tag:theconversation.com,2011:/institutions/sunway-university-2941/articlesSunway University2023-09-14T02:51:03Ztag:theconversation.com,2011:article/2134002023-09-14T02:51:03Z2023-09-14T02:51:03ZSepertiga tanah di Bumi telah rusak, saatnya pemerintah dunia bertindak memulihkannya<figure><img src="https://images.theconversation.com/files/547759/original/file-20230904-29-iz3bq6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">(Volodymyr Shtun/Shutterstock)</span></span></figcaption></figure><p>Tanah yang kita jejaki ini merupakan bukan benda mati. Tanah adalah ruang kehidupan–rumah bagi begitu banyak mikroba di Bumi, yang bertanggung jawab terhadap sejumlah proses penting seperti penguraian dan kesehatan tumbuhan.</p>
<p>Komponen organik dalam tanah, seperti humus (dari hasil penguraian hewan maupun tumbuhan), berperan penting menjaga struktur tanah. Humus menjadi agen pengikat partikel dalam tanah. Sama halnya dengan dinding dalam suatu bangunan, tanah yang sehat merupakan struktur yang menjadi kanal-kanal pengaliran air. Kanal ini menjaga tanah dari erosi, sekaligus menjadi habitat makhluk hidup. </p>
<p>Tanah yang sehat juga memungkinkan manusia mendapatkan makanan yang aman dan bernutrisi. Kesehatan tanah juga penting bagi para petani dan masyarakat adat di negara-negara berkembang.</p>
<p>Sayangnya, lebih dari sepertiga tanah di Bumi <a href="https://www.fao.org/about/meetings/soil-erosion-symposium/key-messages/en/">saat ini rusak</a>, alias menghadapi masalah pengerasan tanah, erosi, kemerosotan nutrisi, dan naiknya keasaman tanah.</p>
<p><a href="https://www.sciencedirect.com/topics/earth-and-planetary-sciences/soil-degradation">Kerusakan tanah dapat</a> mengakibatkan seretnya hasil panen dan penurunan kualitas makanan. Pasokan air dalam tanah juga bisa berkurang sehingga risiko kekeringan semakin bertambah. Bukan hanya itu, banjir juga berisiko terjadi karena tanah kehilangan kemampuan untuk menahan dan menyaring air.</p>
<p>Artikel ini akan menjelaskan faktor-faktor utama di balik kerusakan tanah, sekaligus alasan mengapa pemerintah di seluruh dunia harus lebih mengupayakan pelestarian sumber daya ini.</p>
<h2>Para perusak tanah</h2>
<p>Industri pertanian global menggunakan pupuk secara berlebihan. Akibatnya, ekosistem mikroba dalam tanah rusak. Praktik berlebihan ini juga meningkatkan ketergantungan industri pertanian terhadap pupuk dan pestisida yang mahal.</p>
<p>Praktik pertanian modern untuk komoditas tertentu seperti jagung dan kentang juga lebih sering mendahulukan jumlah produksi dengan memakai pupuk nitrogen berlebihan. Pupuk ini menyebabkan terlepasnya <a href="https://www.bbc.com/future/article/20210603-nitrous-oxide-the-worlds-forgotten-greenhouse-gas">dinitrogen oksida</a>–gas rumah kaca yang lebih kuat memerangkap panas di atmosfer 300 kali lipat dibandingkan karbon dioksida.</p>
<p>Selain itu, praktik perladangan agresif seperti pembajakan tanah dengan alat berat juga naik signifikan <a href="https://www.nytimes.com/1998/04/05/us/deep-plowing-is-halted-by-many-to-protect-soil.html">dalam satu dekade belakangan</a>. Parktik ini menghancurkan unsur-unsur organik sehingga merusak keberagaman hayati dalam gumpalan tanah.</p>
<p>Aktivitas manusia juga mengakibatkan tekanan berlebihan terhadap sumber daya tanah. Saat ini, sumber daya tanah <a href="https://www.unccd.int/sites/default/files/2018-06/17.%20Threats%2Bto%2BSoils__Pierzynski_Brajendra.pdf">sudah memasuki titik nadir keselamatannya</a> yang tak hanya membahayakan keberagaman hayati, tapi juga mengganggu pasokan pakan yang berisiko menjerumuskan jutaan orang dalam kemiskinan.</p>
<h2>Kesuburan tanah berarti kelestarian bumi</h2>
<p><a href="https://www.iucn.org/news/ecosystem-management/202009/farmers-could-substantially-boost-productivity-conserving-soil-biodiversity-iucn-report">Studi oleh Uni Internasional untuk Konservasi Alam (IUCN)</a> tahun 2020 menyatakan, tanah dan kawasan yang sehat dapat meningkatkan ketangguhan tanaman menghadapi dampak perubahan iklim seperti kekeringan ataupun banjir.</p>
<p>Usaha meningkatkan pengetahuan kita tentang tanah juga dapat menggenjot pemenuhan target ekonomi dan iklim yang berkelanjutan.</p>
<p>Laporan IUCN di atas menyebutkan, peningkatkan komponen karbon organik dalam lapisan tanah (kedalaman 0-40 cm) sebesar 0,4% per tahun dapat meningkatkan produksi pangan global seperti jagung, beras, dan gandum. Angka peningkatannya cukup besar, sekitar 20-40% per tahun.</p>
<p>Usaha menggenjot komponen organik di lahan pertanian dan padang rumput global juga mendongkrak kapasitas penangkapan karbon sekitar <a href="https://portals.iucn.org/library/node/49094">1 gigaton</a> per tahun hingga 30 tahun mendatang. Jika ditotal, angka tersebut setara dengan penangkapan 10% gas rumah kaca dari aktivitas manusia tahun 2017.</p>
<p>Walau begitu, peningkatan kesuburan tanah tak bisa dicapai hanya dengan penyebaran pupuk saja. Pemerintah di tingkat dunia, regional, dan nasional harus bekerja sama untuk menyehatkan tanah.</p>
<h2>3 langkah untuk pemerintah</h2>
<p>Pemerintah dapat mempelajari berbagai inisiatif yang sudah dilakukan di seluruh dunia untuk meningkatkan kesehatan tanah.</p>
<p><strong>Pertama,</strong> pemerintah dapat membuat kebijakan yang mendukung petani ataupun pengelola lahan menerapkan praktik-praktik ramah lingkungan.</p>
<p>Salah satu contohnya adalah kebijakan <a href="https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/cap-glance_en"><em>carbon farming</em></a> yang diterapkan Uni Eropa. Kebijakan ini mengatur pemberian insentif bagi petani maupun pengelola lahan yang menerapkan praktik ramah lingkungan. Beberapa contohnya adalah pemberagaman tanaman, penanaman tanaman kacang-kacanagan seperti lentil ataupun kacang tanah, maupun praktik agroforestri (pertanian ataupun peternakan yang dibarengi penanaman tanaman berkayu).</p>
