The full programme:

15:00 for 15:15      Reception, 1st Floor, Bush House, 101 (Auditorium)

15:15 – 15:30          Welcome
Deborah Bull, Assistant Principal King’s College London

Dr Jessica Borge & Dr Geoff Browell

15:30 – 16:15         Computer Code
Artefact:                  Wheatstone’s Cryptographs and Cipher Post/ Telegraph TBC
Dr Jamie Barras
Professor Mischa Dohler

16:15 – 17:00          Life Code
Artefact:                   Photograph 51 TBC
Professor David Edgerton
Professor Karen Steel

17:00 – 17:45          Visual Code
Artefact:                   Wheatstone’s Stereoscope TBC
Denis Pellerin
Professor Reza Razavi

17:45 – 18:00          Concluding Remarks
Dr Geoff Browell

18:00 – 19:00          Drinks, 8th Floor, Bush House (South)

19:00 – 21:30          Dinner, 8th Floor, Bush House (North)
Guest Speaker: Dr Carina Fearnley

Surging Financial Crime In A Digitised World – Can We Turn The Tide?

Some remarks made before the CityForum Strategy Round Table on 3 November 2016 at the Guildhall.  Just before the publication of this ENISA report to which we contributed:


“May I offer a warm welcome on behalf of the City of London Corporation.  We are delighted to be hosting you today here in the heart of the City.

The growth of cyber-related businesses – and indeed the tech and digital economy in general – is of great importance to the City of London Corporation.  As we move more towards a more a digitally enhanced economy in the City of London, especially in light of the challenge we now face to our more traditional financial services offer by way of the political challenges that are ongoing.  The growth of new industries such as fintech and cyber enhance the role of the City of London as a world-class centre for business and professional expertise and services.

The City of London – both large institutions and small businesses  – are subject not only to political or economic challenges but also technological ones.  And whilst the level of expertise around cyber in our banks may be developed, there are always individuals – or even individual states – looking to undermine our dominance as a global hub.

Later today, my colleague Mark Boleat will address this gathering on the importance of international partnerships and how we can work together to meet those challenges.  We have made great strides in securing international partnerships to foster shared intelligence and prosperity in this space – and we are grateful to have Cyrus Vance joining us later, and we are grateful for his continued support for initiatives such as the Global Cyber Alliance.

But we also believe that there is an exciting ocyberpportunity here to harness the burgeoning tech expertise in the UK.  Our dominance of our more traditional financial services markets, markets which provide amazing access to both finance and services, talent and data, could enable us to create something new and secure not only for our digital way of life, but increase our general economic prosperity too.  We have in the past discussed the important role that insurance and reinsurance can play in making this risk ‘normal’.

And of course – that knowledge and expertise here in the City also includes our own Police force – the national lead for economic crime – and we are  fortunate to have them join us today as well, and to have the Commissioner, Ian Dyson, speaking.  Only by working in partnership with our Police and security forces can we begin to build a prosperous City which is secure, confident in its own abilities, and ready to meet the challenges of the 21st century. cyber_cover

There is a saying that “the opposite of danger is taking risks”.  In the cyber space I believe that is truer than ever, and I hope that today’s conference suggests some of the technical and financial risks we need to take, from using distributed ledgers and blockchains for added, rather than reduced, security, or a Cyber Re, similar to Pool Re, for national resilience.

Thank you.”

ChainZy – Anchoring Mutual Distributed Ledgers (aka blockchains) In Reality

Over the Last year there was a lot of hype about mutual distributed ledgers (MDLs, aka blockchain technology).  Leaving aside the coin-based systems of Bitcoin, Ripple, and Ethereum, I think Z/Yen’s practical work in the field is fascinating.  Much of Z/Yen’s work was featured in the FT recently.

We have been working with mutual distributed ledger (MDL) technologies since 1995 for complex multi-party transactions, but until recently financial services people dismissed MDLs as too complex and insecure, until Bitcoin terrified them.  The mania around cryptocurrencies has led to a reappraisal of their potential.  Equally, MDLs are getting easier to implement and manage at a time when people are rethinking the future of financial services.

