The core concept to remember I think is that there are two ways to pay for things:
* 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.
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.
The introduction of the revelatory "mark of the beast". No one will be able to [legally] buy or sell without it. I suspect anyone that tries to barter or trade outside of the system will be considered and labeled a criminal for operating in black markets or tax evasion.
Multiple European countries already forbid cash payments over a few thousands euros. In my country the law is just being proposed: anything over 3000€ must be done using electronic systems (read: banks) or you risk getting a fine equivalent to 25% of the amount over the limit.
okay, if you believe stuff like that, it's hard to take you seriously. 666, the devil, he's there in your transaction? I remember when conservatives didn't like that unix has daemons. That was not particuarly a useful concern.
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.
Pretty much. I tried using my account from France, and now my account is locked, and there are a bunch of hoops to jump through to restore access. No thanks.
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 believe that the main reasonable concern with large transactions of money is mostly buyer/seller protection, for large sums of money.
When buying, say, a house/car and spending well over €/£/$ 3k (typical over-3k transaction), it is customary to have a series of formalities/assurances so that both parties are protected against fraud. These formalities require the kind of proof (that money exchanged hands) that generally only banks can provide.
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.
I don't trust the governments and nanny states. Does that qualify as anti-trust? Better governance is lack of it, lack of corrupt government officials that work hand in hand with the financial institutions that sponsor them to take our freedoms away for their mutual benefit.
Or, for an even scarier example, the way that payment processors have forced FetLife to restrict the kinds of (legal!) fetishes people are allowed to discuss on the site.
I've experienced that directly more than once. Trying to use a credit card online to purchase from a merchant that the banks --- all of them! --- refused to process my payment. This was for legal products from an established seller.
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.
The concern expressed above was not about anonymity, but about requiring the approval of a third party to carry out a transaction. (Although I'm pretty sure Bitcoin does that too, but with multiple third parties in the form of miners.)
I can go weeks without touching cash these days. Nonetheless, I find the idea that I could be prevented from making a person-to-person financial transaction for even a modest amount without a paper trail pretty unsettling.
In China, all ATMs are supposed to record serial numbers.[1][2] That's already deployed. There's no secret about this; some ATMs in Hong Kong give you a list of the serial numbers of the bills just dispensed on their receipt. Coming up next, face recognition.[3]
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]
Unless your counterparty goes ahead and deposits it in their bank at the end of the day.
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.
A particular bill does not change hands very frequently between ending up at a bank.
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.)
Last year I tired of reconciling my credit card and checkbook accounts, so shifted to using cash only (I have credit cards if there's an emergency). So far I'm spending ~10% less each month. I'm more careful about purchases. I get and seek cash discounts. Best of all I don't need to do the reconciliation.
You realize cash discounts exist for precisely two reasons: the merchant avoids the 1.5-3% credit transaction charge, and (2) the merchant gets to under-declare on their taxes.
Merchants don't always prefer cash. There's trade-offs to both. If merchants always preferred cash then there wouldn't be merchants who go cashless, and there are.
Many gas stations will prominently display the cash/debit price on the big sign, and the credit price may not be visible at all until you get to the pump.
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.
Technically charging less for cash violates merchant credit card ToSs, so big companies don't do it and small companies don't advertise it. If you're making a big purchase you can just ask.
"Arguing that you don't care about the right to privacy because you have nothing to hide is no different than saying you don't care about free speech because you have nothing to say." -Edward Snowden
To be the devil's advocate here, what situation can you imagine that would warrant a person to legitimately hide information or keep secrets from their own government?
Alcohol is involved in a very large number of deaths in the US every year. A very large proportion of suicides, automobile deaths, shooting deaths, diabetes deaths, and so on are directly caused by alcohol consumption.
It's not like we need more people running around with impaired decision making ability.
I actually think this is a great question and I'm glad you asked it because it's such a common response to privacy. It's gotten good responses.
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.
Consider that what the government knows could become public due to leaks, changes of government (election, war), third party access, 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.
A bit late to this discussion, but the question of why someone would want to hide information from the government of today is not necessarily the right question.
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 pack of cigarettes for someone else, and happens to rack up a huge medical bill. The Insurance company might have a reason to disavow him? (Trump and disavow?)
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.)
And don't forget that 'payment processing' is never free. In fact, it is never even a flat fee despite the fact that it does not actually cost anything more to transfer a larger number over a network than it does a smaller one. Yet people seem to have no problem handing over the majority of their economy to 'processed' payments which empower banks with the ability to do nothing less than levy taxes and exert the same sort of control over the economy that was previously reserved to the federal government. If they wish to restrict the availability of money in the economy, they can simply raise the payment processing fees. If they wish to boost their own profit margin, they simply raise the payment processing fees. They show favoritism by giving large companies big discounts on those fees, revealing them not to be fees actually needed to pay for a service being provided but merely a chunk of money they take simply because they can.
> If they wish to restrict the availability of money in the economy, they can simply raise the payment processing fees. If they wish to boost their own profit margin, they simply raise the payment processing fees
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
Right. Banks can charge their customers whatever they want (as long as it's the same as for domestic transfers), but they can't charge other banks fees for accepting their wire transfers.
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.
> In fact, it is never even a flat fee despite the fact that it does not actually cost anything more to transfer a larger number over a network than it does a smaller one.
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.
A cashless society would be an attempt to create a society that lacks basic economic freedom, but it would also fail. People will simply return to barter, and the use of whatever precious metals/stones/etc are hot that year.
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.
"Second, the value of state money is maintained by the state's ability to levy taxes [...] 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.
It seems that you know a good deal more than me about economics, so allow me to ask a question please. You say this:
>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?
> 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?
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.
Can you even conceive of how radically different that would look? In order for barter to be possible, you must be face-to-face with the person you are exchanging goods with. Unless Amazon really stepped up to the plate and hired agents in every neighborhood in the nation, I couldn't see it being anything but a reversion of society to pre-Industrial-Era structures.
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.
It is unlikely that people will actually return to barter and transfer physical goods such as gold all the time, because it is expensive. However, they can usually promise to transfer value later. Such transactions will mostly cancel out and the amount of actually transferred goods is greatly reduced.
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.
As an example of your point, during the Nixon crash, people used postage stamps as a proxy for cash. They also used Canadian coins in America to replace USD coins. People would literally drive over the border to Canada, get a bunch of coins, and bring them back and sell them to stores so they could make change.
