The cashless society – which more accurately should be called the bank-payments society... is a utopia where money cannot leave – or even exist – outside the banking system, but can only be transferred from bank to bank.
Such a system replaces a relationship between two parties with relationships between those parties and the bank. If either party falls out of favour with the bank, they can't do business with each other.
For an immediately ready example, I present Paypal Seller/Buyer disputes on eBay.
I'm always a little tickled by tech people hyping the idea of a cashless society. Don't we all hate Paypal?
Also don't forget that Peter Thiel got really rich by selling Paypal to eBay in 2002. After that in 2003 he founded Palantir Technologies - a company that produces surveillance software for the three letter agencies.
I often like to say that getting lots of money does not make you a bad person, but brings your true character traits to light.
1) ban cash, so that humans need permission to interact when an exchange of value is involved;
2) improve the oversight of the permission-givers, so that the permission-giver-watchers are less arbitrary and annoying, in order to fix the problem that never existed before point 1.
Other than lining the pockets of poor, underfed bankers and giving busy-bodies veto power over our interactions with others, what problem are we solving again?
I fully agree that this places a big amount of power in the banks' hands, but what alternatives are there? (I'm honestly asking, are banks the lesser/only evil here?)
I'm not seeing cryptocurrency fixing this, but maybe it is possible. From my limited understanding, if transactions were mapped to some contract, it would void some anonymity of the system, and it probably wouldn't be possible to get money back in case of fraud anyway, so there's that.
The banks were happy to charge a big fee to send a bank wire or cashiers check. Just wouldn't deal with a credit card.
It's obviously because the bank ends up on the hook for liability in the case of disputed or reversed charges. They judged that market to be too likely to result in their losses so they simply refused to let me do business with the seller I wanted to use.
Many ATMs already have the hardware. To improve counterfeit recognition, most ATMs which accept cash now take a high-resolution image of both sides of the bill and do considerable processing on it. It just takes a software upgrade.
Some bank counting machines also have this feature. Cummings markets their cash counter to law enforcement, so they can capture all the serial numbers from a drug bust and track them.[4]
[1] http://www.grgbanking.cn/en/chinaATMs/images/H68NL.pdf [2] http://hkmb.hktdc.com/en/1X09V6YK/hktdc-research/ATMs-to-pro... [3] http://en.yibada.com/articles/35951/20150601/china-worlds-fi... [4] http://www.cumminsallison.com/us/en/products/currency-handli...
If five of the twenty bills you withdrew at 9 am were deposited by Seven-Eleven at 7 pm, I can guess that you went shopping at Seven-Eleven... And more likely then not, I'll be right.
A particular bill does not change hands very frequently between ending up at a bank. If anything, a bill that you withdrew not ending up back in circulation is suspicious.
Right. At one time the US Fed estimated that the average number of transactions for cash outside a bank was two. That's an old number, measured years ago to plan bill replacement. (One of the Federal Reserve's functions is paper bill replacement. Banks pull worn bills and send them to the Fed, which tallies them, shreds them, and replaces them with new bills from the Bureau of Engraving and Printing. Dollar bills last about 18-22 months.)
https://www.nerdwallet.com/blog/credit-cards/credit-cards-ma...
https://www.nytimes.com/2016/03/27/your-money/credit-cards-e...
Merchants prefer cash as card costs them money.
Usually works with dry cleaners, cafes, etc. Big businesses generally say no.
I'm not sure if this is more prevalent in certain regions, because I never noticed it until I drove west from the east coast. First I was confused when I stopped at the cheapest gas station I saw somewhere in Nevada, only to discover it was cash/debit ONLY, and I think there was a 35-cent charge for using debit. After that, in California, I started noticing how easy it is to see the cash price when driving by, but you often have to look closely for the credit price.
It seems some states still ban it by law, though.
What are you hiding citizen? Nothing to hide, nothing to fear.