Z/Yen have a lot of work  on, a project with SWIFT on The Impact and Potential of Blockchain on the Securities Transaction Lifecycle, ‘proof of concept’ and ‘use case’ demonstrators for clients, courses, and ongoing research.  Z/Yen and Long Finance share their research widely, e.g.:

EY Front Cover

Sharing Ledgers For Sharing Economies: An Exploration Of Mutual Distributed Ledgers (aka blockchain technology) Michael Mainelli and Mike Smith 2015
Journal of Financial Perspectives, Volume 3, Number 3, EY Global Financial Services Institute (December 2015), 44 pages.

Z/Yen published the work of one significant 2015 research consortium (InterChainZ) online back in September.  InterChainZ has been working for the past year on multiple MDLs working together.  Z/Yen used their suite of MDL technologies built up over two decades, dubbed ChainZy, to build a set of seven ‘use cases’ working together.  InterChainZ aimed to answer a core question – “what elements of a trusted third party are displaced by mutual distributed ledger (MDL) technology?” by providing a basic demonstrator of MDLs, including variants of blockchains, and comparing how they might work within selected financial services use cases.  InterChainZ provides a generic demonstration suite ChainZy Logo of software providing an interface to MDLs for tasks such as:

  • selection & storage of documents;
  • document encryption;
  • sharing keys;
  • viewing the MDL transactions;
  • viewing the MDL contents subject to encryption structures.

The software permitted the testing of a variety of MDL technical configurations. It was then employed to discuss and test various practical applications of MDLs.  The outputs were shared with participants as joint intellectual property for their own future use.

InterChainZ has shared some learning online. This includes the above video – titled “Boring is Brilliant” – where participants (DueDil, PwC, and SunCorp) explain what mutual distributed ledgers are, and how they could be employed.   A few of the key learning points from InterChainZ were:

Terminology: Early in the InterChainZ project it became apparent that the further discussion moved away from Bitcoins and blockchains, the easier conversations became.  Bitcoins and blockchains were burdened with too much baggage.  Terminology is evolving rapidly, hence the team’s emphasis on “mutual distributed ledgers” as the term of choice.  The technical focus might be on boring ‘ledgers’, but the excitement is in the applications above.

Identity: It also became clear that ‘identity’ issues are universal.  One of the great advantages of doing consortium research was that the identity chains were both ‘use cases’ and essential infrastructure that would have had to be built for anything else of substance.  Distinguishing ‘identity’ from ‘transactions’ and ‘content’ made processing and distribution sense, at the expense of a bit more complexity in comprehension.  While InterChainZ showed that MDLs can work together, and the project explored many different architecture possibilities, what was explored is certainly only a small portion of what is possible.

Architecture Choices: MDL architecture has to reflect the economic and commercial realities of numerous businesses working together.  This dictates that many different architectures are needed for many different situations.  One ‘blockchain’ will not suffice for most business-to-business work.  Different business uses require different node structures.  For example, the Master node architecture would be appropriate where a regulator is confirming all transactions in a market as being from valid market participants.  The Supervisor node architecture might suit a small group of large organisations interacting with multiple smaller ones.

Validation: Core to identity and architecture is the method used for validating new transactions.  While Bitcoin blockchain’s ‘proof-of-work’ validation approach is fascinating, and suited to having seven billion people confirm retail transactions, it is not appropriate for wholesale markets.  One of the basic premises for InterChainZ was to focus on exploring “non-blockchain consensus or identity” MDLs, i.e. what benefits could be achieved when not using currencies or tokens.  This decision provoked some external criticism, principally questioning whether there were benefits to MDLs without proof-of-work validation mechanisms.  However, Z/Yen long ago achieved around 1 billion transactions per day, a benchmark a few are now touting, by sacrificing token systems for other validation methods.

Content Chains: The project developed a number of MDLs that directly stored documents, as well as MDLs that only recorded the ‘hash’ of documents.  This led to the development three conceptual MDLs, “identity chains”, “transaction chains”, and “content chains”.  Corporate and individual identity chains authorise access to a transaction chain.  A transaction chain holds the core ledger records of all transactions, but only a hash of original documents.  The content chain is an MDL holding all of the original documents.  The content chain might be managed by a third party for storage and retrieval because of its size.  This conceptual structure is quite flexible.  The only technical difference between the chains is that the identity and content chains have a fixed length hash field while the content chain has a variable length field.