I question the assumption that this would fail outright. It would likely result in a hybrid visible/invisible transactions.
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.
There's an important point here that's often overlooked. Drugs themselves can serve as currency, but just like salt in Rome, such currencies are consumer goods as well as fungible commodities. Their consumability as well as their growth/collection time form a natural barrier against inflation.
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.
Plus, everyone with even the smallest amount of money, wants to be clean; it's an incredibly basic need. Alcohol will probably always been a good form of barter too.
Unfortunately, the US Government does not accept tax payments in turnips, emeralds, pirate treasure, moonshine, or Eth. Until that changes, you will need to interface with the USD economy.
The US government also expects your tax payment on an annual basis.
What is the annual volume of gold transactions, compared to the annual number of USD transactions? Hundreds of thousands, versus trillions? Is there anyplace in the country where I can pay my green-grocer with gold?
Describing gold as an incredibly popular currency makes alternative-facts look honest.
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.
The book "Debt: The First 5,000 Years" (https://www.mhpbooks.com/books/debt/) makes a compelling case that no societies on record have depended on a barter economy. The author also argues that debt even predates state sponsored currency.
Debt obviously predates states sponsored currency. Heck, money economies (that is, ones in which there is a generally accepted medium of exchange and unit of account for debt) predate state sponsored currency (or even states). I've never even heard of that being an active argument.
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.)
The comment that got this whole subthread started was that we would "return to barter." That implies that there was a time where economies were primarily barter based, and that the question "In what societies have humans used barter?" likely meant primarily barter. So my understanding of the question was not using, but primarily barter.
It depends on some definitions, but I've read that's not the case. Jericho region is said to have been exclusively barter based until ~7,500 BC
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.
The book "Debt" is decidedly not written by a banker. The author, David Graeber, was part of the Occupy movement, among other things: https://en.wikipedia.org/wiki/David_Graeber
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).
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)
You're right to question it, there is no evidence of the idea Adam Smith promulgated (that barter societies were natural). Ancient societies used a credit system with debt being the social tie that binds a community together
If I understand correctly the Netherlands plan to go cashless. There were already cashless fast food restaurants when I was there in 2013. No cash allowed.
"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.
People were using rice as cash in Japan back in the 8th century. Or arrowheads. Depends wether you want to eat or wage some war. AK-47 rifles would be the modern equivalent of arrowheads.
I don't see this as a given. I for one would be more than happy to have a cashless society, and I would struggle to believe that I'm unique out of the ~7 billion there are of us.
Have an upvote. But also try to understand why many people are uncomfortable with the idea that even modest transactions can be monitored by governmental agencies. In practice, there are always ways to work outside the system of course. But to the degree these become real exceptions they become that much more suspicious as a result.
Error in conciseness! I can empathise completely and do understand the reasoning of the opinion of a large number of people who do not want a third party being privy to every transaction. I was attempting to convey that there are likely many people on both sides of the debate, should have expanded a bit more!
Lot's of comments below are uptight about the definition of "barter". Which is a very vaguely defined word: trade of goods/services without the use of money.
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.
I'm a Monero supporter (and owner and future user once more widely adopted) because like cash, no one can tell how much money you have in your wallet or who you're buying things from. With Bitcoin, neither of those is true.
Once you give out its address for someone to send you what they owe you they will know, which is not the case with your physical wallet or your bank account.
They'll know how much is in that address, but a wallet consists of many addresses. How do you find all of the other addresses?
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%.
I don't see how Bitcoin solves the anonymity problem cash does. If anything, banks and intelligence agencies would love a world where everyone transacts on a distributed ledger.
It doesn't solve anonymity, but it does solve the permission problem. You can transfer unlimited amounts of Bitcoin at any time and place without anyone's permission or approval.
While Bitcoin is not completely anonymous, it is also not completely transparent. The blockchain does not contain names and things can be obfuscated in various ways. Furthermore, a truly 100% anonymous system of money without any exceptions may not actually be desirable from a societal point of view, as it would enable things like assassination markets.
I'll also add that if Bitcoin had started out completely anonymous like Zcash, it likely would have been outlawed in many countries by now including the US and China. Certainly no exchanges connected to the traditional banking system would be allowed to exist.
Cash isn't really anonymous either. Serial numbers make it traceable, albeit with large time granularity. All banks and many large retailers track deposits and payments by serial number. That plus CCTV and cell tower data will usually be enough to identify someone with a pattern of spending dirty money.
But cash can move around quite a bit in a day. Spend $14 at merchant A, get $6 in change, spend $3 at merchant B, who hands that out to customer C as part of their change, who gives it to a bum, who in turn uses it to buy lunch... seeing a deposit of a suspect serial number at a merchant doesn't mean a whole lot. At best it gives you one more place to look through their CCTV and not find the guy you're looking for.
It's very complicated to articulate exactly who can block Bitcoin transactions. The traditional simple answer is that "a majority of mining power" can block an individual transaction by refusing to include it in blocks.
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!).
I think it's great to think about weaknesses and corner cases, but you're being too generous/imaginative here.
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.
I agree, but the more forks, the less value that currency has. And if a nation state actor did block, it would shake confidence in the currency and be at least temporarily disastrous.
The economics of bitcoin and all alt coins mean some company will have the most efficient solution long term and thus mine far more than 51%. And once someone can mine 80+% of a block chain they can do what they want with it.
PS: Add up the Chinese pools and one country effectively already controls bitcoin.
For those out of the loop, miners work together in pools to combine their mining power. With more mining power, the more likely it is for them to mine a block (of the blockchain) and divide its payout among members of the pool. Pools cause centralization of mining power. You can see a list of pools and the percentage of their mining power at [https://blockchain.info/pools].
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 is unrelated to consensus, but otherwise what you said is accurate.
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.
Most Bitcoin owners have absolutely no say in whether or not your transaction goes through. Only miners can do that.
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.
You only need collusion among a majority of mining power to ignore a transaction, not all miners.
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).
You have a point about cashless transactions, though I'm not sure if the argument about the word "authorization" stands. At least I always understood it that I authenticate myself to the bank, and then I authorize the bank to transfer my funds to someone else...
In an ideal scenario that's the case, however the bank isn't solely answerable to you. There are situations such as being investigated by the police where access to any money in your bank account can be suspended, and they will no longer authorise you to make use of it.