* Your government won't adequately protect collected information from your stalker
* Your stalker has friends who work for the government
* Your stalker works for the government
* You're gay, and live in the UAE, where your outing may result in your death
* You're gay, and live in the USA, where your outing may result in your death
* Your government has too many laws to count - nevermind read - and can find a violation of them for anyone, given enough time
* Your government won't adequately protect collected information from other governments
* Your government won't adequately protect collected information from your competitors
* Your government won't adequately protect collected information from identity thieves
So yes, for this any many other reasons, it's good to keep secrets from the government.
By the way, pot is just an example, you can literally dig millions of unjust laws up if you looked, we're all just conditioned to OBEY.
It's not like we need more people running around with impaired decision making ability.
The government is not perfect. It's made of people. People who may be racist, sexist, homophobic, desperate for money, greedy, or corrupt.
- Someone's ex burned them, now they hate everyone of __ gender and go out of their way to dig through information of those people and get them in trouble.
- Someone is anti-LGBTQ+ and uses information to hunt people down and get them killed.
- A racist particularly hates a certain race, and now goes after them in particular for small law breaking things -- jaywalking when no cars are coming, not using their blinker, not coming to a complete stop at a stop sign. And while those are all crimes, now people of that race are being punished disproportionately.
- Businesses with their hands in the government now have information to use against their competitors and create monopolies
- Limits free speech - can't even discuss things privately.
- Further removal of all freedoms because now you can't get away with anything even if it's a controversial thing such as drugs, sexuality, art/music, and protest.
etc.
I certainly do not want my bank passwords to be with the government. My bank accounts can be wiped out. Hence I do not like my communication recorded at all for this reason.
Governments are not permanent. Significant changes in government can occur through democratic election, revolution, invasion (Ukraine?). Such changes can happen very rapidly. Records can not always be easily purged.
If the incoming government is ideologically opposed to something that you are or you declare (race, religion, political views) and they have a lot of information about you collected by the previous government - then you could very well be in mortal danger.
There are many examples of this in history.
So benign governments should aim to collect the minimum of information required to deliver good service to its citizens. Neither you nor your hopefully benign current government can trust the governments that are to come.
He buys a 12 pack, and his kid steals it, and gets into an accident causing front page news. His kid lies, and says dad gave me the beer. (He is screwed.)
He goes onto physical therapy office. One of the legitimate places that, but sounds weird--like the power of hands--whatever. The wife sees the bill and it always stays in the back of her mind forever.
He buys a pressure cooker, and is suddenly profiled?
He pays out of packet for a CAT scan because he's a hypochondriac, and things he has a brain tumor. He is forced to claim he did have a CAT scan on all those pesky insurance forms. (Happened to me.)
Yea some of these are far fetched, but not being able to buy groceries last nights wasen't. My slick new chipped bank card was not recognized by the machine. I usually carry a c-note, but used it the following week because of bank card problems.
I guess the McCarty Era is not taught in school anymore?
So no--I don't want a paper trail either. Hell Safeway knows my diet better than me. (Yes--different card.)
Luckily I can still go weeks without touching my EC card these days.
In Europe, payment processing interchange fees are regulated. Debit cards are fixed at 0.3% and credit cards at 0.2%. SEPA wire payments have zero interchange.
That's not exactly true. Payments to other countries within the SEPA must not cost more than a domestic payment. That's usually nothing for people, but businesses may pay.
As an example, the Bank of Ireland charges businesses €0.10
https://businessbanking.bankofireland.com/banking/current-ac...
So an upstart bank can claim zero fees, still have access to other banks without them ruining it for them. But in the case of debit/credit cards, you couldn't start a card processor without being subject to fees.
A flat fee doesn't inherently make more sense either, as the marginal cost of processing a transaction is negligible. The costs come from the infrastructure.
There are many ways they could price it, but relating it to transaction size makes a fair amount of sense, since people making larger transactions are demonstrably able to pay more.