Further Research – IntereXchainZ & MetroGnomo

At a basic level, the project showed that MDLs work and can work together, but current research, IntereXchainZ goes much further, pushing forward four themes:


  • market functions – order matching, margining, account functions, clearing, settlement, as well as possible uses of a token currency within exchange;
  • usability and ergonomics to enhance the end-user experience – exploring the end-user experience by connecting to off-the-shelf wallets for cryptographic key management;


  • integrity proofing – dynamic anomaly and pattern response additions, monitoring and testing facilities;
  • Content Hash-Addressable Storage Market (C#ASM) – extending the ‘identity’, ‘transaction’, and ‘content’ chain thinking that emerged from InterChainZ into an indexable archiving system both as a ledger itself, but also supporting other ledgers;
  • data taxonomies, encryption levels and tracking – how feasible is it to have differently labelled categories and ‘data boxes’ (e.g. health, car insurance, home insurance, driving record, etc. on a person’s MDL) that can only be opened as a group, to encrypt levels with levels (first order health data perhaps before detailed data), to provide access records (who opened, when), and might homomorphic encryption have a role;


  • facilities for automated creation of new mutual distributed ledgers – a parameter driven system providing options for permission management, proof of stake and identity settings, supervisor-master and other node settings, ‘voting’ permutations, and peer-to-peer structure settings;
  • exchange functions – processes to make the basic interacting ledgers into a demonstrator of a full exchange, with numerous ‘use cases’ therein, e.g. sharing identity functions with transactional functions and storing relevant documents securely and permanently;


  • management and control features – management information, performance statistics, visualisation;
  • documentation of standards for mutual distributed ledgers and legal entity identifiers.

And 2016?  Z/Yen are launching a new timestamping service next month with the support of at least one government.  We call it MetroGnomo, a “world record service”.  This is being launched in an experimental mode using MDLs based on ‘agnostic broadcasting’.  The intention is to increase speeds further, increase resilience, and provide a useful, free service showcasing Z/Yen’s technologies.

Kuring? No, But Konfirming The Origins Of Kawasaki Disease

Here is a nice story about the ancient Barts Pathology lab helping advance modern medical science a teensy bit over the tragic Kawasaki disease:–but-it-may-all-be-in-the-wind-10376403.html

“Gee’s post-mortem examination findings, preserved in a single paragraph written in 1871, recorded signs of damage called aneurysms in the coronary arteries running across the surface of the boy’s heart.”


For me, this museum story began in 2006.  Professor Will Ayliffe and I were aghast at the state of deliberate neglect when we made an ‘illegal’ tour of the then abandoned facility.  I was on a board with the Clinical Pathology Association (CPA) as a subsidiary, UKAS.  The CPA had a Trust to which we applied for cataloguing, and the CPA Trust funding came through in 2009/2010 with Dr Ken Scott’s support (the CEO of CPA).  Professor Adrian Newland also lent his support, thus drawing in Barts Trust support.

The publication by Carla Connolly of her preservation work – –  along with this Gresham College lecture by Will – – (supported by Gresham Professors Tim Connell and Frank Cox), and City of London support through Wendy Mead kept up the visibility, leading to the permanent museum arrangements with Queen Mary University of London (QMUL) –

And it turned out the historic collection was useful, perhaps invaluable, as long suspected by Will and me. Sadly (for those with this rare disease and their families), yet hopefully (medically and scientifically), perhaps more value will be derived in future on Kawasaki and other diseases. I think it is a great story, or backstory, for all of us in the City, Gresham College, and the scientific profession.

[Coda: during the covid-19 pandemic we have also seen Kawasaki disease feature, so the origins are important –]

Sirius-ly Long But Successful-ly

One of my longer and more problematic projects has been Sirius Minerals.  What began as a copper and gold mining exploration firm turned into one of the biggest potash firms, and the first non-hydrocarbon mine in the UK in over half a century.  As I’ve remarked to friends, if oil & gas run out we wind up cycling, but if the potash runs out we move from 7 billion people to 1 billion people in less than two years.  Hmmm.

Planning permission has been the key to success.  Having been one of the founders, along with Richard Poulden and Jonathan Harrison, back in 2005, I was delighted to see planning permission finally approved.

