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Surviving the Cashless Cataclysm
MrSeb writes "There's been a lot of noise about Sweden becoming a cashless economy, and the potential repercussions that it might cause, most notably the (apparent) annihilation of privacy. Really, though, I think this is a load of hot air. Physical money might be on the way out, but that doesn't mean the end of anonymous, untraceable cash — it'll just become digital. If Bitcoin has taught us anything, it's possible to create an irreversible, cryptographic currency — but so far it has failed because it doesn't have sovereign backing. What if the US or UK (or any other country for that matter) issued digital cash? We would suddenly have an anonymous currency that can be kept on credit chips (or smartphones) and traded, just like paper money. No longer would handling money require expensive cash registers, safes, and secure collections; your smartphone could be your point of sale. It won't be easy to get governments to pass digital cash into law, though, not with big banks and megacorps lobbying for centralized, electronic, traceable currency. Here's hoping Sweden makes the right choice when the referendum to retire physical money finally rolls around."
If it's secure, it's traceable, otherwise you can duplicate it.
Maybe the Swiss. Imagine a global digital currency backed by gold.
When I lived in he US, I rarely carried cash. I used a debit card for 90% of my purchases, including food purchases. I saw no point on carrying anything but a $20 on me for the random times a place I frequented didn't have a mag strip reader for my card.
Back in the 1990's, I was working on payment machines when the Mondex Trial started out in Swindon.
Essentially, this was just a smart card which you could load up with cash - if you lost your card, then you'd lost whatever cash was on it at the time.
At the time, I thought it was a useful idea, and it did take off to a certain extent for micropayments, particularly in newsagents, but as far as I recall, the trial fizzled out an died after a while. I do recall at one point the promoters were trying to hand out free Mondex cards loaded up with £5 but the general public just weren't ready for the concept 20 years ago.
Philosopher (n) - a wise person who is calm and rational; someone who lives a life of reason with equanimity
For the criminals, the simplest alternative would be to use another convertible currency for your transactions.
Euros, US dollars, whatever; as long as all countries haven't joined in to the digital cash trend, evil doers can just ignore it
After that, what . . . barter?
Bank transactions rely on open audits between the trading partners... you can't just say "hey, some guy just gave me $5M", you have to be able to verify where it came from, otherwise "some guy" can give the same $5M to 5 different banks.
My computer (and yours) can make a perfect copy of any string of 0s and 1s.
So-called digital cash relies on either special, supposedly un-copyable by the masses, hardware, such as in today's paper money, or traceable transactions recorded by trusted servers, such as today's bank to bank wire transfers.
If the traceability is implemented by the government, you can be sure that it will be accessible for "matters of national security," just as today's banking transactions are. The only way to make a secure transaction untraceable is to give something un-copyable to the parties doing the trading.
Usually a few beers (Yes, I really am that good looking).
I don't give a crap about who tracks what already. Cash may be one of the last bastions of anonymity and privacy left to us! If I want to pay for cash for everything I can, then I should be able to do that! What I buy at the grocery store, or what movie I go see, or what restaurant I eat at, etc. is nobody's business but mine. Aren't things already bad enough in this world? I can't say it loud enough: DO NOT WANT!
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
You have that a bit backwards. It's not the megacorps lobbying for traceable currency, it's the government forcing the banks to have traceable currency so that they can monitor and shut down terrorists, drug cartels, tax frauds, etc. Hint: the term "money laundering" means moving money through transactions not traceable by the government. Plenty of banks and megacorps have in the past and continue to provide essentially untraceable transactions.
You're going to need to provide some evidence for the claim that bitcoins have failed because of a lack of sovereign entity backing them. There's a whole slew of other reasons that probably contribute far more to the poor adoption rate of bitcoins.
Why would any government endorse an untraceable digital currency scheme, when the whole point of the scheme is to circumvent the government's regulatory and investigatory powers?
I'm out of my mind right now, but feel free to leave a message.....
Bitcoin is not anonymous. Bitcoin transactions are necessarily public information.
You can't be anonymous (disconnected) while at the same time expect digital currency to remain globally consistant and secure. It's an oxymoron.
Even if it were possible it is unrealistic to assume a single government exists on the planet who would choose to implement such a system. Where is the value to the government in not being able to trace all transactions even if you ..wink wink nudge nudge don't know "who" owns what money at a point in time.