<p>Langkah ini dapat meningkatkan penyerapan karbon dalam tanah sekaligus mendukung penyehatan ekosistem dengan makhluk-makhluk yang menguntungkan seperti bakteri, jamur, protozoa, dan nematoda (cacing).</p>
<p>Untuk meningkatkan kesuburan tanah dan keberagaman hayatinya, pemerintah perlu mengalihkan anggaran subsidi pupuk kimia ke solusi penyuburan tanah secara alami seperti pupuk organik dan praktik kompos berbasis sains. Negara-negara seperti Brasil, Cina, India, Indonesia, dan Thailand sudah menerapkan <a href="https://web.kominfo.go.id/sites/default/files/G20%20Bali%20Leaders%27%20Declaration%2C%2015-16%20November%202022%2C%20incl%20Annex.pdf">pengurangan subsidi ini.</a></p>
<p><strong>Kedua,</strong> pemerintah perlu berpartisipasi dalam inisiatif global untuk meningkatkan kualitas tanah.</p>
<p>Organisasi-organisasi internasional seperti Badan Perserikatan Bangsa Bangsa untuk Jaringan Solusi Pembangunan Berkelanjutan (UN SDSN), menggaet para pakar, pemerintah, sektor swasta, dan organisasi lingkungan untuk menekankan masalah lingkungan krusial, termasuk pentingnya kesuburan tanah.</p>
<p>Pertemuan tahunan seperti Pertemuan Target Pembangunan Berkelanjutan PBB dan Konferensi Perubahan Iklim PBB (<a href="https://unfccc.int/cop28">COP 28</a>) tahun ini dapat menjadi kesempatan bagi pemerintah untuk menyadari kelayakan dan keuntungan dari pemulihan tanah besar-besaran.</p>
<p><strong>Ketiga</strong>, pendidikan publik tentang ilmu tanah juga penting.</p>
<p>Salah satu contohnya, <a href="https://www.sciencedirect.com/science/article/abs/pii/S0065211320301024">museum tanah</a> yang telah didirikan di banyak negara. Museum ini berfungsi mendidik orang-orang tentang berbagai jenis tanah, bagaimana tanah terbentuk, penggunaan dan ancamannya, serta langkah-langkah pelestariannya.</p>
<p>Usaha untuk merawat hubungan timbal balik antara manusia dan kehidupan tanah membutuhkan perubahan pola pikir. Pendidikan dapat meningkatkan pengetahuan sekaligus membuat masyarakat menghormati siklus alam yang sebenarnya mereka andalkan dalam kehidupan sehari-hari.</p><img src="https://counter.theconversation.com/content/213400/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yuen Yoong Leong juga menjabat sebagai Director of Sustainability Studies, UN Sustainable Development Solutions Network (SDSN); Professor di Sunway University. Michael James Platts (1945-2022) dari University of Cambridge turut memberikan sumbangsih dalam penulisan artikel ini.</span></em></p>Mulai dari kebijakan untuk mendukung pertanian karbon, hingga mendirikan ‘museum tanah’ setempat, pemerintah perlu berbuat lebih banyak untuk melindungi tanah sehat di Bumi.Yuen Yoong Leong, Director of Sustainability Studies, UN Sustainable Development Solutions Network (SDSN); Professor, Sunway University, Sunway UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2127002023-09-14T02:50:47Z2023-09-14T02:50:47ZHealthy soil can help grow more food and cut emissions – but government inaction means too much soil is being degraded<figure><img src="https://images.theconversation.com/files/546150/original/file-20230904-29-iz3bq6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">(Volodymyr Shtun/Shutterstock)</span></span></figcaption></figure><p>The soil beneath our feet is a living entity. It is home to many microbes on Earth responsible for crucial processes such as decomposition and supporting plant health.</p>
<p>Organic compounds in the soil, such as humus – made from decomposed plant and animal matter – play a crucial role in maintaining soil’s structure, by acting as a bonding agent between soil particles. Similar to the walls of a building, healthy soil acts as a structure that allows water to flow, prevents erosion and provides habitats for organisms.</p>
<p>Healthy soil also helps people get safe and nutritious food, and is especially important for people including farmers and indigenous communities in developing nations.</p>
<p>Yet, more than a third of the soil worldwide is <a href="https://www.fao.org/about/meetings/soil-erosion-symposium/key-messages/en/">now degraded</a>, or facing issues such as hardening, erosion, nutrient degradation and increased salinity.</p>
<p>Degraded soil <a href="https://www.sciencedirect.com/topics/earth-and-planetary-sciences/soil-degradation">can result</a> in lower crop yields and poorer food quality. It also reduces water supply and increases drought risks. It may also increase the risks for floods, as the soil loses its ability to hold and filter water.</p>
<p>This article will share major factors behind soil degradation, and why we need governments worldwide to do more to take better care of our soil. </p>
<h2>Soil destroyers</h2>
<p>The global agriculture industry’s excessive use of fertiliser seriously damages the microbiological ecosystem in soil. This in turn makes the industry more dependent on expensive fertiliser and pesticides.</p>
<p>Modern ways of growing crops such as corns and potatoes often prioritise maximising high yields by using more nitrogen fertiliser than necessary. This releases nitrous oxide – a greenhouse gas <a href="https://www.bbc.com/future/article/20210603-nitrous-oxide-the-worlds-forgotten-greenhouse-gas">300 times more potent</a> than carbon dioxide at trapping heat in the atmosphere.</p>
<p>In addition, aggressive soil cultivation practices – such as deep plowing with heavy machinery – have risen significantly <a href="https://www.nytimes.com/1998/04/05/us/deep-plowing-is-halted-by-many-to-protect-soil.html">over recent decades</a>. These practices crush organic matter hidden within soil clumps, resulting in serious loss of biodiversity.</p>
<p>Human activities are putting too much stress on soil resources, and we are reaching a point where the soil can <a href="https://www.unccd.int/sites/default/files/2018-06/17.%20Threats%2Bto%2BSoils__Pierzynski_Brajendra.pdf">no longer sustain us</a>. This not only endangering biodiversity but also disrupting food supplies, potentially pushing millions into poverty.</p>
