Measuring How Much Poorly Thought Out Regulation Hurts The US Consumer?

What wasn’t covered in that entertaining and thought provoking intro was the actual cost of giving the banks – or any group – an effective monopoly over a business segment while technologies such as the Internet protocol or Bitcoin protocol race to make the world a more effecient place. Case in point, the Internet, unfettered and unencumbered by legislation that choked innovation has increased efficiencies and dropped the prices of practically every industry that it has even came near.

This is an excerpt from a Slashgear article in 2011:

Blockbuster went into bankruptcy after its expensive rentals and high late fees helped to drive the average consumer to kiosk rentals and streaming services. Blockbuster was for a long time the biggest rental chain in the country and had multiple stores in many areas. The company isn’t alone, the entire DVD market is seeing profits drop. Blockbuster was recently purchased by Dish Network and the rental store has now announced some changes to their in store rental policies.

Blockbuster is lowering prices to appeal to users that have been renting elsewhere. As of May 27, the price of “thousands” of in-store movie rentals dropped to 99 cents per day. The price on new releases was also reduced. The new price is $1.99 for the first day and then 99 cents per additional day. The price of just released films will be $2.99 for day one and then 99 cents daily after.

That’s right! Blockbuster DROPPED prices to 99 cents per day, per movie. How does that sound to you? Well, those companies that took advantage of the Internet protocol (and without the benefit of a PacketLicense, like was proposed by the NY DFS) are the cause of Blockbuster’s price drop.

Netflix charges $7.99 per month for tens of thousands of movies, to be watched on demand and as often as you wish – streamed to your desktop or portable device. Now, let’s look at this from an analytical perspective. Without even bothering to adjust for inflation, Blockbuster (even after a dramatic price cut) is literally multiples more expensive that Netlfix. Why? The technological advances of the Internet protocol were allowed to be leveraged unfettered and superior business models simply displaced the inefficient, legacy business models. This would not have happened if Netflix had to have a PacketLicense, along with the draconian (at least to sparsely funded startups) measures that are proposed to go along with the BitLicenses. As a matter of fact, if the PacketLicense would have been in effect, Blockbuster would not have went out of business and it would not have faced competition from innovative companies such as Netflix. As an additional matter of fact, you would probably be paying $3.50 per movie rental, per day (as in before Blockbuster dropped its fees) as compared to $7.99 per month for all of the movies you can consume per month. We’re talking a 30x difference in price for avid movie watchers – and this doesn’t tell the whole story because real wages increased by a 1/3rd percent, making the Netflix price discounts even steeper in reality. In addition, you’d probably be renting these movies through a bank (the NYDFS Bitlicense excludes banks from the rigors that Bitcoin startups are held to)!

These rapid drops in pricing due to the Internet protocol affects more than just movie rentals. Look towards the ubiquitous smartphone industry. In 2011, An unsubsidized iPhone 4S cost anywhere between $649 and $849.

Today you can get better functionality in an LG D90 Android phone for $179. I can personally attest to this because I bought 3 of them for less than the cost of the bottom of the line iPhone from 2011 model year (which I purchased as well).

The cheaper phone is faster, has a better screen, expandable memory and a vastly superior OS and incomparable battery life (at least as compared to the iPhone).

BUTTTTTT…… When you look towards the financial industry you find protection by clauses such as those proposed in the NY DFS proposed BitLicense. These proposed protections are actually coming at the cost of innovation, the same innovation that Netlfix and LG brought to their customers. As proposed, the NYS DFS proposes Bitcoin startups have:

1. 100% reserves,
2. inability to invest in the currency one does business in,
3. fingerprinting requirements for ALL employees,
4. bond requirements,
5. KYC and AML requirements, etc. – among other things.

All of these requirements are waived for anyone with a banking license (Hmmmm!) but required by startups with a mere $100,000 in funding. So what does such protective regulation do for banks and the consumer in the face of Internet and now Bitcoin protocol technology driving down prices EVERYWHERE else?

Just Google it?

Seriously? Bank Fees Shoot Up Again – Business – Time