The very first investments in new technologies, from railways to steamships, are hardly certain bets. Even if the technologies themselves do take off, the first to invest in these projects are not always rewarded for their risk-taking. Rigid airships were risky investments in their early days. Pouring large volumes of capital into vehicles inflated…
Since the birth of banking, a hurdle in offering banking products to the mass market has been the overhead involved in building and maintaining a network of physical branches, personnel, and offline record-keeping systems that could accommodate large volumes of small accounts and transactions. Online banking had the potential to relieve banks, at least…
Knight Capital, a market-maker, entered into billions of dollars in unwanted trades in 2012, resulting in a loss of about $440 million once unwound. This was not the result of any unauthorized trading by a rogue employee but by a coding error that allowed trades to be made without limit as a result of…
Improvements in infrastructure had tremendous effects on both trade and finance, perhaps most notably in the 19th century. Canals and railways first connected cities within countries and then connected continents. These improvements made trade in merchandise and commodities more efficient, creating opportunities for exchange that did not previously exist. Even communications technology, like…
How do you verify a debt or payment in a mostly illiterate society? What records can you rely on? Trade and credit in the medieval world required some way of tracking amounts due and paid without the aid of written records. In medieval England, wood sticks were used to represent debts and by a simple…
Whether in finance, or in other professions, the most transformative changes happen gradually. To be sure, many of the triggers of these changes may be discrete events, absent today and here tomorrow. However, for the effects to filter through to the methods of ordinary professionals, and the markets they operate in, some time must usually…
The flow of information is an important part of any financial system. Whether it be in the agglomeration of important institutions in a single financial center or the communications technology used, the need for information has left its mark on financial services. For centuries, business could only be done as quickly as a courier’s legs…