<h2>The global significance of healthy soil</h2>
<p><a href="https://www.iucn.org/news/ecosystem-management/202009/farmers-could-substantially-boost-productivity-conserving-soil-biodiversity-iucn-report">A 2020 study</a> by the International Union for Conservation of Nature found that healthy soils and landscapes can enhance crops’ ability to withstand the detrimental effects of climate change, such as drought or flood. </p>
<p>Improving our understanding of soil can also advance economic and climate goals.</p>
<p><a href="https://portals.iucn.org/library/node/49094">The IUCN report</a> found that increasing soil organic carbon by 0.4% annually in the first 30-40cm of soil may increase global production of major food crops, such as corn, rice and wheat, in some cases between 20-40% per year. </p>
<p>Boosting soil organic carbon in the world’s agricultural land by that much could increase carbon capture by croplands and grasslands by approximately <a href="https://portals.iucn.org/library/node/49094">1 gigatonne</a> per year over the next 30 years. That would be equivalent to capturing 10% of the world’s greenhouse gas emissions from human activity in 2017. </p>
<p>However, enhancing soil fertility is not as simple as pouring fertiliser out of a bag. Governments need to work together at the global, regional, and national levels to collectively improve soil health.</p>
<h2>Better policies to soil museums: how governments can help</h2>
<p>There are many existing soil initiatives around the world that governments can learn from. </p>
<p><strong>First,</strong> governments need to create policies that encourage farmers or land managers to implement environmentally friendly practices.</p>
<p>One example is the <a href="https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/cap-glance_en">“carbon farming” policy</a> implemented by the European Union, which provides financial incentives to farmers or land managers who adopt eco-friendly practices. These practices include diversifying crops, planting leguminous plants, such as peanuts or lentils, and practising agroforestry (integrating trees and shrubs with crops or livestock).</p>
<p>These actions help to increase carbon sequestration in soils and support a healthy ecosystem with beneficial organisms, such as bacteria, fungi, protozoa and nematodes.</p>
<p>Brazil, China, India, Indonesia and Thailand <a href="https://web.kominfo.go.id/sites/default/files/G20%20Bali%20Leaders%27%20Declaration%2C%2015-16%20November%202022%2C%20incl%20Annex.pdf">have led globally</a> in reducing chemical fertiliser subsidies. To improve soil fertility and biodiversity, governments need to direct subsidies towards a biological solution that involves using bio-fertilisers and science-based composting.</p>
<p><strong>Second,</strong> governments can participate in global initiatives aimed at improving soil quality.</p>
<p>International organisations, such as the UN Sustainable Development Solutions Network, bring together experts, governments, the private sector and environmental organisations to emphasise critical environmental issues, including the significance of soil health. </p>
<p>The upcoming UN SDG Summit and UN Climate Change Conference (<a href="https://unfccc.int/cop28">COP28</a>) later in the year present opportunities for governments to recognise the feasibility and economic viability of large-scale soil ecosystem restoration.</p>
<p><strong>Third</strong>, educating the general public about soil science is also essential.</p>
<p>For instance, <a href="https://www.sciencedirect.com/science/article/abs/pii/S0065211320301024">soil museums</a> – located in various regions around the world – serve as an effective means of educating people about different types of soil, how they are formed, their uses and threats, as well as ways to protect it.</p>
<p>Nurturing the symbiotic relationship between human and life in soil requires a mindset change. Doing so will improve citizens’ understanding and respect for the nutrient recycling mechanisms that nature itself has developed and relies on.</p><img src="https://counter.theconversation.com/content/212700/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Yuen Yoong Leong, Director of Sustainability Studies, UN Sustainable Development Solutions Network (SDSN); Professor, Sunway University, and Michael James Platts (1945-2022), University of Cambridge</span></em></p>From policies to support carbon farming, to setting up local ‘soil museums’, governments need to do much more to protect the soil we rely on for growing food and a healthier life on Earth.Yuen Yoong Leong, Director of Sustainability Studies, UN Sustainable Development Solutions Network (SDSN); Professor, Sunway University, Sunway UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/775612017-06-29T04:47:21Z2017-06-29T04:47:21ZAre robots taking over the world’s finance jobs?<figure><img src="https://images.theconversation.com/files/173633/original/file-20170613-31635-6r07w6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An early prototype of the IBM Watson cognitive computing system in Yorktown Heights, NY. It was originally the size of a master bedroom in 2011</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:IBM_Watson.PNG">Wikipedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The year is 2030. You’re in a business school lecture hall, where just a handful of students are attending a finance class. </p>
<p>The dismal turnout has nothing to with professorial style, school ranking or subject matter. Students simply aren’t enrolled, because there are no jobs out there for finance majors. </p>
