Throughout the western world, politicians appear keen on eliminating cash as a concept. There are many reasons on the surface – preventing armored car robberies, combating organized crime, making money laundering difficult, et cetera. However, this is a typical elite ivory tower project that will neither work in practice nor escape a lot of negative fallout. Attempts to eliminate cash are not just a privacy disaster, but also a resilience and national security disaster.
Politicians are suggesting that cash should be gradually replaced by credit card transactions and direct bank transactions, making every single movement of money trackable, seizable, and reversable. This is not just a privacy disaster, it’s also a resilience disaster. I had the privilege of having a long conversation with the Chief Security Officer of one of the larger European banks, and he told me the outcome was a given – there will always be some kind of cash. Whether it’s issued by a central bank is completely beside the point; if central-bank cash isn’t readily available, people will create a way to trade between them without involving a third party.
It’s not just privacy that requires cash or a cash equivalent. It’s also the ability to trade without having tons of red tape including a third processing party, which – to top it off – clearly establishes a merchant class (with the ability to receive money) and a consumer class (with the ability to pay and shut up). In contrast, cash has always been peer-to-peer.
Let’s take that again, because it is important: cash is and has always been peer-to-peer. (We can easily observe how popular other peer-to-peer technologies are with governments.)
But the fight against peer-to-peer cash is also a national security disaster, and I don’t think most politicians understand the ramifications of this. We’ve already seen how the US has killed organizations by pointing a Finger Of DeathTM at them, when Visa, MasterCard and PayPal shut off their ability to accept money as though it was done with one voice. High-profile case in point: WikiLeaks.
Now, two questions:
– If you were an entrepreneur, would you be comfortable with the fact that somebody else held the master key to your entire operations, and could shut you down the moment you became inconvenient? It’s not just WikiLeaks that has been shut down by the credit card cartel; many small mom-and-pop stores that sold sex toys and similar completely-legal-and-moral goods have also been shut down. This has already happened, citing “Acceptable Use Policies”. We are effectively outsourcing policymaking to democratically unaccountable credit card companies under the jurisdiction of a foreign power.
– If you were a politician outside of the United States, would you be comfortable with the fact that a foreign power (the US government, issuing letters to Visa and MasterCard) could shut down your entire consumer economy (the ability to pay at points-of-sale) as easy as flicking a Big Red Switch? You shouldn’t. This should have politicians waking up at night screaming in terror. The US can effectively eliminate an entire country without a single shot fired if that country has been stupid enough to eliminate cash.
In summary, political attempts to eliminate cash are very shortsighted, and I’d add dangerous to society. Bitcoin may come to the rescue before the credit card companies and shortsighted politicians knew what hit them.