FT Coverage –

Guardian Coverage –


It’s an exciting, interesting (not least being a two century export supply for all of Europe and  having a 37 km transportation tunnel to Teeside), and potentially highly-profitable project with which I’m proud to have been associated.  Interesting that it becomes successful alongside another decade long project at Barts (see next).  The pigeons may take a long time to come home to roost, but they do home in.

Knightian Ignorance – “Are You Not Thinking What I’m Not Thinking?”

Voltaire said, “Doubt is not an agreeable condition, but certainty is absurd.”  I was asked to share my ignorance by speaking about uncertainty and finance at the Calculating & Communicating Uncertainty Conference on 27 January 2015 at BIS, London.  The event was sponsored by the UK Ministry of Defence, Defence Science & Technology Laboratory (DSTL) and Public Health England, and organised by the University of Southampton.  You can read the full talk, “Where The Numbers Meet The Road – Uncertainty At The Frontiers Of Finance”.  As my highlight, I would point out how much I enjoyed sharing with the audience my concept of “Knightian Ignorance”.

DSTL Conference 2015.01.27

University of Chicago economist Frank Knight (1885–1972) distinguished risk and uncertainty in his 1921 work Risk, Uncertainty, and Profit.  Risk is something you can assess by knowing impact and likelihood.  Uncertainty is something you realise might happen, but can’t quantify.  Black Swans and unknown unknowns are popular party points today.  To explain the conjunction of known unknowns and unknown unknowns I remembered the UK Conservative Party’s crude slogan under Michael Howard in the 2005 general election, “Are you thinking what we’re thinking?”  I could explain known unknowns and unknown unknowns as Knightian Ignorance, “Are you not thinking what I’m not thinking?”  Enjoy!

Safer Cities – open data, cyber insurance, new currencies

Safer Cities – People, Security, Technology
Alderman Professor Michael Mainelli
CityForum –
Monday, 10 March 2014
One Whitehall Place, London SW1

As a student of international economics, I’ve been asked to provide some comments today on Safer Cities. In 1800, only three percent of the global population lived in cities and only one city, London, had more than a million people. In 2008 more than 50% of the world lived in cities and there were well over 300 cities with a population over one million people. Despite working with many cities on things such as the Global Financial Centres Index or futures work on drone delivery strategies or new currencies, I’ve never claimed to be a City guru. However, you don’t need a guru – the question “what makes a great economic city” has a simple one word answer – Trade.


Cities reduce the degrees of separation. People come to cities to trade. What makes cities strong is the free flow of goods, capital, services, labour, and intellectual property. Gross World Product is about $50 trillion, and trade is over $25 trillion. In fact, 25% to 40% of trade is non-monetary, so global trade is not far off Global World Product, though this is a bit of an apples and oranges comparison. Now, can you name my economic hero of the 20th century? He transformed the UK road network, destroyed the northern ports, and devastated east London. He was of Scottish descent. Several cities such as Oakland, California or Tanjung Pelepas in Malaysia sprang from nowhere due to him. His innovation created London’s Tilbury port. He is of course Malcom McLean, father of the shipping container.

The biggest gains for peoples of the world have been through free trade. When major eastern economies embraced free trade, almost two billion people were lifted out of poverty. The biggest innovation of the 20th century that contributed to reducing poverty was probably also the sea container.

So let’s look at security. One of my favourite Benjamin Franklin quotes is: “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety”. Franklin meant, of course, that even seemingly minor or transient curbs on freedom should not be tolerated. American representative democracy required a compact with markets that did give up some essential liberties to regulators in order to purchase a little temporary safety. Madison notes in The Federalist Papers, “The regulation of commerce, it is true, is a new power; but that seems to be an addition which few oppose, and from which no apprehensions are entertained.” I think Madison underestimated the apprehensions.

We have to get the relationship between commerce and our security services right. So what are my thoughts on safer cities? One of my big cyber security fears is hacking those same sea container stacking systems on the docks and randomly shuffling them. We might slowly starve and riot, unable to get at the scrambled stacks with food inside. I want to talk about non-physical trade, so I’ll point out that the biggest shift in trade today also involves containerisation – the data packets transmitted and swapped over the internet. I shall provide three points for discussion on weightless, online trading – open data, cyber insurance, and the changing nature of money.