<p>Today, <a href="https://www.topuniversities.com/courses/accounting-finance/accounting-vs-finance-which-should-you-study">finance, accounting, management and economics </a> are among universities’ most popular subjects worldwide, particularly at graduate level, due to high employability. But that’s changing. </p>
<p>According to consulting firm Opimas, in years to come it will become harder and harder for universities to sell their business-related degrees. Research shows that 230,000 jobs in the sector could <a href="https://www.finextra.com/newsarticle/30236/capital-markets-jobs-on-the-line-as-banks-raise-ai-spend">disappear by 2025</a>, filled by “artificial intelligence agents”. </p>
<p>Are robo-advisers the future of finance? </p>
<h2>A new generation of AI</h2>
<p>Many market analysts believe so.</p>
<p>Investments in automated portfolios rose 210% between 2014 and 2015, according to the research firm <a href="https://www.bloomberg.com/news/articles/2016-02-05/the-rich-are-already-using-robo-advisers-and-that-scares-banks">Aite Group</a>. </p>
<p>Robots have already taken over Wall Street, as hundreds of financial analysts are being <a href="https://goo.gl/jfCYWG">replaced with software</a> or robo-advisors. </p>
<p>In the US, claims a 2013 <a href="https://goo.gl/rrSJi0">paper</a> by two Oxford academics, 47% percent of jobs are at “high risk” of being automated within the next 20 years – 54% of lost jobs will be in finance. </p>
<p>This is not just an American phenomenon. Indian banks, too, have reported a <a href="http://economictimes.indiatimes.com/industry/banking/finance/threat-of-automation-robotics-and-artificial-intelligence-to-reduce-job-opportunities-at-top-banks/articleshow/58485250.cms">7%</a> decline in head count for two quarters in a row due to the introduction of robots in the workplace. </p>
<p>Perhaps this is unsurprising. After all, the banking and finance industry is principally built on processing information, and some of its key operations, like passbook updating or cash deposit, are already highly digitised. </p>
<p>Now, banks and financial institutions are rapidly adopting a new generation of Artificial Intelligence-enabled technology (AI) to automate financial tasks usually carried out by humans, like operations, wealth management, algorithmic trading and risk management. </p>
<p>For instance, JP Morgan’s <a href="https://futurism.com/an-ai-completed-360000-hours-of-finance-work-in-just-seconds/">Contract Intelligence, or COIN, program</a>, which runs on a machine learning system, helped the bank shorten the time it takes to review loan documents and decrease the number of loan-servicing mistakes. </p>
<p>Such is the growing dominance of AI in the banking sector that, <a href="https://www.accenture.com/us-en/insight-banking-technology-vision-2017">Accenture predicts</a>, within the next three years it will become the primary way banks interact with their customers. AI would enable more simple user interfaces, their 2017 report notes, which would help banks create a more human-like customer experience. </p>
<p>Customers at <a href="http://personal.rbs.co.uk/personal.html">Royal Bank of Scotland</a> and <a href="http://personal.natwest.com/personal.html">NatWest</a>, for instance, may soon be interacting with customers with the help of a virtual chatbot named Luvo. </p>
<p>Luvo, which was designed using <a href="https://www.ibm.com/watson/">IBM Watson</a> technology, can understand and learn from human interactions, ultimately <a href="https://goo.gl/vzhslF0">making the flesh-and-blood workforce redundant</a>. </p>
<p>Meanwhile, HDFC, one of India’s largest private-sector banks, has launched <a href="http://timesofindia.indiatimes.com/business/india-business/hdfc-bank-launches-artificial-intelligence-driven-chatbot-eva/articleshow/57481168.cms">Eva</a>. India’s first AI-based banking chatbot can assimilate knowledge from thousands of sources and provide answers in simple language in less than 0.4 seconds. At HFDC Eva joins Ira, the bank’s first humanoid branch assistant.</p>
<p>AI has also made inroads in the investment industry, where, many financial analysts say, a sophisticated trading machine capable of learning and thinking will eventually make today’s most advanced and complex investment algorithms look primitive.</p>
<p>Advisory bots are allowing companies to evaluate deals, investments, and strategy in a fraction of the time it takes today’s quantitative analysts to do so using traditional statistical tools. </p>
<p>Former Barclays head Antony Jenkins, who called the disruptive automation of banking sector an “Uber moment”, <a href="https://goo.gl/264XR3">predicts</a> that technology will make fully half of all bank branches and financial-services employees across the globe redundant within ten years.</p>
<p>Goodbye, human <a href="https://goo.gl/fVvq7S">fund managers</a>. </p>
<h2>The fintech grads of the future</h2>
<p>Universities are now revising their educational blueprint to adapt to this technological disruption in the finance job market. </p>
<p>Both <a href="https://www.stanford.edu/">Standford University</a> and <a href="https://www.georgetown.edu/">Georgetown University</a> business schools are planning to offer so-called “fintech” in their <a href="https://www.reuters.com/article/usa-students-fintech-idUSL1N1J529S">MBA programmes</a>, hoping to teach students how to become masters of financial technology.</p>
<p>And the Wales-based Wrexham Glyndwr University has announced the launch of <a href="https://www.glyndwr.ac.uk/en/AboutGlyndwrUniversity/Newsandmediacentre/Newsarchive/PressReleases2017/FintechdegreelaunchesatWrexhamGlyndwrUniversity/">the UK’s first undergraduate degree</a> in fintech. </p>
<p>But fintech is so new and diverse that academics are having difficulty to construct a syllabus for Financial Technology 101, let alone more advanced topics on AI. The lack of academic textbooks and expert professors are additional challenges. </p>