Banking doesn't rely on a single person's authority either. But it relies on a network of connections and rules. So does bitcoin. No blockchain, no transaction.
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.
The paper trail is perfect only if bitcoin was exchanged for money. It is possible to construct a chain of transactions without touching any money (I buy a widget from China with bitcoins, widget's owner buys something else with these bitcoins, etc).
Not so perfect. Take, for example, using a tumbler - the prosecution can't prove that the coins going into the tumbler were yours, only that you got some coins from the tumbler and exchanged them for dollars.
Many money laundering techniques use a commodity in the process, that doesn't make it not money laundering.
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."
As in eliminate cash entirely? Not as far as I know. Even in Sweden, articles I've read suggest that the shift to cashless will continue at its own pace but no one is really talking about completely pulling cash out of circulation at this point. (And most people don't seem to be in favor of that.)
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.
There is a fundamental difference between a medium of exchange whereby the government would have to devalue or interrupt everyone who holds the instrument in question (like by invalidating a series of bank notes) and one whereby someone can decide that you personally are no longer allowed to use the medium of exchange. Those things are not at all similar.
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.
there is nothing inherent in the idea of "cash" that ties it to a central bank. you make an excellent point about our particular implementation of cash as being controlled by the central bank, but your comments don't refute the OP regarding the non-freedom of non-cash systems.
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
I get it, but think of what you're getting in return.
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.
Or had to live without a coke for half an hour till you passed by somewhere where they were sold?
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.
An electronic payments system-based vending machine is risker (where the risk is to your ability as a consumer to get a coke on demand) than the current model (coin operated vending machine) since it depends on connectivity to the payments network to function. This is easily interrupted through malice, negligence, or oversight. In my experience coin op vending machines by and large work; bill readers are hit and miss; card reading machines almost never function.
(BTW not downvoting you, but your comment does inexplicably ignore coin op machines which are an existent, good solution.)
The Chip+PIN system includes an offline mode, which is especially suitable for small transactions like this.
"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."
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).
In Japan, vending machines that take Pasmo and similar smart cards are pretty common. But Japan is pretty much an outlier AFAIK in its extremely widespread use of this type of technology.
Not just in Japan, plenty of countries in Asia have offline stored-value cards that started out as train cards but can be used in many shops [commonly in convenience stores] as well (see Octopus in Hong Kong, ez-link in Singapore, EasyCard in Taiwan, Touch 'n Go in Malaysia, etc)
The thing about the cashless surveillance panopticon is that it still can't stop illegal drugs. Every prison is exactly that kind of surveillance society, and in every prison drugs are readily available.
HSBC is one of the principle members of this privatised money system. It was found to be laundering money for international drug dealers, and got off with a slap on the wrist. Nobody working at the bank has been prosecuted.
Some people might like the idea of all transactions being monitored and controlled. Ensuring that people behave ethically, that they don't avoid tax, etc. The problem is that elitists can't help believing that they know how to run everybody's lives. So it wouldn't stop there and what future regulators claim to be ethical will morph into supporting a tyrannical status quo.
After having my card skimmed for the 4th time (at a gas station pump, at checkout at grocery store, etc), I decided to pay for everything with cash. It's not worth the hours it takes to clear up things with the bank and I get a better understanding of where my money is being spent when my wallet gets light.
Also, it's difficult to determine if you end up spending 2% more on purchases than you normally would because of the "convenience" of the card. If you are a person who is diligent about budgeting then I'm sure it's possible but most people I know will just pull out the card at Starbucks if they don't have cash in the wallet to pay. Without the discipline that 2% can evaporate very quickly.
I can't wait for contactless payments at most gas stations. Seems like the perfect spot for it, you're already going to get your phone out to kill the pumping time anyway.
You'll see signs about cellphone use around a lot of gas pumps. (Though, according to Mythbusters a number of years back, the issue is static electricity, not the cell phone.) It's possible laws might need to change to use a phone payment at the gas pump.
Yes and static fires don't have anything to do with cell phones. If it was a real concern they would be really strict about stopping people from using phones around gas pumps.
When I lived in Europe it was really tempting to just completely scratch off the magstripe, as everyone used the chip. I was never sure if ATMs use the chip or not though.
How many hours will you spend at the ATM withdrawing cash?
You get a better understanding of spending by feeling your wallet then by looking at your bank statements? That smells like a false pseudounderstanding.
You've clearly never tried to go cash-only. You feel the pain when you buy something; pulling out a credit (or even debit) card does not have nearly the same emotional angst.
Seeing those bills go away with the knowledge that they're not coming back is quite enlightening.
Considering that banks use poor customers as a source of fees to make money, the GP comment is spot on. They've regained control, and honestly your "just check a thing once a month" is hardly the kind of visceral knowledge from watching your wallet get thinner as the month goes on.
A cashless society I will only ever come once human nature fundamentally changes. Say Canada gets rid of physical currency, the very next day people will use American money to buy things like drugs or stuff they don't want on their credit card like sex toys. Make a law against using other currencies and the market will just move underground. Even if every country eliminated paper money there will always be a way of exchanging high priced commodities, at which point the prevailing choice will become cash.
It is necessary for a free society that citizens are able to engage in economic transations without asking the permission of an unaccountable private entity.
It is not in the interest of a free, fair, and just society to give such an entity the power to tax and control transactions at their leisure.
If you consider money to be a form of speech (I don't but it's been successfully argued in US case law) then I'd argue it is a right as I'd argue availability of anonymity is a prerequisite of free speech.
Whenever one makes a purchase, the price structure of the good that was purchased changes, and in the case of goods/assets that have a yield, it also changes its interest rate structure. This is information being propagated from the consumer to the merchant, via the price system, using money. So while the act of exchanging money for goods is not information in and of itself, as speech is, this act results in the propagation of relevant information from consumers to merchants to producers.
Do you mean, within an existing legal framework? Then yeah, but clearly our existing legal frameworks are failing in important ways so start thinking about what rights you actually want rather than what you think you can get.
It's a form of association and assembly. Both of which are considered legal rights in US and other jurisdictions, with the proviso that they are conducted peaceably.
I'm just not sure you can construct a coherent argument around that though. Obviously a seller isn't obligated to accept cash; is there a suggestion that we should legally require sellers to do so?