First, I wonder, with the Lord Mayor Alderman Fiona Woolf CBE, if how we gather and exchange data might define a city. Perhaps, our new city wall is a data wall. Our new reservoir is our data store. Perhaps on entry to a city we contract to provide movement information from our smart phones to help transport planning – a mobile app passport. If I get planning permission to build a block of flats, must I provide ways of sharing energy, occupancy, or waste information with the city, which it anonymises, stores, and then shares more widely. I can link up with neighbours to consider new power or water treatment plants because I have the data on local consumers, their needs, their usage patterns. There are liberty and security issues, certainly, but more open data could transform London and other cities. We’ve seen this locally in minor ways with transport apps. We’ve seen this globally in major ways with GPS or weather data. Perhaps we should be freer with Land Registry data. Perhaps utilities should have sharing obligations in exchange for their quasi-monopolies. Perhaps cities should have open source blockchains of recorded trades within their walls. A safer, wealth producing City has to reset a number of boundaries, to build new city walls around reservoirs of data, keeping out the highwaymen of the internet. I might go further and muse on how fundamental reform of patents and copyright might help trade in data by lowering trade conflict, but due to time shall move on.

Second, we have to make data trade and cyber issues commercially ‘normal’. The state of commercial normalcy for most risks, think fire, theft, flood, for a business is that – after a business has done all the right things – it can then buy insurance. Why don’t we have a Cyber Re (or extend the existing Pool Re for terrorism insurance) where government becomes a partner to the insurance industry funding the extreme losses of cyber-crime, learning how to talk to industry in commercial terms? With reinsurance, normal insurers write cyber policies which help spread information and best practice. A Cyber Re helps promote a stronger ICT security industry and a more promising national location for ICT business. Cyber Re would provide proof that ICT security technology works, in financial terms. Normalcy is more than just cyber. I’d include working visas & immigration, regulation, and taxation in commercial normalcy. Given the number of financial scandals over the internet, such as FX, the regulators are unintelligent but they are not inexpensive. Retroactive or ‘shakedown’ taxation is equally reprehensible. Perhaps I might mischievously suggest that Starbucks be reported to the US authorities for paying £20 million to HMRC recently. The Foreign Corrupt Practices Act of 1977 “was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.” [US Department of Justice website] Reducing trade frictions generated by immigration, regulation, and taxation, which are security-related, e.g. Anti-Money Laundering, will help cities flourish economically. Security has a cost, but efficient security pays. But I’ll move on.

Third, money is traded online via data packets. And the nature of money is changing. Bitcoin has the headlines. Bitcoin’s essential innovation was a public blockchain, which eliminates the need for a central bank by making the entire network the record of transactions. From several possible choices of currency architecture, Bitcoin chose to set a maximum fixed supply of 21 million coins. This fixed supply means that Bitcoin is possibly best compared with gold. Gold is also an element with a fixed earthly supply. Imagine Bitcoin as a virtual element. We know what the supply is. We know where most of it is, and can mine a bit more. However, it is not money. It is a virtual element, weightless. Only a community can decide whether to use it to trade. So far, many of the allegations for or against Bitcoin focus on what type of community is perceived to be using it to trade debts – a Silk Road of illegal transactions, quixotic libertarians damning profligate governments, new age gold bugs, or hard-pressed traders in a tight credit environment.

Many people dismiss cryptocurrencies out of hand, forgetting that in times of economic turmoil and tight credit alternative currencies flourish. Well over 400 currencies sprang up in the USA in the 1930’s to fill credit gaps. The eighty year old Swiss WIR is a government-sanctioned trade currency still providing useful credit to a quarter of Swiss businesses counter-cyclically to the Swiss Franc. Bitcoin may fail, but it is already economically important. A quick insanity check – the five year old Bitcoin has a market capitalisation today of several billion dollars, albeit fluctuating wildly, with about the same market capitalisation as the two century old London Stock Exchange Group.

In summary, successful, safe cities are safer places to trade. We need to understand that data containerisation, the internet packet, is transforming them. We need to provide more smoothly swapped open data, normalise cyber risk, and embrace the innovation cryptocurrencies provide. Thank you.