<h2>Robots gone wild</h2>
<p>Still, it is not clear that AI and automation will actually prove advantageous for banks. </p>
<p>Too much reliance on AI could backfire if financial institutions lose the human touch most customers favour. </p>
<p>There are other risks, too. Robo-advisers are cheap and save time when creating a simple investment portfolio, but they may struggle to take the correct precautionary measures when markets become volatile, especially when thousands, maybe millions, of machines are all trying to do the same thing while operating at great speed.</p>
<p>In August 2012, robo stock traders at <a href="https://www.kcg.com/">Knight Capital Group</a> went on a spending spree and <a href="https://goo.gl/w3qzaS">lost $440 million in just 45 minutes</a>. </p>
<p>High expectations for the performance of these well-programmed robo-traders could also cause chaos in the key trading centres around the world. </p>
<p>There is no single algorithm that can combine multiple volatile variables with a multidimensional economic forecasting model that works <a href="https://goo.gl/raznqG">for all investors</a>. Expecting that could prove a potentially fatal error for financial markets. </p>
<p>And how will investors be protected when robots make the wrong decision? According to the rulings of the US Securities and Exchange Commission (SEC), robo-advisers require registration in the same way human investment advisers do. They are also subject to the rules of the <a href="https://www.sec.gov/news/pressrelease/2017-52.html">Investment Advisers Act</a>. </p>
<p>But it is difficult to apply to robots the financial regulations designed to govern human behaviour. </p>
<p>The SEC’s rules, created to protect the investors, require that advisers adhere to a fiduciary standard by which they unconditionally put the client’s best interests ahead of their own. Concerned US regulators have asked whether it is practical for robots <a href="https://www.bloomberg.com/view/articles/2016-06-08/robots-rogues-and-regulation">to follow rules</a> when their decisions and recommendations are generated not by ratiocination but by algorithms.</p>
<p>This conundrum demonstrates one fact clearly: it is hard to completely replace humans. There will always be demand for a real live person to act as check when and if our robots go rogue.</p><img src="https://counter.theconversation.com/content/77561/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Banks are relying more and more on robots that perform financial services.Nafis Alam, Professor of Finance, Sunway UniversityGraham Kendall, Professor of Computer Science and Provost/CEO/PVC, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/739842017-03-09T03:20:32Z2017-03-09T03:20:32ZNow that bitcoins are worth more than their weight in gold, is it time for central banks to make their own?<figure><img src="https://images.theconversation.com/files/159353/original/image-20170304-29009-onj92e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/btckeychain/19781017593">BTC Keychain/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The history of gold trading can be traced back hundreds of years while <a href="http://money.cnn.com/infographic/technology/what-is-bitcoin/">bitcoin</a>, a digital currency that uses encryption and works independently of central banks, has been around for less than ten. </p>
<p>But the cryptocurrency is now starting to challenge gold as the investment of choice. Its meteoric rise is such that on March 3 2017, bitcoin <a href="http://money.cnn.com/2017/03/03/investing/bitcoin-gold-price-value/">overtook gold</a> for the first time, trading at US$1,290 compared to US$1,228 for an ounce of gold.</p>
<p>All the gold that has ever been mined would easily fit under the legs of the Eiffel Tower – in fact, multiple times. Gold’s scarcity is one reason for its value. Another reason is that it’s a very nonreactive metal so it doesn’t tarnish, which is important if you’ve invested millions and don’t want it to slowly deteriorate. </p>
<p>Most governments keep some of their funds in gold (as the video below explains). But although gold is seen as a <a href="http://money.cnn.com/2016/02/10/investing/china-gold/">safe haven</a> in times of crisis, it is still subject to the usual market fluctuations of any commodity. Once the bitcoin reaches its full potential (all bitcoins are mined) the value will be much more stable.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/CTtf5s2HFkA?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">How much gold is there and why is it a good investment?</span></figcaption>
</figure>
<h2>What is bitcoin?</h2>
<p><a href="https://bitcoin.org/en/how-it-works">Bitcoin</a> is a virtual currency used for electronic purchases and transfers. It has recently been gaining popularity and <a href="https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/">a growing number of businesses</a>, including WordPress, Overstock.com, and Reddit, now accept it as a form of payment. Microsoft already <a href="http://www.silicon.co.uk/e-marketing/microsoft-confirms-bitcoin-support-187909">accepts bitcoin</a> payments through its Windows 10 and Windows 10 Mobile platforms, while those shopping online at <a href="https://www.shopify.my/bitcoin">Shopify</a> may use bitcoin as payment.</p>
<p>Bitcoin is also moving outside the virtual space; what may be the world’s first bitcoin store, <a href="https://btcmanager.com/the-first-bitcoin-store-of-the-world-opens-in-vienna/">House of Nakamoto</a>, opened early this year in Vienna. There, people can buy bitcoins for euros, and vice versa, from a dedicated bitcoin ATM. Drinkers in Cambridge can <a href="http://www.coindesk.com/six-places-you-can-pay-bitcoin-for-beer/">pay for beers</a> at a pub called The Haymakers. </p>