Isn't he? I don't know how it works in US, but at least in Poland every banknote has printed statement that it is "the legal payment method ". The law institutes a fine for any seller that refuses payment in cash.
IANAL, but In the US, banknotes specifically reference "debts." For places where you pay after receiving the goods or services (e.g. many restaurants) they must accept cash, but they may refuse to accept cash if you pay prior to receiving goods & services.
A seller in the US absolutely does not need to accept cash. Certainly most online merchants won't accept cash but there are also examples like onboard purchases on airlines where cash isn't accepted.
It's a basic right to engage in economic transactions without being tracked, but I don't agree you necessarily have the right to "spend money" (as in government currency) without being tracked.
If you want to engage in transactions without being tracked in a cashless society, you always have the option of using alternative currencies.
While I agree that cash is extremely convenient and largely anonymous, it is still much more of a hassle to manage than credit or debit cards are. I lived in NYC for a bunch of years and the one thing that I absolutely do not miss is paying for >$100 dinners, entirely in cash, because the restaurant was "too cheap" to handle processing and transaction fees.
> because the restaurant was "too cheap" to handle processing and transaction fees.
I applaud businesses like this. The fact we slowly let a few giant private corporations enact a 1-3% fee against pratically the entire consumer economy would be ludicrous in any other situation.
Plus the privacy concerns just are not worth the convenience. Whenever possible I use cash, simply so I slow the day coming where I can't function in society without having my entire spending history out there for any agency to decide to take a look at.
> The fact we slowly let a few giant private corporations enact a 1-3% fee against pratically the entire consumer economy would be ludicrous in any other situation.
Well, if you look at it from a bigger picture, its actually good business to accept card. The reason being is, as I mentioned in another comment, people spend more when they use card than if they use cash. So you may have to pay a 3% fee to the CC companies but you may get 6%+ more business. Especially in the restaurant/bar industry. The last thing you want to do is allow your customers to feel "pain" when they order that third or forth drink (pain being their wallet getting physically thinner)
There's also costs to handling/processing large amounts of cash, it's not "free."
So anyone who isn't creditworthy (ie. poor) pays additional tax in the form of higher-priced goods. But to heck with them for being poor, right, because you get the convenience and cash back?
I was just pointing out that the 1-3% isn't fully eaten by the credit card intermediaries. I do agree with you that it does pass on a tax to the consumer, and it would be better to just charge a 0.2% fee (or whatever the actual cost of credit card processing is) without the points, rather than take 2.5% from everyone and then give the bulk back to whomever you deem "creditworthy"
The bulk of people with bad credit are not rich... and bad credit disproportionately harms people who are not rich. But that wasn't the point of my comment or the GP's; we were talking about the 1-3% tax on goods (effectively) imposed by credit companies... and how people who aren't in lower socio-economic classes are largely oblivious to the costs it imposes on poorer populations.
To be fair, the poor shouldn't be racking up credit card bills. That's just adding fuel to the fire. A world existed before credit cards became commonplace.
You're talking about something entirely different. Let me take another crack at explaining. You're a grocery store. Some (large) fraction of your patrons use credit cards. Rather than charge just those patrons a 1-3% surcharge to cover Visa's fees, you simply raise your prices across the board by 1-3% so that you can make enough margin to survive.
A poor person, who can't (or shouldn't) use credit cards comes in to buy food. They now pay the full-price (already marked up 1-3%) -- essentially paying that as a "tax" that wealthier patrons, with good cash-back cards, get back later as a refund.
Which means your bank knows if you buy a sex doll, if you have diarrhea, if you are a member of a political party or if you donated to your cult.
And I don't believe in the legal system enough to think that the information is not shared.
Also, cash is one of society safety net. You see, nothing is black and white, and society is not perfect. If it can control everything, then the citizen has no margin, no grey zone to try things that the current society consider wrong.
And this is a problem, because you can't make society evolve if you can't try what you want to change for first.
Cash let a small part of society locally try things that are not (currently considered) right. Without it, you would soon have a static society.
Another problem is that, because society is imperfect, it will create rules that in certain situation are bad for the people. Without a way to bypass the system at a local level, you are at the mercy of errors (not even talking about evil doing), with no short term solution.
Without cash, if visa or bank x doesn't like you, you are screwed. Without cash, if you are doing something moral but illegal, you are screwed. Without cash, if you are doing something that society consider immoral (ex: going to a gay bar in a repressive country), you are screwed.
Yes cash is abused, but a life without cash eventually would derive to something way worse : a rigid society.
That's when everything works correctly. What about when the power goes out and the card reading device stops working? What about transaction denials due to bank mistakes (or predatory policies)?
Having the option to pay with credit/etc is nice, but the failure modes can be nasty.
I've had the pleasure (?) of going on vacation without notifying the card company. Because a hotel was late with a correction to their charge, that showed the card in use at two places at once, so they shut it down. While I was on vacation. That got... uncomfortable.
Fortunately, they only shut down my card. My wife's still worked, and we were able to proceed. It made for a more stressful vacation, though...
Pro tip. Always carry a second credit card (from a different bank) when you travel. It's just too easy for anti-fraud systems to be triggered by something they don't like and to be in a situation where you're not really in a position to spend 30 minutes on the phone proving you are who you say you are.
The systems can really trigger on random stuff too. After the last time when I gave them holy hell and threatened to pull my business, I haven't had trouble since. But before that, as someone who travels worldwide, I had transactions declined at 1.) a gas station convenience store and 2.) a grocery store in the Western US.
This is why I always have two bank accounts (with two different banks and two different ATM cards) and always have two credit cards, in case one bank account or one credit card gets shut down or skimmed it wouldn't be a big inconvenience. Especially helpful if you are going out of the country.
Yes, absolutely, most brokerage accounts let you request ATM card/debit card/checks to access your core position. Additionally, Both Fidelity and Schwab let you open a free checking account(1) as well with no balance limits and ATM reimbursement.
Second bank account is more important than second credit card, IMO. Being locked out of your cash is much worse than being locked out of your credit.
(1) technically they are brokerage accounts also, at least for Fidelity, but they hold your deposits in FDIC insured banks and are designed to be used for everyday spending, exactly the same as a checking account.
>Being locked out of your cash is much worse than being locked out of your credit.
