Bitcoin and the War on Cash
The United Kingdom’s Prime Minister is going to host a wide international anti-corruption summit in London on May 12.
“The summit will seek to galvanise a global response to tackle corruption. As well as agreeing a package of actions to tackle corruption across the board, it will deal with issues including corporate secrecy, government transparency, the enforcement of international anti-corruption laws, and the strengthening of international institutions,” the official announcement of the summit reads.
As some expect, the meeting will once again raise the question of restricting cash and switching to cashless payments system, with the final goal of total digitalization of currency.
Digital currency of any kind is indeed a very reasonable solution for those seeking to â€śtackle corruptionâ€ť. Be it a centralized and regulated one, or a form of private money, such as Bitcoin, it provides utmost transparency to all financial transactions.
However, the move signifies a more large-scale trend of present day, which is a shift to electronic means of payment and a massive attack on cash.
New political and financial reality causes Western banks to seek new ways of surviving, and they think they’ve found the way out by imposing stricter controls over money flows. Cash in this case is the most likely victim, as it facilitates tax evasion, corruption, shadow economy blossoming – and, apart from that, it acts as regular people’s shelter from banking dictatorship and credit traps that banks so carefully set. As long as there is much cash in the turnover, banks find it hard to establish a true financial dictatorship and control routine financial operations of regular people.
European and American financial regulators have already started the warfare by discussing removal of 500 EUR and 100 USD banknotes from the turnover, and the European Central Bank has already decided to do that as of 2018. The basic justification for that is faire, olde, and astonishingly predictable: money laundering and terrorism financing. In this regard, 500 EUR banknotes have surprisingly much in common with cryptocurrencies. Notably, the share of large denomination bank notes in the turnover stands at around 3%.
As cryptocurrencies are hardly accepted everywhere, the general public will have to comply with whatever demands of banks, should the cash leave us forever. Around 10% of people in developed or developing economies have no debts, have not a single loan, and keep their money safe in the form of cash or precious metals. If we kiss good old cash goodbye, it would be pretty easy to find out what are the real reasons for the war against it: if banks are indeed about to take control over every speck of financial activity, their next step would probably be yet another war against alternative means of value storage.
Some regulators consider switching to digital currencies â€“ however, none of them considers using bitcoin or other kinds of independent money. A notable example here is so-called RSCoin, a centralized and regulated evil twin of Bitcoin developed to the order of the Bank of England. Similar to Bitcoin, RSCoin employs cryptography to create digital money resistant to counterfeiting, verifies transactions on a blockchain, and records all transactions of the currency therein. However, while bitcoin’s operations are maintained by numerous computers around the world, and it lacks a unified control center, RSCoin’s ledger is controlled by the central bank. The system allows for unlimited issuance of digital tokens.
If everyone starts using digital currency similar to RSCoin, it would be easy for banks to control customer accounts and everything they may spend their money on. Otherwise, having destroyed cash, regulators might thus force everyone to have a credit/debit card, with the former being far more likely.
Desperate lack of bitcoin infrastructure makes it â€“ at least, presently â€“ an inviable alternative to bank services. There are only several service providers offering cards to cash bitcoins in regular ATM’s. Bitcoin ATM’s, or BTM’s, are sparse and scarce. There are none of them in some countries, while in others, where they are still present, it would possible take one to have a nice and long journey to another city in order to have their money.
However, if cash gets completely removed, which seems inevitable, bitcoin and other cryptocurrencies could finally find their way to mass markets. Removal of cash will also remove the need for complex and expensive infrastructure, as cryptocurrency operations will be serviced similarly to traditional ones.
In the anticipation of cash-based economy’s demise, some cryptocurrency companies have already started developing what may eventually become the counterweight to the dictatorship of banks.
For instance, payments processor BitPay partnered with Visa and recently presented its own bitcoin debit cards enabling users to deposit their money in cryptocurrency form, pay for their purchases in PoS terminals, and cash their money in ATM’s. The original issuer of the cards is Metropolitan Commercial Bank; only happy U.S. residents now have the option.
While it is definitely not the first example of bitcoin-based cards, users are mostly disappointed with high withdrawal fees involved. However, the move still signifies that, notwithstanding the creeping centralization of bitcoin itself, there could be a second option for users unwilling to put their lives into bank.
The main question here is whether there would be enough people to demand for properties of cash in a cashless economy.
Sadly, the history proves that it is quite unlikely. Nobody misses money backed with gold, just as nobody misses gold coins, which preceded it.
Those wishing to stay independent of banks, still have some time to develop a solution.
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