<p>The number of bitcoins is capped at 21 million. As of March 2017, there were almost <a href="https://blockchain.info/charts/total-bitcoins">16.2 million circulating</a>. The supply of coins grows steadily because of the way bitcoin is programmed. Each “miner” (“mining” is lingo for the discovery of new bitcoins – anyone with computer knowledge and access to blockchain software can act as a miner) <a href="http://www.bitcoinblockhalf.com/">introduces new coins to the supply</a> at a rate of around 12.5 coins every ten minutes.</p>
<p>Mining is the process of adding transaction records to bitcoin’s public ledger of past transactions (blockchain). The <a href="https://www.bitcoinmining.com/">blockchain confirms transactions as having taken place</a> to the rest of the network. </p>
<p>Even as far back as 2013, <a href="http://money.cnn.com/2013/11/29/investing/bitcoin-gold/index.html">bitcoin</a> was worth almost as much as gold. And, at the end of 2016, the total value of bitcoins in circulation was <a href="https://www.theguardian.com/business/2016/dec/22/bitcoin-circulation-hits-record-high-of-14bn">US$14bn</a>.</p>
<h2>A good investment opportunity?</h2>
<p>Investment in digital currencies, such as bitcoin, has emerged as an alternative to traditional forms of money and created a niche that’s driving major innovations in the financial sector, such as peer-to-peer lending, and digital wallets. As traders gain confidence in alternative forms of money and payment mechanisms, bitcoin is seen as a possible <a href="https://www.thebalance.com/is-bitcoin-an-alternative-investment-391274">investment alternative</a>. </p>
<p>In fact, bitcoin exhibits similar features to gold – limited global supply, maintaining value and hedging against global market volatility. Such is the exuberance in bitcoin investment that it actually outperforms the precious metal, generating an <a href="http://www.nasdaq.com/article/bitcoin-as-an-investment-opportunities-and-risks-cm740800#ixzz4aKvwi088">annual return</a> of 155% compared to gold’s annual loss of 6% during the same time period. </p>
<p>Even though Bitcoin seems a profitable investment tool, its value can be as volatile as the value of the gold, depending on the perceived risk of <a href="http://www.zerohedge.com/news/2017-01-07/bitcoin-good-gold">owning bitcoin as a commodity</a>. Bitcoins are encrypted for security purposes, but while the coding identifies the currency itself, it does not identify its owner. If someone hacks the miner system and gets a secret bitcoin code they will eventually become the rightful owner.</p>
<p>What, then, is pushing the investment value of bitcoin? One driver is <a href="https://news.bitcoin.com/localbitcoins-growth-85-2016-signaling-further-use-of-bitcoin/">increasing demand</a> from developing countries, especially Brazil, Russia, India, China, and South Africa. These countries are experiencing economic distress and weakening currencies, making their local currencies unpredictable and volatile. As a result, it’s becoming <a href="http://bit-media.org/news/bitcoin-value-escalates-in-the-brics-countries/">increasingly popular to use bitcoin as a natural hedge</a> against paper currency. </p>
<p>Another contributing factor to the rise of bitcoin is the possibility of a trade war <a href="https://cointelegraph.com/news/bitcoin-price-2000-is-just-starter-unless-compromise-is-reached">between US and China</a>. US President Donald Trump has indicated that he may impose <a href="http://www.latimes.com/opinion/op-ed/la-oe-navarro-trump-trade-china-tariffs-20160721-snap-story.html">45% tariff on Chinese imports</a>. This may lead to a weakening yuan, and capital outflow from China as investors will resort to more stable currencies such as euros. </p>
<p>The hike in bitcoin’s price during financial troubles is also a testament to its increasing attraction as a hedging tool.</p>
<p>When <a href="http://money.cnn.com/2013/03/28/investing/bitcoin-cyprus/">Cyprus’s economy crashed in 2013</a>, the price of bitcoins spiked as people resorted to other forms of payment than the national currency. In 2015, when the Chinese <a href="http://insidebitcoins.com/news/is-china-turning-to-bitcoin-as-yuan-devalues/35369">currency was in free fall</a>, people in the country turned to bitcoin alongside gold. </p>
<p>And after the Brexit vote in the UK, when global currencies and stock markets tanked, bitcoin’s <a href="http://www.vocativ.com/333283/bitcoin-brexit/">value rose more than US$100 compared to the previous day</a>. This was mainly due to some of the speculative money flowing out of the pound and yuan making its way to bitcoin.</p>
<h2>Increased government support</h2>
<p>Bitcoin is not just getting increased interest from tech-savvy individuals <a href="http://www.techworld.com/picture-gallery/e-commerce/bitcoin-beyond-how-banks-are-investing-in-blockchain-technology-3625324/">and banks</a> such as Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JP Morgan, State Street, Royal Bank of Scotland and UBS. Governments are also lending support to the cryptocurrency. </p>
<p>The <a href="http://www.heraldsun.com.au/news/national/federal-election/budget2016/federal-budget-2016-turnbull-announces-tax-cut-on-bitcoin/news-story/45148197bcfc1f287a41b3eb751afd84">Australian government</a> plans to reduce tax on bitcoin transactions. Current treatment of the digital currency under the goods and services tax (GST) law means that consumers are “double taxed” when using it to buy anything already subject to GST. The government plans to change this. </p>
<p>Meanwhile, the <a href="http://www.bbc.com/news/technology-35344843">UK’s chief scientific adviser</a> has said that governments should use bitcoin’s underlying technology – blockchains – to help with taxes, benefits and passports. </p>