As a general principle I tend to agree. But, when traveling, having something that functions as a credit card can be pretty important. (Of course, if you have a healthy cash balance and a debit card, that works equally well.)
My wife had her wallet stolen in Florence while we were traveling. It turned out that some banks will give different numbers to each card and other banks (Bank of America) will give the same number.
We had to cancel the BofA card that I had.
Fortunately our CapitalOne card used different numbers and we were able to keep traveling without a lot of hassle. For our next trip, we're going to make sure there's no number overlap.
There's card numbers, and then there's card numbers.
That is: My wife and I have cards that have the same number on the front. On the back, though, the three-digit... I forget what it's called, but there's this additional number that is not embossed into the face of the card. Her card has a different one of those than mine does. And the bank can tell the difference, can tell which card made the purchase, and can shut down one but not the other.
So it doesn't matter if the two cards share the same main number, as long as the bank can tell them apart.
Does BofA give different three-digit extra numbers to their cards? Do they give the same extra numbers? Do they give extra numbers at all?
The numbers on the back - the CVV code - is essentially a cryptographic hash of the information on the front of the card: expiration date, name, card number, whatever else is on there. So each physical card should have a different CVV if the card number is the same. Given 3-4 digits and millions of issued cards, there will of course be collisions among cards with different numbers.
I think every card issued by Visa, Mastercard and American Express (at the very least) in the US has these extra numbers.
I was buying gas at 2AM in Grand Forks, ND on my way back to my parents home. I had stopped at that same station multiple times, but Citibank denied the authorization (plenty of money, and I only used that card for gas). I foolishly was about $5 short on cash[1], had to call Citibank and yell. Had to walk to the across the street that had an ATM that would work with my bank card (gas station ATM didn't have the network). It was a typical ND winter night.
The failure mode on getting permission is really nasty.
Thinking about it, they really had some sh!+ software at that point since I only used the card at 4 gas stations with 1 in the Plymouth, MN and the other three on the I94 / I29 route.
1) after this I started following my Dad's policy of hiding $100 in the car for emergencies.
> it is still much more of a hassle to manage than credit or debit cards are
I don't really get this. I use credit cards (almost entirely online), but I've never used a debit card. Not out of any deep-seated aversion, I just don't see the point.
The appeal is largely that credit cards let you spend money you don't have, and debit cards, by definition, don't. For people who have a hard time operating within their budget with credit cards, this is a huge difference.
Well yes, but surely that's something that cash does even better, isn't it? I take a fixed amount of cash out once a week and that's everything I'm going to spend that week. Not only can you not spend money you don't have, you can't accidentally spend more money than you were planning to spend. (I carry a few extra weeks' buffer for emergencies, but could put that in a separate pocket or something if it ever became a temptation; so far it hasn't.)
My tinfoil-hatted side does wonder whether this is half the motivation of these new "convenient" debit mechanisms - like those fake "points" currencies used by various stores and in-app purchase schemes, I'm sure people spend more money when it doesn't feel like spending money.
Agree re credit cards, but I never carry a balance, they're just a payment mechanism.
The difference is that I generally feel safe carrying a debit card around where I wouldn't with even $100 in cash. In the US, we are just getting chip cards for debit, so even if my wallet is stolen, I can just call the bank and cancel it, but I can't do that with cash.
I'm with you on the credit cards-- for me, they're just a point-generating mechanism-- but it's easy for me, since if I accidentally go over my budget, I have enough savings to easily cover it whenever that happens. For people who live more paycheck-to-paycheck, that can be devastating, and it's sometimes non-trivial to compute your safe-to-spend amount from a current credit card balance, expected expenses, and current bank balance.
> Well yes, but surely that's something that cash does even better, isn't it?
[...]
> Agree re credit cards, but I never carry a balance, they're just a payment mechanism.
I think you just answered your own question.
For most people here (Holland), a credit card is not a 'default' (and so many people don't even have one). We still use our debit card all the time because it's so much more convenient as payment method than messing around with cash.
Over the past few years they've been rolling out contactless payment, which is even better. You see the amount of a screen, swipe your card, and only after x transactions or over a certain amount are you asked to use the chip and enter your PIN. I'm pretty sure most of these machines also allow you to use your phone (or watch) to pay for things, but that's not as common yet.
Or another example: one of the big supermarket chains here has been rolling out self-checkout kiosks at many of their stores, making the process even easier: take the stuff you want, scan it, swipe your card, and just walk away!
We (UK) have had self-checkout tills for a few years too, but they still take cash as well as debit card.
Maybe I'm just old, but I don't want payment to be too frictionless. Cash still strikes the right balance for me; convenient enough that I don't get annoyed by it, not so convenient that I lose track of what I'm spending.
True enough, but I hate those things. They tend to incur nasty fees when used on top of the overdraft itself, and then there's interest to be paid on the overdraft amount if not paid in full, etc., etc.
If allowed, I will always disable them, and when not allowed, I will change banks to one that will allow it.
I agree with the sentiment, though I'd argue they're getting better. For example the Nationwide FlexDirect current account[0] comes with a £1,200 overdraft limit that gets charged at 50p per day it's used. A vast improvement in my mind, I remember getting charged around £30 for going £2 overdrawn for less than 2 hours!
I am exactly the opposite. I use a debit card, but I've never used a credit card. Why would I want to borrow money (and risk owing interest), if I already have money readily accessible via my debit card?
> Why would I want to borrow money (and risk owing interest), if I already have money readily accessible via my debit card?
Because if your credit card is used fraudulently, you tell the credit card company, they disallow the charges, and nothing comes out of your pocket.
If your debit card is used fraudulently, the money comes direct from your bank account, and you get to find out how much work it is to get that money back--and in the meantime, you don't have it.
The biggest reason I can think of is safety. With a good credit card you are not liable for any fraudulent charges, which definitely isn't the case for debit cards.
I don't use a credit card instead of a debit card, I use cash instead of a debit card. I mentioned the credit card just to emphasize that this isn't out of some weird card phobia.
Historically a lot of restaurants and retail establishments in the US had minimum charges for credit cards. My anecdata is that this is far less common today (Brooklyn notwithstanding).
There's also just been this psychological shift that makes it generally OK in most places to put that $3 salad on a credit card. I'd never have done that 10 years ago. Now I routinely charge my lunch or a cup of coffee.