It sounds more like Revelations 13:17
First, the obvious: How do you pay someone who doesn't have the means to register your payment? Private to private money deals will become virtually impossible unless both parties have some kind of electronic device on them permanently. And it may be unbelievable to some, but there are still people who refuse to carry a smart phone around. How do I lend my buddy 10 bucks if he has no means to receive them?
Then, the criminal. Untraceable, yeah, sure, tell someone who believes you. Criminals will not use it. Instead, they will keep the cash in circulation. And why shouldn't they? The very first thing I will do as soon as it becomes a fact that this goes through is to go to the bank and withdraw as much money as I can in the lowest possible bills available. Trust me, this money will become more and more valuable as time goes by, as it is used for back alley deals and as it gets out of circulation because of busts and people returning it to their account. ANY currency that you can only spend but not collect becomes more valuable over time, as long as there are people who give it value. And that stuff WILL be valuable, and if not, I can always still hand it back to the bank and deposit it. The alternative being, of course, that some foreign currency suddenly becomes the street bill. For reference, see Cuba. You want something aside of the state-approved crap? You better have greenbacks with you.
And finally, how about people who do not get a bank account? It's not like it's possible for them to have a halfway decent life now, but then, it will become virtually impossible. Try to get a job in Europe without a bank account. Just try. No such luck. There is NO way you will be paid in cash. No company I know of will ever even consider doing it. Now on the other hand, try to open an account if you're homeless. Try it. I dare you. How the heck do you think these people will ever get back on their feet? Because then your excuse "if he really wanted, he could" doesn't work anymore. He CANNOT anymore.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Bitcoin, last I checked, had not failed, and was still in use. Having used it in the past myself, I remember it being rather easy to get my money in and out. So... failed? So rising to $5/coin is failure? Or is it just because the $30 bubble burst?
Bitcoin is deeply flawed, but, as of one of just a handful of largish attempts at a non-soverign digital currency, I would say the lack of government backing is hardly a proven requirement, any more than a few early flight failures proved that flight was impossible.
"I opened my eyes, and everything went dark again"
The user could pay someone else to buy the card at a small premium.
So when the drug dealer's money is confiscated and traced back to someone, it will be someone who you paid to buy it for you, and since there is no physical money anymore, that person will be able to provide your info to the cops. Or he'll go to jail.
Care to debate which option your local prepaid VISA card reseller who doesn't want to go to jail and doesn't give a damn about you will pick?
It doesn't matter who you buy the card from, they'll have your information because you can't pay them untracably. Even if you could barter all the money you need with them, they'll have your info.
:-) We should think deeply about how to move past have artificial scarcity (including fiat currencies) at the heart of a 21st century abundance-oriented economy. We can do that in part by improving our gift economy (Linux, Wikipedia, Thingiverse, blogging), by improving our subsistence economy (home robotics, 3D printers, solar panels, maybe LENR), by improving our planning (like by using emails and twitters to organize the economy by creating and monitoring demand and feedback), and, if we do have a currency, by having a basic income to go with it, as well as LETS-like local currency systems. It would also help to rethink the nature of most "work" so it is more inherently fun and inherently meaningful:
http://www.whywork.org/rethinking/whywork/abolition.html
http://web.archive.org/web/20110425153540/http://www.smallisbeautiful.org/buddhist_economics/english.html
As a rule of thumb, if there are laws relating to something about "counterfeiting" or "unauthorized sharing", you are dealing with a system based around "artificial scarcity". We should be able to do better in the 21st century.
http://www.youtube.com/results?search_query=star+trek+money
A 21st century issue: the irony of technologies of abundance in the hands of those still thinking in terms of scarcity.
Give us a break about BitCoin and this non-sense that given the fact that it failed was to be blamed on not having sovereign backing. If it had no one would have used it as the only ones using it are criminals. Yes, criminals. Most are trying either to avoid paying taxes.
Back in the 60s, there was also a lot of noise about "we need a currency the government can't destroy by printing endless amounts", because we had recently officially left the gold standard (we had unofficially left it under FDR when he outlawed private ownership of gold). Being the 60s, one often-discussed proposal was the use of hemp-backed currency. A note might be backed by 20 pounds of hemp (and be printed on hemp paper, of course). But that was mostly hippies discussing this, and so it went nowhere.
