The potential dangers of centralised control
What is a cashless society?
In the most literal sense, a cashless society is a society where physical forms of money such as banknotes and coins are not used for financial transactions. Cashless societies have existed all throughout history, the first know forms of cash appeared nearly 5,000 years ago in 600 BCE Asia where Lydia’s King Alyattes minted stamped gold and silver coins to pay armies, before this other forms of transactions were common place such as the barter system. However, in this article I will be referring to cashless societies in a modern sense, where cash would be phased out and replaced solely with digital currency. This is different to crypto currencies like bitcoin as it would remain centralised whereas bitcoin id decentralised.
Many countries are moving towards a cashless society. Sweden is the closest country to achieving this with just 1% of the GDP coming from cash transactions. This is largely due to Swedish law allowing merchants to refuse cash payments, a norm for businesses in the country. Sweden has also seen a significant drop in the amount of cash in circulation since 2007, the only country to do so. And in the UK with the most contactless cards in circulation of any country in the world combined with pushes from big tech, a move towards a cashless society within the near future seems likely.
How does this affect me?
How a cashless society would affect you largely depends on who ‘you’ are. So, to do this we must first go through the benefits and drawbacks of a modern cashless society.
The pros:
One positive is that it reduces risk and cost for businesses. Business owners would be in favour of this shift as cash payments provide a risk in the form of counterfeit notes and the costs involved in cash collection and delivery to the bank. A cashless society would negate the risk of counterfeit money and also allow all payments to be instantly deposited into the businesses accounts.
Along these same lines, if there was no physical cash then certain crimes like muggings and a lot of robberies wouldn’t be as possible, causing a large reduction in this kind of crime.
Another positive is that with less or no cash in circulation, less materials are being used to make cash. This reduction in cash production would have a slight benefit from a sustainability standpoint.
The cons:
The first problem is the prospect of digital fraud and crime such as hacking. As well as technological issues such as glitches and outages, all of which could pose major problems if managed incorrectly.
A bigger issue is the many problems a change like this would pose for the under banked and unbanked. Many of these people are the most impoverished within society and would also affect groups such as the youth and elderly. A switch to a cashless society would be detrimental for these people as in some cases they would have no access to money with a survey in 2012 finding that almost one third of people lacked the full range of basic financial services.
Finally, the biggest problem for most people is concerns of privacy and the problems of centralised control. In a digitalised economy all financial transactions could be tracked, and data stored. This would enable governments to enforce things such as a transaction tax on every peer-to-peer transaction or restrict what type of products or services that could be purchased with a certain amount of money.
To summarise, for businesses and governments, a cashless society would reduce risks and costs and be highly beneficial and for the everyday person it could bring some convenience benefits but would also pose challenges based on your current personal situation. One more point that must be addressed though is another problem to do with centralised control. A centralised cashless society would allow totalitarian regimes to carry out mass surveillance more effectively and quickly prevent individuals and opposition from buying anything or earning any money whatsoever, effectively providing complete control over them. Now, this may seem very dystopian and like something that would never happen in the democratic west but let me point you to Canada to examine this point deeper.
Canada
In the first two months of 2022, a series of protests against government mandates called The Freedom Convoy was carried out in Canada by cross-border truckers. The convoy was joined by thousands of other protesters not associated with trucking. In response to this the Canadian government froze hundreds of bank accounts and other financial resources and assets belonging to members of the protest thus forcing the protest to end as members had no access to their savings or spending accounts. The implications of this would have been even more severe had Canada been cashless as with literal zero access to money the members may not have even been able to acquire essentials.
The bottom line
With major shifts within society and technological developments towards digitalisation of financial transactions a move towards a cashless society seems more than likely but isn’t necessarily certain. There are many potential negatives to this but it is really dependant on your point of view, we will just have to see what the future holds and if it ever comes to a vote think for yourself but also what are the wider implications?
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