‘Open Commerce’ Talk To Worshipful Company Of Information Technologists

 Worshipful Company of Information Technologists, 83rd Business Luncheon

“Open Commerce Drives Out Closed Commerce”

Alderman Professor Michael Mainelli FCCA FCSI FBCS

Tallow Chandlers’ Hall, 4 Dowgate Hill, London EC4R 2SH, 12 February 2014

WCIT logo

Master, Deputy Master, Wardens, Alderman, Liverymen, distinguished Guests.  I’ve had the delight of knowing this Wonderful Company for three decades.  I worked at British Leyland in the early 1980’s with John Leighfield; I fondly remember scheming for reform with Alan Benjamin; like all of us, I constantly admire Dame ‘Steve’ Shirley.  Back in the mid-1990’s, with the Ministry of Defence, the London Stock Exchange, and others, this Company and my firm, Z/Yen, created the Financial Laboratory Club to visualise risk.

I’ve also been coming to your business luncheons for two decades.  While it’s a great honour to be given this chance to discuss whether “open commerce drives out closed commerce”, it was also a bit of a terror when your Master Michael Webster asked me to follow the magnificent Vint Cerf from three months ago.  How inspiring to hear Vint’s plans for interstellar travel – truly per ardua ad astra – striving to bring mankind to the stars.  My plans are more mundane.  I shall swiftly star trek through community, code, and currency to ask you to promote open commerce.


The writer Orson Scott Card said, “Every person is defined by the communities she belongs to.” [Speaker for the Dead, 1986].  Now the IT industry is a young community, yet there is already an old joke about three engineers, a mechanical engineer, a production engineer, and a software engineer, think Past Master Charles Hughes.  The three engineers drive to the top of a steep mountain to see the view.  On the way back down the car veers out of control and they barely bring it to a halt on the edge of a cliff.  The mechanical engineer gets out, looks under the engine, and says, “it’s a leaking brake line.  Let’s patch the hole, refill with fluid, drive home”.  The production engineer says, “no, let’s try to remove the flaw from our factory floor.”  The software engineer says, “hey, let’s go back to the top of the hill and see if it happens again.”

Anthropologists define a community as a group of people who are indebted to one another.  At first this sounds like an accountancy definition, but in joining any community, this livery company for example, we assume debits and credits.


Code is language and language is code.  As a Harvard student on the internet in 1976, perhaps I should have dropped out like Bill Gates, rather than remain a penniless nerd.  And I am a nerd.  Though my wife may cook a blackberry tart or a mulberry cheesecake, we have two Raspberry PIs at home.  I’m still the unpaid IT director for some Ubuntu Linux machines.  You’ll date me easily when I say FORTRAN, COBOL, PL/I, PASCAL, or Cnot++.  I love the geek cartoon XKCD where a programmer dreams of a universe coded in Lisp but God explains, “Honestly, we hacked most of it [the universe] together with PERL.” []

At Harvard at the start of the 20th century, the faculty presented President Lowell with compelling arguments for a new department of political science. President Lowell agreed but remarked, “Gentlemen, there is no such thing as political science, we shall call it Government”.  And it is the Government department to this day.  Computer science is at that stage – it’s really just computing.  We hack it all together.  Yet some theory matters.

After mathematics, the biggest theoretical effect on code was linguistics.  It’s an unusual fact that in the 4th century BC the scholar Panini described Sanskrit using transformational syntax.  In the 1960’s we computer folk adopted Noam Chomsky’s syntactical theory to build language compilers.   FORTRAN 1 took thirty man-years in the late 50’s.  Today we expect an undergraduate to build a compiler as a semester’s exercise.

When we code, we squeeze a community’s language into a machine.  Over the years I’ve had to cram a parabolic missile guidance system into 4k of memory, or jam a world of Mundocart and Geodat maps into 4MB of DEC PDP storage.  I once coded biorhythms, though there I won’t claim they make sense.  Today my firm encodes statistical learning theory.  Coding teaches us about ourselves, in a little class ditty from the 1970s [archive text provided by William Joseph]:

I really hate this damned machine,
I surely wish they’d sell it.
It never does the things I want,
Just only what I tell it.

When talking about commerce we must talk about encoding money.