From what little I've read, to the extent BitCoins are in use, it's as an underground currency, mostly to buy illegal drugs (I'm a bit skeptical, but it could be so). So perhaps we've come full circle to a new hemp-backed currency? I kind of hope so, just for the humor value.
Socialism: a lie told by totalitarians and believed by fools.
Personally, I took the EFF, of all places, returning all BitCoin donations as a bad sign.
And the current pathetic theoretical net value of the entire BitCoin currency ($30M) isn't exactly encouraging either.
It would require a professional code of conduct to protect clients' anonymity, but it's not inconceivable.
How many professional codes of conduct survive a US federal marshall knocking on the door, backed up by an extension to the Patriot Act? It won't even take something as radical as the Patriot Act to get laws that require "money sellers" to release records with a subpeona.
If enough people are concerned about privacy, there may very well be, realistically, too many clients for a given broker to remember.
They have these marvelous things today called "computers" that can keep track of stuff for billions of people to the exact penny. How many times can a "money seller" tell the marshalls "I forget" and get away with it? Especially when the transaction had to be remembered in order for it to happen in the first place?
Also, a lot of obfuscation can be accomplished through gifting people indirectly: if broker A gives out $150 to 10 people and broker B gives out $100 to 8 people, then the customers of broker A can repay broker B, and vice versa, and then B can pay A $50 to balance things out.
So the marshalls show up at broker B, who says "I gave that card to broker A", then they show up at broker A's door and broker A says "I sold that card and here is Samanatha Wright's name and address.".
Do you really think either broker A or broker B will go to jail to protect you? Or that they will simply "give out" cards to anyone who wants one, with the hope that the people they give them to will hand them over to someone else?
As I said in the other post, I send my kid to school with 60 cents or $2.75 for lunch. If she loses it along the way, drops it on the ground, it gets dirty, some other kid steals it, etc, I'm out a small amount. Now you're telling me I have to send her to school with a phone worth hundreds of dollars, not to mention some sort of plan (pre-paid or contract)? And the school has to pay to put in some sort of billing system? I know this could be set up via some "account" system where we would pay into the account and they would debit it. But the whole "paying for things" is a life lesson that's pretty valuable to learn and kids are very oriented towards seeing money change hands. They don't "get" the electronic transaction thing.
And how long is it going to take for someone to set up some sort of hack where your "just like cash" payment does the equivalent of a double-swipe on their phone when you pay them? The Craigslist scammers are going to be all over that action. No thanks, I'll pay cash for my second hand blender and know when I give somebody $10 the deal is done.
I can't remember which Heinlein novel (maybe Time Enough for Love?) was set in a 'nearly' cashless society. Cash however, was still needed because, as was phrased, it was 'the oil needed for the wheels of commerce'. What Heinlein was implying was that the contribution of black and grey markets can't be ignored, and indeed without them, normal commerce wont work at all.
OK, here are some things that should be made legal:
- Buying something while in a in a no-sales-tax jurisdiction, taking it home, and NOT paying "use tax".
- Buying alcohol at age 18 (I'm old enough that I actually did that legally. Now get off my lawn).
But I think the point he was trying to make is that things will BECOME illegal if it is feasible to track everything.
If the cards change hands frequently enough, then the tracability of the card becomes as difficult as the tracability of the unique IDs on cash bills.
The reason that the ids of cash bills are essentially untraceable is because almost nobody currently tracks them.
The card data will be tracked by everyone, since everyone who touches it will need to process it as data and the computer will record it automatically. Unless you think people will just accept your word that "this card contains $25" and not run it through their scanner to verify the amount and validity, at which point the record is made.
The various denominations of card would never go through a card swipe machine, except to permanently denude it of its assets prior to its physical destruction.
Wow. So you really do think people will just accept your word that the cash card you hand them contains $25 just because you say so.
That 200$ card can have changed hands physically hundreds of times before then. This is the same problem as cash bills.
Cash bills are easily exchangable like that because there is some measure of trust that the bill is genuine and has not had its value stripped from it by an intermediate owner. There are also people with guns who deal with people who try to produce fake bills, and usually identifying a fake bill takes nothing more than really looking at it.