<p>Taking its cue from bitcoin, the US government is planning to launch a legalised cryptocurency called <a href="https://news.bitcoin.com/fedcoin-u-s-issue-e-currency/">Fedcoin</a>, which can be exchanged for a physical dollar. Bitcoin is not considered legal tender because it is not backed by any government.</p>
<p>Bitcoin pricing is also motivating the much anticipated establishment of the <a href="http://www.cnbc.com/2017/02/24/bitcoin-hits-record-high-above-1200-on-talk-of-etf-approval.html">first bitcoin exchange-traded fund (ETF)</a> in the United States. An ETF is an investment company that has no restrictions on the amount of shares it can issue.</p>
<p>The approval of a bitcoin ETF would make the cryptocurrency more attractive to risk-averse institutional investors as it would allow an easier way to gain access to bitcoin than buying it directly. </p>
<p>Such is the dominance of bitcoin that the Bank of England <a href="http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf">issued a white paper on the subject</a>, investigating the possibility of central banks minting their own cryptocurrencies.</p>
<p>Bitcoin’s appeal, compared to gold, comes from two factors. First, it can be used as a easy medium for payments (for a limited but growing number of transactions), which gold cannot replicate. And with their limited supply of 21 million, bitcoins are likely to attract higher demand compared to gold. </p>
<p>The debate over the supremacy of gold versus bitcoin will continue. What we can say with certainty is that we cannot use gold to buy bitcoin directly but bitcoin can be used to buy gold. You can decide which you prefer.</p><img src="https://counter.theconversation.com/content/73984/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The cryptocurrency is now starting to challenge gold as the investment of choice.Nafis Alam, Professor of Finance, Sunway UniversityGraham Kendall, Professor of Computer Science and Provost/CEO/PVC, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/717042017-02-21T07:46:40Z2017-02-21T07:46:40ZIndia’s demonetisation drive has boosted banks and start-ups, but it’s still a failure<p>When Indian Prime Minister Narendra Modi <a href="https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38520">announced the withdrawal of ₹500 (US$7.40) and ₹1,000 (US$15) banknotes</a> from circulation in November 2016, the government said its demonetisation drive would curb India’s shadow economy and <a href="http://indiatoday.intoday.in/story/live-pm-narendra-modi-addresses-nation/1/805755.html">suppress the use of illicit and counterfeit cash in the economy</a>.</p>
<p>If there’s one sector that’s done particularly well as a result of government’s move, it’s the banking sector. </p>
<p>Banks received deposits worth ₹6 trillion (US$88 billion) and overall banking deposits with the Reserve Bank of India <a href="http://www.livemint.com/Industry/XALVUcyigyTrbn7KogaIfM/Demonetisation-impact-Bank-deposits-with-RBI-reach-a-record.html">reached a record high of ₹4.3 trillion (US$63.1 billion)</a> within two weeks of the currency ban.</p>
<p>So the demonetisation was a well-planned move in terms of the health of the Indian banking system. Five months before the drive, the total amount of gross non-performing assets (loans are classified like this after 90 days of non-payment of interest or principal) for public and private sector banks was around <a href="http://www.thehindu.com/data/Details-of-NPA-figures-of-public-private-sector-banks/article16670548.ece">₹6lakh crore (US$88 billion)</a>. </p>
<p>To understand how big this problem was, one needs to see the figure against the total loans given out by India’s banking system. That ratio corresponded to 11.8% of total credit advanced in September 2016, and it’s expected to reach 12.5% by March 2017. </p>
<p>The bulk of these non-performing assets are from public sector banks, and were mainly lent to finance the basic metal and metal products sector, the textile industry and the beverages sector. </p>
<p>In its <a href="https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=39074">December 2016 Financial Stability Report</a>, the Reserve Bank noted that the asset quality of public sector banks had deteriorated further between March and September 2016. This reflected the failing health of the Indian banking system, which is a major provider of credit to industry and business. If not checked in time, it can have serious repercussions for the economy. </p>
<h2>Bringing currency back</h2>
<p>So calling the demonetisation drive a complete failure, as <a href="http://www.indialegallive.com/commercial/special-story/demonetization-will-adversely-impact-97-percent-indians-15912">many economists</a> and <a href="https://www.bloomberg.com/view/articles/2016-11-16/india-s-strike-against-black-money-backfires">financial analysts</a> have done then, is to fail to respect this well thought-out strategy for saving India’s banks. Demonetisation has fulfilled the objective of bringing currency back into the banking system. </p>
<p>Within the first month, practically all demonetised currency notes in the country were <a href="http://timesofindia.indiatimes.com/toi-features/business/97-of-scrapped-notes-deposited-with-banks-as-on-dec-30-report/articleshow/56344692.cms">back in the bank vaults</a>. The sudden flow of cash to public sector banks gave them an instant lifeline clearly visible across the banking system. </p>
<p>Enriched by these higher deposits, the country’s largest lender, the State Bank of India, <a href="http://www.thehindu.com/business/Economy/Loans-to-be-cheaper-as-SBI-slashes-rate/article16973380.ece">slashed its benchmark lending rate</a> by 0.9%. In other words, after difficulty dealing with bad loans, after demonetisation banks are now able to provide cheap financing. </p>