I don't know how much of this is changes to credit card fee structures and how much is that it's just become a cost of doing business many merchants now feel they have to put up with.
We had that in the UK for a while too. It seemed that the big corps ended up absorbing the fee and then most others had to too. There's still the occasional merchant that has a minimum but I see less and less as time goes on.
In theory, our interchange fees were reduced, but from what I saw it just resulted in most decent cashback schemes disappearing. This seems to have resulted in issuers making the same margin as they no longer pay out a part of it to the customer.
Restaurants and anything mom&pop will probably be cash-only, but pretty much anything that's a chain (big supermarkets, stores in malls with their own branded cards [includes JR train stations], etc) tends to support electronic payments.
I find a lot of places may accept cards if you ask them, but they don't have card logo stickers anywhere or a prominent card reader.
Yes while travelling it's a huge cash based society here, but Tokyo/yokohama are really leaning towards cards/suica(the train ticket pre-charge card)/Edi(mobile phone payment system) and such.
I assure you the reason they didn't accept anything but cash was not because they were cheap but because they could mix in and clean up dirty cash from their other clients for a fee without an audit trail.
Well, governments stepped on it, and moved the point of control a notch above.
What is unsettling is that governments could create a digital payments system that didn't depend on any single authority. This would be convenient enough that I can't imagine it not gaining the entire market (even from cash), and making this move much more palatable. This would be a much easier way for govs to get their so desired universal surveillance. Yet none is doing that. Why?
My biggest concern is the frightening fact that all of these cashless systems are powered by private, for-profit banks. I'd be more fine with a move to cashless if the fundamental system which powered it were operated by the Fed (for free, as a public service), not Visa or Mastercard.
...as though the Fed is chartered entirely for public benefit? The structure of the 12 Fed district banks are very similar to private corporations. The whole system is run for the benefit of the US Treasury and (secondarily) the private member banks that hold stock in the district banks. It's there to keep the system solvent and stable. And it may be required to remit all profits to the treasury, but the Fed is not there to protect the general public, and if Hollywood has taught us anything, it is that the meaning of "profit" can be blurred with clever accounting.
I would only be fine with cashless if the power inherent in the system were diffused, such that no single entity could exercise significant control over it, and if it were supported by laws, such that attempting a 51% attack (perhaps by merger or secret collusion) would get those responsible thrown in PMitA prison for their dire felonies.
You let the Fed control it, and they'll just use it to print money, much like they do now with paper money and bank deposits. For some, that may be a beneficial feature, but I think the power to control the size of the money supply is simply too dangerous for any one group to wield it unchecked. And I think the Fed's ongoing policy of targeting a positive rate of inflation has harmed the whole US-dollar economy to a greater extent than the problems that are hypothesized to have been avoided by it.
You put one nexus of control on the whole money supply, and that's where all the crooks will go to get their scores. Bitcoin had the right idea in trying to solve the Byzantine Generals problem, because I don't trust any big financial institution to handle money alone, but I do trust them all to distrust one another enough to gang up against anyone that tries to pull off a coup.
I go the other way. If Visa decides they don't like me, Mastercard or American Express may still do business with me. If the Fed decides they don't like me, my only option is to leave the country.
My thoughts exactly. A blockchain is exactly the solution to a shared, secure, accurate public ledger without the need for a trusted third party like a bank (not that current blockchains are perfect, by any means)
"The cashless society – which more accurately should be called the bank-payments society"
Due to this sentence I'm forced to believe the author has literally never heard of bitcoin, which seems impossible
I want to continue being able to pay by Cash as it's the only to guarantee my privacy. But, because of the miles I get using my credit card, I end up almost never using any cash.
I'll have to think about this, do I value the plane trips so much that I'm willing to compromise on my values regarding privacy?
I'm also going to look into blockchain currencies like Bitcoin to see what potential currencies would guarantee my privacy.
I've never used cash regularly in my life. I hate carrying extra stuff around, so just have one of those card holders attached to my phone. I feel like older people are ingrained with cash, but it hasn't come into my life at all. College kids these days even use Venmo to buy drugs.
Of course I know I'm subjecting myself to tracking which is somewhat scary but I guess the convenience has outweighed that for me.
You're also sending a 3-5% tithe to the payment processor (credit card company, bank, electronic payment provider) with every transaction instead of giving that money directly to the service provider.
There are still costs to handling cash, which will vary in each case based on business size.
Hiring those armoured vans to move it around, loss by theft or error by staff, time spent counting money, making cash deposits or withdrawals from the bank, and perhaps higher insurance.
Whether those costs are more or less than cash presumably varies. A public transport operator seems the obvious case where cash costs are high.
The EU capped fees at 0.2% for debit card transactions, and 0.3% for credit cards. I'd guess that makes them very competitive with cash -- the discount German supermarkets, well-known previously for only accepting cash, started to take cards. It also led to the demise of cashback credit cards, but I'm not sorry to see them go.
If [1], of which I've only skimmed the summary, shows that the EC was aiming to "calculate a level of interchange fee that makes the merchants, on average, indifferent between a transaction by cash or by card", and if that's the level that's been implemented in the EU, then they can probably call it a success.
In the last 3-4 years, I've been surprised a few times when small businesses (plumber, street food seller, dry cleaner) have preferred a card.
Maybe this is harsh, but why would I care? It sounds like a problem for the store. And many of the mom and pop shops around me require a minimum purchase or charge a 50 cent fee for using a card.
>Maybe this is harsh, but why would I care? It sounds like a problem for the store.
The store passes the cost right back to you, the consumer, in the form of higher prices. You didn't just think they absorbed the cost out of the goodness of their hearts, did you?
Of course not. But some percentage of customers still use cash. So the store might raise prices by 1.5 pct instead of the 3pct that Visa charges them. This essentially means those who use cash are subsidizing the card users. If they raise it the full 3 percent then the cash users are paying extra for a service they don't even use!
That doesn't negate either coldpie's or my points; if anything, having people use cash effectively helping to subsidize the "credit card tax" only adds more weight to the argument that it's an unreasonable arrangement that only serves to enrich the credit card companies.
yes it does. from a game theoretic perspective, it only would make sense for me to switch to cash if everyone else did so that the store wouldn't incorporate the extra fee into the price of their goods. However, one can't control others, they can only control their own behavior. So in a situation where there goods cost extra, because others are still using their cards and the owner has to markup prices, the only rational thing to do is to use the payment method you prefer. And economically speaking, all the cash users are paying extra for a good they don't use.