Money is a technology larger communities use to trade debts.  The technology is becoming ever more open.  Bitcoin’s essential innovation was a public blockchain, no need for a central bank.  When I explain Bitcoin, I ask people to imagine it as a new virtual element.  We know what the supply is.  We know where most of it is. However, it is not money.  It is a virtual element, but only a community can decide whether to use it to trade.  A quick insanity check – the five year old Bitcoin has a market capitalisation of $8.5 billion today, about the same market cap as the two century old London Stock Exchange.  There are now over 40 alternative cryptocurrencies, AltCoins.  While Vint Cerf was talking intergalactic last year, Travelex announced Quids, Quasi Universal Intergalactic Denominations, a space currency.  Bitcoin may fail, but some altcoins are likely to succeed and the technology has other applications, for example voting.


Talking about money leads to dreams of wealth.  Your Senior Warden Nic Birtles reminded me that the Master’s theme this year is Ubiquity, so I’ll remind you of the Silicon Valley definition of URL – “Ubiquity first, worry about Revenue Later”.  In his essay “How To Get Rich”, the biogeographer Jared Diamond set out two principles for communities – connectivity and competition:

“First, the principle that really isolated groups are at a disadvantage, because most groups get most of their ideas and innovations from the outside.  Second, [I also derive] the principle of intermediate fragmentation: you don’t want excessive unity and you don’t want excessive fragmentation; instead, you want your human society or business to be broken up into a number of groups which compete with each other but which also maintain relatively free communication with each other.  [And those I see as the overall principles of how to organize a business and get rich.]’

So what is ‘open commerce’?  Sharing data, especially public data, and keeping our communities sensibly competitive.  Frankly, pretty much what Adam Smith wrote in The Wealth of Nations in 1776.

Gresham’s Law Of Commerce?

Sir Thomas Gresham’s family grasshopper graces his 16th century works, Gresham College, the Royal Exchange and St Martin’s goldsmiths.  Gresham’s Royal Exchange was a market and shopping mall where you could trade the virtual, such as a share of a voyage.  St Martin’s issued gold certificates you could trade if you believed in them.  Gresham College is a Tudor Open University, online today also as a Tudor TED, and with a Creative Commons policy.  But Gresham’s Law, “bad money drives out good”, was not his; it dates back to Aristophanes.  More importantly, the law is expressed backwards.  If you offer me a debased coin or a real coin, I’ll take the real coin unless some monarch insists we use his or her debased currency.  The Nobel economist Robert Mundell rephrased Gresham’s Law properly as “cheap money drives out dear money only if they must be exchanged for the same price”.  Open drives out closed.

So do open data and competition drive out closed commerce?  Start with open data.  In the 1960s and 1970s the UK founded computer-based mapping.  From 1979 to 1987, a number of us in the mapping industry tried to influence three Chorley reports to release publicly-owned ordnance survey and hydrographic data at cost.  We failed.  The industry moved to nations, principally the USA, Germany, and Sweden, where firms and researchers could get data at cost.  Contrariwise, just a few years ago Transport for London decided on free release of train and bus data.  A number of innovative London firms turned it into information on the smart phones you have in your pockets – hopefully switched off – today.   Freeing data made London a global centre for software development of public transport apps.

In January the Rt Hon Lord Mayor Fiona Woolf CBE pointed out in her Tomorrow’s Cities Gresham lecture that our new city walls might be shared data walls – “Perhaps on entry to a city we contract to provide movement information from our smart phones to help transport planning – a mobile app passport.  If I build a block of flats, I must provide ways of sharing energy, occupancy, or waste information with the city, which it anonymises, stores, and then shares more widely.  I can link up with neighbours to consider new power or water treatment plants because I have the data on local consumers, their needs, their usage patterns.”


Master Michael Webster remarked via email last year on the benefits of Airbus and Boeing competition.  In the 1970’s, just as it looked as if Boeing would have a monopoly on large passenger aircraft, the European community, at great expense, created Airbus.  Though Europe has only come out even, thanks to the British and the French governments Boeing has no monopoly and benefits have spilled across the world through more diversity and lower prices.