First, such systems only work in the presence of a unit of account, because otherwise it's impossible to coherently price items in a pure unlike-for-unlike barter system. The unit of account would, of course, be money. So what you're talking about isn't a collapse of the money system, but black markets. When you say "people who want to keep their transactions off the books will use black markets," it sounds much less prophetic.
Second, the value of state money is maintained by the state's ability to levy taxes, and the state only accepts tax payments in its own money. For people living "on the grid" in a country with a credible government, this means that most of their economic action has to happen in the state's money. Since people have to, at the very least, acquire enough money to pay their taxes, and most people don't want to put up with multiple systems of exchange.
Not coincidentally, this is also the biggest hurdle for serious adoption of cryptocurrencies.
It is not a hurdle. In fact Bitcoin's growing adoption and increase of value over the last eight years has already demonstrated your worry is a non-problem. Money has value because people demand it. It doesn't matter if demand comes from the government or a merchant. Both can change their mind about what they'll accept tomorrow as money (as history has shown many, many times.)
Sure, on a practical level a currency's value will have a more solid foundation if (1) the government that demands taxes is big and stable, or (2) if a large number of merchant accepts it. But again, fundamentally there is no difference between (1) and (2). Multiple cryptocurrencies already have value resting on a more solid foundation than the value of currencies in many smaller countries.
>Second, the value of state money is maintained by the state's ability to levy taxes
Does that also hold when the state allows the vast majority of the transactions within the state to be mediated by banks and payment processors who charge a proportional "processing fee" on every single transaction which becomes essentially indistinguishable from a tax? Does that not put banks in the position of having as much, or at least nearly so, control over the value of the money of that state?
The existence of other necessary service providers who also.demans payment in the government's preferred currency is an additional source of support for currency value, not a countervailing force.
And it's often largely a secondary product of the government requiring the use of the currnecy, anyway, especially when they are heavily regulated creatures of law, like banking corporations.
Shit. You just made me realize something. This would be bliss and perfection and salvation for the current status quo. The Internet has come along and taken distribution, the source of basically every existing accumulation of significant wealth, and made it a worthless problem to solve. It took the primary economic engine, something only huge sophisticated organizations were capable of accomplishing with any effectiveness, and turned it into something any clever 12 year old can do in their spare time for a lark and run circles around those large organizations whose pre-existing distribution chains are now a weight drowning them.
They feel that noose tightening and know their days are numbered unless they can stop things from progressing any further. The death of any not-in-person transactions, especially any transactions over the Internet, would give them rebirth. Their distribution networks would once again be the single most valuable structure in the entire economy. They could continue to skim 90% of every transaction between creator and consumer for performing the long-valued task of distribution.
Shit.
What you end up with is informal system of money transfer such as https://en.wikipedia.org/wiki/Hawala
Such a system will emerge as soon as people are prohibited to pay directly to each other. Instead of paying cash to you, I will pay for you in restaurant.
Look at how the underground economy of drugs uses commodities like detergent [1]. This would just take that economy to the next level. Clearly to prevent currency from failing outright, going cashless would likely result in the ban (effective or not) of cryptocurrencies and the like.
[1] http://nymag.com/news/features/tide-detergent-drugs-2013-1/
Of course such currencies are economically inefficient. But I think too much monetary efficiency is bad, because it encourages financialization and excess risk. for generations now we have been borrowing from our descendants to pay for things in the present, seeming to come out ahead on paper but more often than not running up a hideous and poorly-accounted-for environmental bill while establishing a consumption-based economy that promotes waste. I've long wondered if we shouldn't treat oil as a de facto currency rather than only as a commodity.
And if you can't sell it, you've still got clean clothes.
The US government also expects your tax payment on an annual basis.
1. When my girlfriend pays me her half for getting groceries.
2. Which I then use to feed the laundry card refill machine in my apartment.
Mind you, I don't want cash to go away, but yes, I essentially live in a cashless society.
Describing gold as an incredibly popular currency makes alternative-facts look honest.
...
