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)
* 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.