How often does the average Briton meet a market?  After government takes 40% of the average Briton’s income, the remaining 60%’s big ticket items are housing, fuel, and food.  Six banks control mortgage markets; six energy providers dominate fuel: two in your area; four supermarkets dominate food: two in your area.  We have a lot of monopolies and oligopolies.  Few outside Brussels compare five dominant UK banks with the two thousand banks in Germany, or question four global auditing firms and three credit rating agencies.  In IT for twenty years we quite rightly we worried about platform providers such as IBM, Intel, or Microsoft; now we worry about Google or Amazon.  Competition is the most basic form of regulation.  It keeps us on our toes asking questions, and it’s ruthless.  When I asked my then 13 year old daughter why she hacked her school Microsoft computer to install Chrome, she heartlessly said, “Daddy, the only good use for Bing is finding Google”.  At the Ministry of Defence I constantly asked my research teams “if you learned so much last year, why are you spending your budget the same way?”, and “I don’t care if it’s the best British technology, is it the world’s best?”.

We should worry about change.  But we might equally worry about lack of change.  What might e-retailing do to our high streets?  We had more profound changes to our high streets over the past century due to the motor car.  Yes, we should worry about privacy, liberty, security, and fair recompense.  We certainly need to worry about earning our global crust as a competitive nation, but that’s brainpower as much as ownership.  Pierre-Marc-Gaston in 1808 observed that « Il est encore plus facile de juger de l’esprit d’un homme par ses questions que par ses réponses. »   “It is easier to judge the mind of a man by his questions rather than his answers”.  Today Kevin Kelly of Wired observes that in “The world that Google is constructing – a world of cheap and free answers – having answers is not going to be very significant or important.  Having a really great question will be where all the value is.”

Open The Competition

So what might you do?  As good professionals you should be annoying about open data and competition.  Open data is not just for governments.  Have you thought about freeing data from your firm?  Anonymise your vehicle movements and share with a traffic laboratory.  Release some energy data in a challenge for students to help you become more renewable.  Eliminate your legalese.  The IT industry has a tortured relationship with copyright, patents, and contracts.  I have a little numbers game I call ‘contract word count’ where I cut and paste those little online licenses that accompany every new app into a word processor.  Then I do a word count.  100,000 words is a typical length for a novel.  A typical Apple contract has over 40,000 words.  My record find was an app with 90,000 words.  For any lawyers here today, I wouldn’t lie.  Yes, I sit in front of my screen reading for two hours before I click ‘accept’.  Don’t you?  My next target is to beat War & Peace’s 587,000 words.  But have you thought about shareware, creative commons, and other methods of releasing information and sharing knowledge without such legal lunacies?  And will you push for open competition, even when you’re in a position of strength?

Commonwealth is a 15th century term meaning “public welfare; general good or advantage”.  “The common-wealth” or “the common weal” comes from an old meaning of wealth as “well-being” thus “common well-being.”  The Lord Mayor believes our common weal is moving into our data.  Our commons need to be places of competition not monopoly or oligopoly.  A village green of fair sport, not village bullies.  As liverymen, we start with community & comradeship, which leads to commerce, and after we’ve generated some wealth we turn to charity, building a just society.  Perhaps we should call out volunteer Deputy Master Michael Grant in all his polished Pikemen and Musketeers finery to defend our commons?  Our wealth is founded on what we share, which starts with data, then information, then knowledge, and then, perhaps, even wisdom.  So, paraphrasing Vint Cerf, per aperta data et commercia ad astra – through open data and commerce to the stars.

Thank you.

May I ask all of you to be upstanding and drink a toast with me to the health of the Company.  To the Company, may I.T. flourish root & branch!

Alderman Professor Michael Mainelli FCCA FCSI FBCS

Michael co-founded Z/Yen, the City of London’s leading commercial think-tank, in 1994 to promote societal advance through better finance and technology.  Educated at Harvard, Trinity College Dublin and the London School of Economics, where after his PhD he was also a visiting professor, Michael started his career in the USA as a research scientist in aerospace and computing, later becoming a partner and board member in a leading accountancy firm directing consulting worldwide, before a spell as Corporate Development Director of Europe’s largest R&D organisation in the UK Ministry of Defence, the Defence Evaluation and Research Agency.  At Z/Yen, Michael is responsible for leading innovative projects and research, particularly for financial, technology, and government clients.  In 2005 Michael founded the Long Finance movement asking “when would we know our financial system is working?”.  One event had 350 finance professionals singing for monetary reform with Brian Eno at the Willis building.  Michael is a Freeman of the City of London and the Watermen & Lighterman, and a Liveryman of the World Traders.