A currency is a store of value, but a store of value is not necessarily a currency. Gold, as a currency, has terrible properties.
In what societies have humans used barter?
I suspect we would instead use something like tobacco, laundry detergent, or startup t-shirts as cash or we would keep a mental register of who owes whom a favor.
All of them, including (but not limited to, since barter predates money) all the ones that also have a money economy.
And the question was about using barter, not depending on barter exclusively; every society has used barter.
And, in any case, debt and barter are not opposed; a system that uses debt of arbitrary commodities without a commonly-accepted unit of account is still a barter system (barter systems with debt certainly have existed, whether or not they were ever the dominant basis for any economy.)
And it depends on what you mean by "depended on". The central authorities of the day maybe preferred to rely on financial tools, but the people themselves performed a non-insignificant amount of commerce using barter.
"2 knicks on this clay tablet reminds me that I gave Tom two bushels of wheat, and Tom will return to me 2 pelts," contrived example to make the point aside, such scenarios as I understand it, were (and are) pretty common.
It depends on what context you're looking from. Bankers might say it's a ridiculous, outdated notion, and sell the idea it's never really existed. Poor people might say yeah well, it's all we really have.
Almost all of them to some degree. Including modern societies (at rural places), especially up until the sixties or so, and even Western European cities (during the war and the very poor years post war).
Also common in communist countries...
How is that relevant? I've lived in a country that wasn't communist, but had a whole communist vs right/centre civil war. And I've visited a number of ex-communist countries, and know people from there.
But this is not about what I've seen with my eyes, it's about what's recorded in history.
Note also that I didn't say "preferred" (as in making barter the dominant and/or official economy).
Barter was very common in communist countries for "black market" stuff (and in times of great crisis, for essentials).
Here's from Wikipedia, about the aftermath of the revolution in USSR:
Civil War ensued and the economy of the new regime became even more chaotic. With mismanagement rampant and hunger sweeping the land, the value of the ruble, currency of the nation, essentially collapsed.[1] During this interval, remembered by the name War Communism, money lost its function as a store of value and a means of exchange. A return was made by people in their daily lives to a _primitive barter economy_ (emphasis mine)
Also here are some more modern examples: https://www.forbes.com/sites/timworstall/2016/12/16/another-...
And one not related to communism (as I wrote, barter was used in Western Europe and many other places as well, in rural societies, but also in times of inflation/depression): http://www.naturalnews.com/052224_economic_collapse_Venezuel...
http://www.europeanpaymentscouncil.eu/index.cfm/newsletter/a...
"Although selected shops, petrol stations, railway stations and government services, each for their own reasons, have decided not to accept cash any longer, we do not foresee the Netherlands will evolve into a completely cashless society. In fact, the consensus is that the cash infrastructure will remain ubiquitous and that it is up to payers and payees to agree on their payment method."
That said, it's not hard to imagine that if you get to 90% or 95% cashless, a lot of retailers aren't going to want to bother with cash any longer.
Old school accounting in many parts of the world did not rely on financial transactions. Central authorities preferred "proper" financial instruments, but for the commoner, bartering was a regular activity.
Knicks on clay tablets tracked debt, sure, but the repayment may not have been via money. 2 pelts to Bill now for a bushel of grain in return next month type agreements are all over history.
It's hard to determine how much activity like this there was, and a lot of the history focused on official financial systems because, well, it's easy to find data on.
How much money is in my Bitcoin wallet?
If you watch for long enough, you can wait for a transaction that spends from the address you know, and you might find some other addresses that were spent with it.
It's true that a non-zero amount of information about your Bitcoin holdings is leaked. But it's not true that that amount is 100%.
Other cryptocurrencies like ZCash, Monero, etc solve this in a more elegant way by making transaction actually anonymous.
However, they have to be pretty committed to this, because if someone outside of the group does eventually mine a block that contains the censored transaction, the group members also have to be willing not to build on that block, and to trust each other not to do so. Just agreeing not to include the transaction in blocks themselves would be insufficient.