<p>Not only did lending rates get slashed, the overnight marginal cost of funds-based lending rate (the minimum interest rate below which a bank cannot lend) <a href="http://profit.ndtv.com/news/banking-finance/article-state-bank-of-india-cuts-lending-rate-by-0-9-across-maturities-1643910">fell to 7.75% from 8.65%</a>. Meanwhile, <a href="http://www.businesstoday.in/current/policy/state-bank-of-india-cuts-lending-rates/story/243342.html">three-year loan rates came down</a> to 8.15% from 9.05%. While these percentages may seem small, it was a huge turnaround, which were reeling under the pressure of the bad loans.</p>
<h2>Another winning sector</h2>
<p>Amid the frenzy after demonetisation, another sector that got a big boost was that of financial technology start-ups, including digital wallet and other mobile payment companies. Due to the cash crunch, <a href="http://www.mydigitalfc.com/news/delhi-govt-joins-cashless-surge-929">many people turned to digital wallets</a> that can be used in conjunction with mobile payment systems, allowing them to pay for purchases with their smartphones.</p>
<p>Digital wallet companies saw an <a href="http://economictimes.indiatimes.com/small-biz/money/digital-wallets-and-mobile-wallets-surge-to-their-highest-level-modern-trade-grows-five-fold-nielsen/articleshow/55605863.cms">unprecedented surge</a> in the number of people signing up for their services and adding money to their wallets after demonetisation.</p>
<p>Among mobile wallet companies, <a href="https://paytm.com/">Paytm</a> was the biggest beneficiary. We can gauge <a href="http://www.hindustantimes.com/business-news/mobile-wallet-is-the-new-cash-demonetisation-is-all-set-to-become-the-turning-point-for-the-sector/story-4ZhcBq4OtAgk1GWwrETodK.html">the impact of the demonetisation drive on its business</a> by looking at the company’s user base, which has reached 160 million – a fourfold increase since May 2016. Paytm’s traffic rose by 435%, app downloads grew by 200%, and the company saw a 250% rise in overall transaction value. </p>
<p>In fact, “<em>Paytm karo</em>” (literally, “do Paytm”) became one of the most common phrases during the early parts of the demonetisation drive, and sectors that have been traditionally cash-based, for example small shopkeepers and public transport, such as taxis and auto rickshaws, started accepting Paytm. </p>
<p>Such was a stardom of Paytm that <a href="http://economictimes.indiatimes.com/small-biz/startups/paytms-story-now-a-case-study-at-harvard/articleshow/56865077.cms">it featured in a Harvard Business School case study</a> of the company’s transformation from online recharge platform to India’s largest mobile payments platform.</p>
<h2>Ultimate failure</h2>
<p>The demonetisation drive, then, <a href="http://www.hindustantimes.com/india/modernising-india-modi-govt-makes-digital-dash-e-gaon-every-mile/story-I5mbDkXKyhELpg4betsERJ.html">could be seen as a blessing for India’s move</a> towards a cashless economy and for encouraging consumers to use digital payment platforms. It also supports the <a href="http://digitalindia.gov.in/">government’s Digital India initiative</a>, which aims to encourage cashless payment solutions across the country by putting technological infrastructure in place.</p>
<p>But it’s difficult to assess whether India is ready for a cashless economy. Traders tend <a href="http://tech.economictimes.indiatimes.com/news/technology/are-we-really-ready-for-a-cashless-future-/55574423">not to reveal their actual income</a> to avoid taxes and people are so used to paying for services in cash that for them to shift to new mode of payments <a href="http://economictimes.indiatimes.com/industry/banking/finance/banking/payments-going-the-plastic-way-is-india-ready-for-cashless-transactions/articleshow/55570808.cms">requires a big habitual change</a>. </p>
<p>The government’s demonetisation drive, then, can be seen as an effort to curb the corruption and the flow of black money as stated, but also to force the general population to embrace digital payment options.</p>
<p>Unfortunately, it seems to have failed in both aspirations. Even though the main stated aim of demonetisation was to curb the extent of black money in the economy, during the first two months of the drive, almost 90% of the scrapped and demonetised notes were <a href="http://www.forbes.com/sites/timworstall/2016/12/28/90-of-scrapped-notes-in-banking-system-india-gets-the-tax-not-the-dividend/#3146aad92aca">back in the banking system</a>. This stands in contrast to the government expectation that roughly ₹3 lakh crore (US$44 billion) of <a href="http://timesofindia.indiatimes.com/india/90-of-scrapped-notes-back-in-system-big-dividend-unlikely/articleshow/56210235.cms">the scrapped notes would never return</a> because they would be part of black money hoards. </p>
<p>The second consequence of moving towards a cashless economy may also be a failure. When cash returns to the system, <a href="http://www.hindustantimes.com/business-news/mobile-wallets-see-a-soaring-growth-post-demonetisation/story-zwdBi3UGqG1qZD92AEF9GK.html">many Indians are likely go back to the cash-based transactions</a> given the over-dependence on cash-based transactions in the country due to limited connectivity and privacy issues related to transactions. </p>
<p>Ultimately, the demonetisation drive has been successful in making the banking sector healthier, but not what it was projected to do in terms of bringing in “black money” and turning the country into “digital India”.</p><img src="https://counter.theconversation.com/content/71704/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nafis Alam does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The demonetisation drive has made the banking sector healthier but failed to curb ‘black money’.Nafis Alam, Professor of Finance, Sunway UniversityLicensed as Creative Commons – attribution, no derivatives.