Because as much as HN praises the notion of passive income streams, widespread parasitism by monopolistic and unproductive sectors of the economy are an anchor on the broader, actually-productive economy.
The payment card industry is a parasite on all of us, full stop.
I started caring a lot more when I started selling things. It's a substantial amount of money that I'm not getting because people don't want to take out cash. But I have to accept it because I'd make even less money if I was cash-only.
Couldn't a lot of the downsides with the credit card system be at least fixed somewhat by anonymization? E.g a card that generates new numbers for each transaction stops the store from tracking my purchasing habits.
Similarly a store that doesn't record any more than the amount to the cc company limits what is recorded.
I'm not saying this is in the interest of either retailers, banks or credit card companies - but it should at least be possible in theory to improve on the status quo e.g by regulation.
The best solution imho would simply be a credit card you can "charge" with plastic cash from your bank account, instead of going to the ATM. The amount stored on the card is then used like cash and then it's re-charged from the account when it's empty.
All the cc company sees is the charging withdrawals and the retailer doesn't see any credit card information as the transaction is made with "cash".
I have seen attempts at this (e.g in Sweden 10-15 years ago) but none successful unfortunately.
In a lot of places the public transport cards (that are anonymous and can be recharged with cash) are also accepted for payments at various retailers (see Japan, Taiwan, Singapore, Hong Kong...) and are very popular since everyone already has one to ride the subway, so why not buy a drink at the convenience store with it too?
In a rare moment of being in favor of centralization, this article has me wanting almost immediate government takeover of credit / banking systems, as they control cash monies.
The only other instance is pharmaceuticals, that industry being "for profit" is nothing but bad news.
In the UK, I basically never use cash, it's annoying, having random coins/notes in my pockets, with no pin code to stop them being used, and having to get change.
This is indeed a fearsome trend we should be on guard against, but there's one thing making me feel it'll never happen in the US: Cash is indeed preferred by criminals, and the government is criminal. There will always be cash for the CIA's drug trade, for example.
If you believe the gov't propaganda, yes. But drug dealers and child pornographers will always find alternative methods of payment because their activity is illicit.
The real reason of the move to cashless is taxes and the fact that governments everywhere borrow without intending to ever pay back. When the shit hits the fan, the payment will come out of your and others' bank accounts.
> This second mode of money is essentially private, running off an infrastructure collectively controlled by profit-seeking commercial banks and a host of private payment intermediaries – like Visa and Mastercard – that work with them. The data inscriptions in your bank account are not state money.
This raises a question in my mind which probably shows my ignorance of finance more than anything, but here goes:
Why not just have a public system of electronic transactions?
What I mean is, the current system of electronic transactions feels to me a lot like the way things were back in Ye Olden Days with cash. Cash didn't start out as state money, it started out as private money -- notes issued by individual banks, promising to pay the recipient in coin or specie on behalf of the bearer. (Which is why paper money is still referred to in some places as "bank notes.")
Which was fine for a long time, but as commerce got bigger and more widely distributed, it reached a point where it didn't scale anymore. Every note was only as dependable as the bank it was drawn on, and the farther away the transaction was from that bank the harder that reliability was to evaluate -- uncertainty which added risk to transactions. So governments started removing that uncertainty by organizing central banks and issuing their own notes, which became the paper currency we all know today.
Fast forward to now. We have modern cash, which has all the virtues the article cites; and we have a separate system of online payments which lacks those virtues, run by private companies who take a non-trivial piece of every transaction for themselves. Those drawbacks weren't too important when electronic payments were a new thing, because it wasn't clear then that they would ever be more than a niche product for the convenience of rich people. But now they're everywhere, and it seems inevitable that at some point they'll become the universal method of payment.
So why not do like we did with bank notes and cut out the middleman? Why not have electronic payments systems operated by governments, in the same way that they print currency? It seems like it could solve a lot the of problems with a cashless society at a stroke, and help the economy to boot by returning the percentage of each transaction that used to go to the banks back to productive circulation.
(The cynical part of me says that the reason is because the middlemen in this case are banks, and in the modern world banks tell governments what to do rather than the other way around.)
You say bank notes were redeemable for "coin or specie," but really that's state money. So state money precedes bank money. This was also a horrible system, because bank notes didn't have guaranteed parity (with each other or with state money) or guaranteed redemption.
Also, the "final" clearing system for electronic transactions is public. In the US, it's called Fedwire, which is operated by the Federal Reserve which, despite various paranoid ramblings, is a public institution. The problem is, only reserve banks are allowed to have accounts with the central bank, which makes the system appear private. It's even trickier with credit cards, where you're basically asking a credit provider for a loan every time you swipe.
So maybe the better question is, why isn't there a national depository bank of the United States? And then you can advance whatever answer you want for that one.
You can already feel the pain in CN. Almost everyone is using WeChat in tier 1 cities. WeChat is like WhatsApp/FB-Chat but with integrated Paypal-clone. It has also an integrated Didi app (Uber/taxi hailing).
You feel the pain if you don't have a local bank account and therefor cannot use the WeChat wallet. So you cannot hail a Taxi with Didi, you have to do it the old way by waving the hand. It's already really a pain, if you don't look like a local but being a visitor from the west. I heard there are restaurants that accept no cash anymore. It's also not so great that bank debit cards now have some regional lock, you have to deactivate it before you travel abroad, otherwise you cannot use ATMs there. Been there, learned it the hard way, good I had 300 USD in cash with me to survive 3 days until the debit card region locked got processed around the globe to enable ATM cash deposit. Let's hope current kind of paper cash stays around and will be a legal and common payment method for a long time to come.
In my experience as a college student, it is exceedingly rare to use cash, especially cash in amounts greater than $5, for anything other than crime. While you can argue that one should be able to reasonably break laws and not get caught - anything else is a surveillance state and there is value to discretionary enforcement - I wouldn't characterize criticism of cash as just manipulative.
For example, on my campus, the vast majority of all cash transactions, from what I've experienced, are to buy illegal drugs or to illegally obtain alcohol. The rest of the transactions are with dining services and with clubs. Because dining services has to keep so much cash on hand, they are a major target for crime; they need to hire more expensive managers to count it, they need to have more cameras and security staff to monitor it, and they need to hire armored guards to carry it off to the bank. In the past front line employees have been shot in armed robberies, so yes, the many safety mechanisms are necessary.