At that point there are complicated questions about how stable and credible the arrangement will be, since systematically avoiding building on certain mined blocks involves slowing down the consensus slightly, and also trusting that the eventual consensus will exclude those blocks.
If, say, 51% of mining power committed to censoring one particular transaction, that might yield an effective fork of Bitcoin for some period of time because the other 49% might gamble on their ability to get their rival blocks accepted in the long term (or, if they didn't know about the 51%'s policy, not see any reason why they shouldn't simply build on what appeared to be the longest chain!).
A pithier version would be: it's infeasible to censor transactions and if a nation state spent enough to try it, it would indeed be noticed and the community would fork.
Look at the Ethereum Classic debacle - and remember that many Bitcoin users tend to hold those views stronger than many Ethereum users.
PS: Add up the Chinese pools and one country effectively already controls bitcoin.
Looking at the chart, you can see that the top 5 mining pools can collude in being a single entity to "control" the blockchain (I believe this is called a Sybil attack [https://en.wikipedia.org/wiki/Sybil_attack]). Now keeping incentives in mind, the idea is that people using bitcoin have faith in the system. That gives bitcoins value. Miners get paid in bitcoin. If they were to manipulate the blockchain, that would most likely cause bitcoin's userbase to lose faith in the system and thus what the miners would be stealing would suddenly have little to no value.
I'm not positive, but I recall hearing that pools have been intentionally been made smaller to keep users' faith in the system. Perhaps the goal of these majority mining power is not to steal bitcoin but censor certain users? That may be a bit more complicated depending on the users' opinions on a case-by-case basis. Fun stuff :)
A Sybil attack can occur when a system designer mistakes a system identity to be exclusive with other ones. e.g. you could create a website that used a phone number as a user identifier and give every new user a $5 signup bonus. But if someone found a way to create valid phone numbers for less than $5 each, they could exploit your new user bonus system.
If it's free/cheap/easy to create new identities, you must be careful how much weight to give those identities. e.g. reddit has some problems related to how easy it is to manipulate voting. They have probably made changes to their algorithm over the years to deweight new/unverified users and likely other clever things to detect voting rings.
Big miners can easily delay your transaction, by refusing to include it in a block, but the only way they can prevent your transaction entirely is if all of the miners collude not to include it.
It's still effectively impossible because it would undermine confidence in the system (which is why people are willing to pay miners in the first place).
Really, cash relies on some sort of approval too. Someone's got to mint money and assure its scarcity (eg: value). I believe in cash for a variety of reasons, but there is no transaction aside from barter that doesn't rely on someone else's authority to buy something.
Just because using a tumbler itself is not against the law, if you use it to hide the source of income, it is still money laundering.
You can't get around financial laws by using property instead of currency. "A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property."
https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan...
Apparently "gold laundering" is a thing in some jurisdictions. https://en.wikipedia.org/wiki/Gold_laundering
While cashless systems are gaining traction, is there any actual attempt for them to replace cash wholesale?
What probably does happen over time though is that, if the cashless penetration becomes high enough, a lot of retail merchants and individuals just stop accepting cash because it's too big a hassle for a tiny slice of their business.
Paying with cash is exchanging a promise that someone else, usually the central bank, will pay the bearer on demand the value of the promissory note.
Even if you could actually exchange the note for its equivalent in precious metals — which you can't — you're still just exchanging a token without intrinsic value. Its only value is conferred entirely by the monetary whims of the government.
Governments can, and have, on multiple occasions, completely disregarded sensible monetary policy and started printing money when they didn't have enough of it, totally destroying the value of people's cash in hand through hyperinflation. This is something you have literally no defense against.
When paying with some other method, we need to make a clear distinction between debit and credit.
If I pay with a credit card, I am asking someone else, usually a bank, to lend me the money to pay. Obviously, in such a situation, they have the right to refuse, albeit only in accordance with any pre-existing legal agreements between us.
