Are you ready for a revolution? You might have just missed it. The digital payment revolution may have already changed the world, as cash may be the odd currency out. The global economic landscape is changing almost daily, with governments and banking working together to remove cash as an option. Many will be funneled into a globally monitored economic watch list, according to a new article in The Guardian.
Remember when cashiers used to ask you ‘cash or card?’
These days, the choice may be “debit or credit” but that’s like asking “chicken or steak” for a flight meal. But the bigger issue is that banks, regulators and businesses are starting to turn their backs on cash.
London buses have stopped accepting coins and paper currency in favor of cards that use NFC. In Louisiana, House Bill 195 recently passed into law, banning the option to use cash to buy used items. Shopkeepers must fill out regulatory paperwork, including the customer’s personal information for every cash transaction, treating cash more like a check.
Even Citibank’s Citi Group’s top economist, Willem Buiter made news by calling for a ban on cash, outright. If he’s saying this publicly, imagine what is being lobbied for behind closed doors between banks and government? American banks and many in Europe are making cash withdrawals of as little as US$5,000 so inconvenient and invasive so as to dissuade the removal of your funds from your bank.
Every large transaction comes with an SAR (Suspicious Activity Report) that is monitored by the government. If you take your money from your bank, you are now “suspicious” and are on two lists: the bank’s and the government’s. You are being trained, like a dog, to keep your money in a bank, indefinitely.
Consumers see a great matter of convenience in paying for everything with a swipe or a scan, but so does your bank and government. Things like fees and taxes can be levied just as quickly and conveniently through the digital world.
Imagine all the extra fees and taxes you already mindlessly pay in things like your cable bill, phone bill, or gas purchases at the pump loaded into the rest of your life? Without cash as an option, every dollar made leaves a digital trail of breadcrumbs for your entire economic life. Where you spent your money, where, how much, even the time and if you got a discount.
With cash, every transaction is peer-to-peer, kind of like Bitcoin, but with no middleman to skim off the top of your budget. If you use Bitcoin, the same effect applies, only in a purely digital world of e-commerce. Take cash off the table, and go cashless, western society wouldn’t be able to buy toilet paper, pornography, or a bottle of beer without a bank knowing about it.
Do you really trust your bank to keep all of your economic dealings safe or trusting them that they don’t hand over your data to a state agency? What about when 5 million+ accounts get hacked, like J.P. Morgan Chase bank had last year. When you think about it, a cashless society has few real upsides.
Another downside of the cashless society concept is every bank card-based transaction has your personal and economic identity attached to it. If the merchant you shopped with earlier today (see Target’s and Home Depot’s major issues with identity theft) gets hacked, you have a serious problem.
Centralizing millions of people’s financial information has always ended badly. Bitcoin may be an open-source online immutable ledger, but your identity is not tied to your bitcoin dealings directly. It’s only when you surrender your keys to a centralized account or server where you run into security issues. Score one for Team Bitcoin.
Another issue is debit card transactions are “pull” transactions, meaning a merchant or bank can remove funds from your account on a recurring basis. With Bitcoin, you have to “push” or send your funds out, and they cannot be taken easily from you by a third party. This creates more control and fewer hands in your financial cookie jar. Another base hit for Bitcoin.
Going cashless works great for the banking establishment
Have you heard a lot about this “negative interest rates” thing? This becomes, not a cash cow, but a digital cash cow for the bank if you can’t actually get cash. Negative interest rates mean you’ll have to pay to access and borrow money from banks.
Since everything you do financially will be done through banks, you can’t run to another bank relief. The name may change, but the hustle will remain the same. You are being conditioned, trained, like a dog, to accept paying banks to hold your digital money.
Needless to say, Bitcoin is not a debt-based system, so you don’t have to pay anybody to hold your bitcoins. There really aren’t banks for Bitcoin, although players like Circle and Coinbase are retrofitting these elements into the community, for better or for worse.
Another win for banks is if the bank goes insolvent, consumers cannot execute a “run on the banks” and take their money out. Ask people in Greece how life is when the bank chooses not to give you back your money, or can dole it out in amounts of their choosing. Are you seeing the scale tip in one party’s favor here?
Conspiracy theorists rejoice. What happens if the national currencies of even more countries collapse under the weight off their own debt? You may have read about other nations like Brazil, Venezuela, Argentina, Cyprus, or Zimbabwe going under. If every year, another currency goes belly up, at some point, some bank, regulator, or national dictator will say we need a global currency, like the IMF’s SDR (Special Drawing Rights) to protect the future of nations. Then you’ll need a global bank to manage this, all digitally.
Will this usher in a one world currency that a common man can never hold? The point is there are a lot of ways this cashless society thing can go south, fast.
Bitcoin is not perfect, but scores may points for The People
Yes, Bitcoin is not widely accepted and is not easy to store and use. The upside is there are investors, coders and small businesses working around the clock to make Bitcoin as convenient as a contactless debit card. Bitcoin will be vastly improved over today ion the coming years. It already has other benefits besides the ones I covered, like the speed of reconciliation of transactions, the much lower fees, and the proven ability of bitcoin to appreciate over time.
The need for convenience may have spoiled the child that is cash, the only way to balance out the ability for banks and government to inject oversight on every aspect of life. Maybe life would be better if you had more privacy but had to work a little harder to get it, economically?
Or you could move out of the western society altogether, and live a much simpler life. People in Guam, Indonesia or Costa Rica aren’t going to face these mass surveillance issues for quite awhile. When the taxman starts making regular deductions from your bank account every payday before you do, you may start to think “The Third World” may indeed have it right, living without all these “conveniences.”
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