How do you deal with the person who "denudes" 100 cards that contain $1 and then transfers the contents of one $100 card to all 100 of the blanks? Or doesn't transfer anything to them. You've now got 101 cards that are valued at $100 because the guy who has them says they are $100 cards. He started with $200, he's now trading for $10,100. You can't tell just by looking, it's a piece of plastic with a magstripe on the back or a few gold contacts on the front.
Well, you deal with that by either "swiping" every card when it is used (which gives you tracability) or making cards that have strong visual authentication systems so no swiping, or even any electronic measure, is needed (and thus you have made a one-for-one replacement of "paper cash" with "plastic cash", copying all the problems of paper cash over into your "plastic" system.)
The only reason paper cash is untracable is because most people don't write the numbers down. If everyone has to write all the numbers down, and has to do it electronically because the numbers are only available via electronic means, then you've converted "paper cash" into just as tracable a system as this new "digital cash" will be.
The broker has no incentive to keep records of their customers.
Knock knock "police search warrant" smash "on the floor keep your hands in sight". "This card says it was sold by you and it was found in the posession of a drug dealer. Who did you sell it to?"
"I dunno..."
"Pack up every computer in the place, we're taking them in to extract the sales records. Sorry about shutting your business down for the next six months, pal."
"I sold it to Samantha Wright...", and he knows that because you had to pay him with tracable electronic cash in the first place. Remember, cashless!
Even if you could find a black market cash card dealer, you'd face the fact that simply being a black market cash card dealer would become a crime and buying one a criminal act in itself. If you get caught with a card from a black market dealer in your posession, you'd be processed the same way that people who have large amounts of cash in their posession and no reasonable excuse are today: confiscated cash and a maybe a criminal charge. Civil forfeiture at the least. Either way, you're out your money. And then every legitimate business you go to will be required to report your use of black market cash, so not only will the card dealer have an incentive to keep records, so will every business you use that card with.
Yes, in a cashless society there will always be people who want anonymity enough that they'll use something else to pay for things. They will run headlong into the problem of needing something that someone else has, and that someone has no interest in keeping your anonymity so your alternative cash has no value for him.
This assumes records are even kept.
See for example this scenario:
100 initial launderers go to mexico with their real visa cards. (They don't have cash afterall.)
They go to the bank and get pesos, because they are smart tourists that know mexian vendors will gladly take 1$ USD, when the real cost is 1$ MX. They get epic shittons of folding pesos.
They use this money with a contact in mexico, who gives them well laundered bills, for a fee.
Using the laundered bills, they buy the initial preloaded visas for large denominations.
They mail these to their local distributors, who further launder the cards into smaller denominations directly at retail shops. (Direct swipe method, no ID.) If the clerk asks questions, claim something like "greek wedding party gifts", then never use that store again.
You now have potentially millions of dollars of legitimate untracable digital currency in the drug network. These can be exchanged between brokers and clients as the "clean" flow to launder local "dirty" flow.
Essentially, your junky pays 150$ for a 100$ "anonicard" using a 150 on a tracable prepaid visa he hands to the broker. The broker physically sits on this card. When he gets enough cards, he contacts his distributor. 1:1 parity is exchanged in clean cards with "dirty" ones.
The distributor uses ATMs in the cash using country to get cash. he can even pay patsies to do the transaction at the atm. He uses his laundering connections to get clean cash, which he uses to buy clean cards for distribution.
Failing that, if you can't use a foriegn country, a circle of brokers can buy the initial batch of anonicards using their own bank accounts piecemeal over time. They funnel these to a dedicated denomination broker, who buys new cards using the old ones, so his account and name are never used. They do this several times to create a long chain of anonymous transactions over a wide geographical area. Criminal trials require "beyond reasonable doubt", which you create by injecting anonymous agents in the transactions. Pulling surveylance data from stores will show a huge assortment of associates, many of whom will be "single use" for this very purpose. When it changes hands around 100 or so times, it is well established that anything bought after that is not the responsibility of the initial brokers.
These anonymous cards now have a considerable amount of invested time and effort, and would come in "grades", depending on how far obfuscated the papertrail behind them are. Depending on the grade, buyers pay a percentage over the card's face value to the money handler, payable in physical handoff of "grade zero" (dirty) cards the buyer purchased themself.