If I pay with a debit card, I am asking one my debtors, usually a bank, to repay part of the debt they owe me to the person of my choosing. They may choose to be somewhat awkward about this, but they fundamentally cannot choose to disregard the debt they owe me, so long as they wish to remain solvent. Nor do they, in any meaningful sense, have the ability to grant or refuse "permission" to pay. They owe me money and, subject to the relevant bankruptcy laws, any pre-existing legal agreements between us, reasonable anti-fraud measures, etc., they have to pay.
None of this has anything to do with the issue of "freedom". It is simply a matter of the way financial transactions work in modern society. The amount of money in the economy hugely exceeds the amount of cash in circulation. Most money exists in the form of credit and debt. Your money exists in the form of credit and debt.
There is nothing scary or unfree about having money in the form of a debt the bank owes you, compared to having it as promissory notes from the government, or as legal deeds to property, or precious metals with a market value. Each and every store of value is entirely reliant upon the continued proper functioning of the market, the legal system and the government.
Money in the form a bank deposit is probably the safest way to store moderate amounts of money. As a physical entity, cash can be damaged, lost, stolen, etc. And the only person affected by this is you, meaning you have no common cause with any other person to recover your losses. A bank's stability and existence is underwritten by the livelihoods of all its customers, employees and investors.
This long rant strikes me as having been written by someone who doesn't know anyone who has been summarily excluded from the banking system. If you're not viscerally aware of the power that one random faceless person at Chexsystems would have over your existence in a cashless world, you're missing the point.
People can be on either side of any trade. If you are worried about inflation, be short cash.
those same people can later declare a purchase you made to be criminal after the fact. Scenarios include purchases made from someone that is convicted of a crime and the government deciding devices/equipment/goods you own are dangerous to the state
The example in the article, about the Coke vending machine. Imagine in the past, before vending machines - the only way you would be able to buy a Coke in that particular area would be if there was enough foot traffic to justify a full time real human being to sit there all day, with inventory of soft drinks, and exchange your cash for them.
The opportunity cost alone of having a human being sit there and accept payments, and risk being robbed, is immense compared to the cost of putting a vending machine there with an electronic payment system.
I would argue that without new technologies like this, your ability as a consumer to buy a Coke would be severely limited.
We might as well go back to a feudal society where everyone met in the village market during the morning to buy food and goods. The convenience factor alone of being able to buy anything you want in almost any area of the world, at any time of day or night, without having to have a live human being there to perform the transaction, is huge.
My country will be more or less cashless within a few years. We are handing over complete power over the economy to unaccountable private institutions, and the debate always comes down to convenience and eliminating robberies. It's a travesty.
(BTW not downvoting you, but your comment does inexplicably ignore coin op machines which are an existent, good solution.)
"The transaction is authorized either online and offline. For an online authorization, transactions proceed as they do today in the U.S. with magnetic stripe cards. The transaction information is sent to the issuer, along with a transaction-specific cryptogram, and the issuer either authorizes or declines the transaction. In an offline EMV transaction, the card and terminal communicate and use issuer-defined risk parameters that are set in the card to determine whether the transaction can be authorized. Offline transactions are used when terminals do not have online connectivity (e.g., at a ticket kiosk) or in countries where telecommunications costs are high."
http://www.emv-connection.com/emv-faq/
It's in wide use in Europe, for instance a ticket machine on a train or tram, or for low-value transactions (bus tickets, fast food), or where there's no connection (purchase on a plane -- where they will probably only accept credit cards beyond a certain amount).
* Ways that involve cash or cash equivalents
* Ways where a purchase requires the permission of someone else
Just think of the word authorization, which is a required element of essentially all non-cash transactions. It has the word authority embedded right in it. If you're OK with that concept, you are necessarily OK with the idea that someone you have never met and don't control has the ability to stop you from using your funds in the way you'd like to at any time.
A cashless society is, at a fundamental level, not free.