What incentive does anyone in this story have to keep using physical cash? It is crazy insecure, dangerous, inconvenient, and used often for illegal things. The criminals (who are more than you'd think; who do you know who hasn't broken at law at least once or twice?) have an incentive to keep cash around. That is legitimate, but as a society, a better approach would be to rewrite our laws to better capture the realities of human behavior and serve the community interest. When people are routinely getting away with things (drinking, smoking, etc.) it is probably time to make them legal and grant those people the full protections of the law and the monetary system - including non-physical value.
Why do you feel it's a currency's place to (help) enforce the law?
If all you can think of for things "people don't want tracked" is "crime" I don't think you've thought about the problem set very long.
It's incredibly damaging to never have "things be in the past". One thing experience has taught us is that any electronic records generated will be kept indefinitely regardless of policy or law.
I just don't understand folks who seem to be completely ok with any agency remotely curious in you being able to re-construct your entire spending history over your life. You might just be so boring you can't imagine hiding anything, but I think you're in the minority.
This is also ignoring the additional transaction taxes private institutions put upon the entire consumer economy. All this so you can maybe do away with some crime (I just think payments will transition and simply cost more) for what amounts to convenience and security. As with all things, I think making that trade ends in long-term ruin.
There's also these weird remote countries nobody has ever heard of where 1/3 (estimate, but more than 10%) of restaurants only take cash, paying amounts < 5$ still grants you a weird look at best, a nope or wtf at worst - and there are in general a ton of shops (bakery, butcher's, boothes, vending machines, etc) that don't take anything but cash, and usually still can't change a 50 :)
Oh, by the way, one of these countries is Germany.
Here is just one example (of many that immediately pop into my head) of a recent situation where I needed to use cash for something completely legal - buying a birthday present for my significant other who I share credit cards with. He'd potentially see the purchase on our statement and so I paid cash to make sure the surprise wouldn't be ruined.
>In my experience as a college student, it is exceedingly rare to use cash, especially cash in amounts greater than $5, for anything other than crime.
You must live in a bubble then. I live in a beach town where there are many small restaurants, souvenir stores etc. that only take cash. (It's not a problem for the tourists because there are many ATMs). Once you leave your bubble there are also farm stands, yard sales and so on.
"who are more than you'd think; who do you know who hasn't broken at law at least once or twice"
You wrote this without an ounce of introspection, not thinking about what we classify as "crime" nowadays and how much are entirely victimless activities.
In many places that are not "First World", cash (especially foreign hard currency) is a way citizens have of protecting their assets from the greed of corrupt politicians.
Indeed there is much to be said for the value of diversifying your assets, and the same is true when it comes to physical and nonphysical currency. Now, where to put them...
Have you never paid for admittance to a club? Paid a busker? Gone shopping at a thrift store or pawn shop? Bought something at a garage sale? Paid for dinner and tipped without having to split the check for n different cards?
In the Nordic countries, you can certainly pay admittance to a club and shop in a thrift shop with a card. You can pay by bank transfer done with a phone app (MobilePay in Denmark, Swish in Sweden, etc) at a garage sale. At the last garage sale I went to, there wasn't anyone around -- just a sign saying everything was priced, and to transfer the money to 12 34 56 78 with MobilePay.
In fact, trying to pay cash can cause problems -- so many people use the electronic methods, the doorman might not have any change. (This is often the case at the weird gigs I go to, where only 25 people attend anyway, and it barely breaks even for the promoter).
I've heard of a trial to donate money to the homeless using a card, but it was only a trial. It's not normal to tip in a restaurant (or anywhere else).
However, the post spoke of having to buy illegal alcohol at college, so the person is clearly in America. But there are always queues at the cash machines near Christiania in Copenhagen, where everyone goes to buy weed. That's the only remaining thing Danes use cash for...
> It's not normal to tip in a restaurant (or anywhere else).
Um, what? It's still normal and people do tip at resturants in Sweden. To be fair, neither you or I have any numbers to back it up and have to chalk it up to experience/intuition.
I've actually wondered what the impact on buskers, clerks that make some money off a tip jar, etc. is of the shift toward plastic. I guess, in the US, a dollar bill is still a relatively small amount. But I know that I basically never have change on me these days unless it's quarters to put in a parking meter.
I imagine one of those swipe attachments for a cheap android phone would work well. The UI is known pretty well now, and many people trust them in the US. I often see them at festivals, where it was previously all-cash, but are now maybe 20% plastic, usually for bigger items ($65 tshirts lol.)
I imagine tip jar employees are doing all right. I used to drop a dollar and whatever coins I got back as change in there, now I push the 20% button on their iPad, which is almost always more.
I live in Argentina part of the time (I'm here right now). When I'm here, I don't even carry my wallet around, ever. I bring cash and my SUBE (public transit) card. I love it.
> In europe most of the population seems to prefer to pay in cash (for clothes, groceries, electronics etc. pp.).
That is a very coarse and completely unfounded statement. The situation differs greatly per country; you can spend months without touching cash in the Netherlands or Sweden. In the Netherlands we've passed the 50% mark for electronic debit card payments at a point of sale a decade ago!
Online purchases are soaring too across the continent, which means that for clothes and electronics there is a shift towards less and less cash transactions each day.
The article you linked was on HN's or reddit's frontpage recently, that's why I wrote "most". ;o) (plus I don't know enough about every european country obviously).
EDIT - looking at the date of the article it might have been not the same, but a similar one.
Anecdotally, I think you're generally right that Europe isn't as heavily into plastic (whether credit cards or something else) as the US. (Though they're pretty widely-accepted in the UK where I spend most of my European time.) I'll be in Germany at the end of the month and it sounds as if I should definitely expect to pay cash a lot of the time.
Sweden does seem to be this cashless outlier for some reason. [EDIT: I gather it's a Nordics thing more generally.] I think it was also featured in a Freakonomics episode fairly recently.
> Anecdotally, I think you're generally right that Europe isn't as heavily into plastic […]
Depends on your definition of plastic. Debit cards are common here. Europeans tend not to use credit cards as much as Americans though; they are mostly used just for travelling or (international) internet purchases.
* 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.