Only record kept is total cash volume and numbers and grades of cards exchanged. Buyers show up with dirty cards, and get sold graded clean ones at the agreed rate of exchange.
Dirty grade-0 cards are distributed randomly through the obfuscation network using a card shuffler.
The currency value on them is used to buy new cards, which are passed through the obfuscation network, increasing in gade as they do.
This way an initial risk by the broker union results in a huge flow of cash through their network of small laundering rings.
Payment to the broker union bosses is done through more traditional laundering channels using garanteed grade-A cards, through suitable business and charitable foundations.
And finally, how about people who do not get a bank account? It's not like it's possible for them to have a halfway decent life now, but then, it will become virtually impossible. Try to get a job in Europe without a bank account. Just try. No such luck. There is NO way you will be paid in cash. No company I know of will ever even consider doing it.
At least here in Norway there no such thing, through the post office you're always entitled to a bank of last resort. Ignoring that I've never been asked for my bank account number until after I've been employed, they may think I'm crazy but they'd still have to pay my salary - they will need my id number for tax reporting though. I would not get paid in cash but I would get a "payout referral" or something like that - I'm not sure how to translate it, it's not a cashier's check but more a wire-to-cash transfer you can collect at the bank. The money is reserved but the transaction is not done until the recipient collects at the bank. If the recipient doesn't collect in 3 months, it expires and the reservation is lifted and the money stays on the account. I used to work in the financial industry and occasionally customers would get payouts but have closed the bank account they were supposed to receive it on. We would then send out these things, most people would simply direct the money to the right account but they could also cash it without having any account at all. If they didn't collect we still had to keep them as client funds until someone asked for them.
Live today, because you never know what tomorrow brings
Surviving the Cashless Cataclysm? You're kidding. I have been dating her for 15 years...
Oh, the beautiful gloss of greality!
Sorry I'm not allowed. All my direct siblings and first cousin's are already married.
Sleep your way to a whiter smile...date a dentist!
But---you use the apostrophe to form the plural, so you're still in. Congrats.
Il n'y a pas de Planet B.
Failed at what exactly? Neither you nor the article define exactly what it is that it has failed at.
Linux is only 1-2% of desktops after 20 years... is that a failure? Scale isn;t great but look how many linux users there were after 3 years ... https://linuxcounter.net/charts/_stats_number_users_40years.png?1332412189
Sure bitcoin is still niche, revolutionary change doesn't happen overnight. Price discovery takes a while and often overshoots. Same with equities, and even indexes. That's all speculation driven. Beneath that there is an economy of sorts - it's small, tiny but thats how things starts.
If/when it gets outlawed, then I think we can start talking about failure. Thought technically it never failed - if anything, outlawing it suggests it was threatening to be a success.
Invaders must die
What all these "anonymous" banking systems lack is a method to catch a con man who gives you something that appears to be of value but turns out to be fake. If you really throw away the records of who gave you something you believed to be of value, you have no recourse when the fraud is exposed.
On the flip-side, if you trust that the records will be destroyed at a certain point in the future, you are equally gullible and likely to be identified when you least want to.
Modern trading systems based on identity and accountability transact millions of dollars of value in microseconds - the anonymous system is either entirely vulnerable to fraud, or unable to compete in speed and convenience - I believe both.
Give us a break about BitCoin and this non-sense that given the fact that it failed was to be blamed on not having sovereign backing. If it had no one would have used it as the only ones using it are criminals. Yes, criminals. Most are trying either to avoid paying taxes.
To be fair it wasn't just criminals. It was people hoarding bitcoins thinking it was an investment opportunity, egged on by early adopters boosting the unsustainable inflation so they could exit with as much real money as possible. It was more like some kind of hivemind ponzi or pyramid scheme where early adopters were cashing out on the proceeds of the later investors. Throw a few big thefts, some major exchange hacks and security scares and the whole lot collapsed and really hasn't recovered. Even in the remote event of it recovering it would probably still get regulated out of existence.
The amount of actual genuine trade was minimal and I doubt it was helped by the exchange rate going up and down like a yoyo. It's not surprising it flopped really.