When cash money disappears completely people will not be able to transact without a middle man. What makes it worse is that people will be forced to keep Fiat currencies in bank accounts that erode their account balance with negative interest rates.

The growth of digital payments and the process to become a cashless society are nearly the same thing, yet there is a fundamental difference between the two things.

Digital payment processors like banks, credit card companies, Paypal, Due, Stripe and Venmo have their advantages. However, they do not remove the need for cash.

Cash money has some properties these companies and others operating ad digital payments processors cannot offer. Making peer to peer transactions without the need of a middle man is impossible with the traditional digital payment processors. This is where cash money is needed because it makes possible to hand money to the other person without the need for a middleman. This allows people to make transactions that are censorship-resistant, permissionless and, above all, private.

This does not mean that digital payment solutions are an antithetical form of payment unless they do not prevent cash payments. Booth the options coexist in modern societies. There is a large economy based on digital payments and also a large economy based on cash payments.

In this article we aim to open a discussion about how eliminating cash completely, will put society at risk of financial surveillance and control, and may lead to authoritarianism or even dictatorship.

Why are we moving toward a cashless society?

Governments and bankers try to criminalize those who hold or use cash. This is what we hear frequently everywhere in the media. In some countries like Sweden, for example, the use of cash is minimal. In India, the 500 and 1,000 rupee notes have been taken out of circulation. In other countries, the amount-limits for cash transactions are being lowered every day.

Every country may have their own incentives to promote a cashless society. In China, digital payments are the pillar of their mass surveillance system. In 2012 cash payments made 96% of the total payment transactions in China, but in 2019 cash payments drop to 15% which is big progress toward a cashless society in a short time.

Another new thing that we did not hear before are negative interest rates that are being implemented by some banks, especially in Europe. In this case, people have no reason to leave the money in a bank account and watch the balance getting eroded by the negative interest rate, instead, they will be looking for safes to put their cash in it. But in a cashless society, this will be not possible because there will not be physical cash to be withdrawn from your bank account.

Also, bankers push the narrative, labeling those who prefer cash as criminals and those who want anonymity as people that might be involved in tax evasion or money laundering. Despite the fact that the same bankers are being caught every while laundering billions of dollars.

The use of large amounts of cash money has been so stigmatized that in many countries special permits are needed to carry cash above certain amounts.

Issues that arise in a cashless society

By going all-in in digital payments and becoming a cashless society people lose the ability to make transactions without the omnipresent government permission and surveillance.

Without cash, every payment has to be made with a third party and there is no way for anybody to make a transaction without being a record somewhere. This eliminates completely the privacy of any financial transaction.

Governments pretend that a cashless society is necessary for them to be able to protect people from criminals. Terrorism narrative is usually used at this point assuming that governments cannot become themself a nefarious actor in society.

Since all transactions need a middle man permission, it can be easily censored and funds can be seized or frozen. An example of that is using this power against the opposition or people protests like it happened in the examples we wrote before:

Some may say that this cannot happen in democratic countries. But a good monetary system should be strong and immune to political mood swings. A cashless society is more likely to produce a tyranny or an authoritarian regime.

Bitcoin Is Indispensable in a (Surveillance) Cashless Society

When cash is eliminated completely and negative interest rates are forced to everybody’s money, what are the options that we have?

The private sector did not come with a solution for that and of course, governments does not like competition. Or course there is gold, it is a good store of value but it is not easy to be used for transactions. Also, unlike Bitcoin, gold is confiscatable.

Bitcoin has the chance to resolve all these problems. First of all, it is not centralized, eliminating the point of failure that the traditional payment systems have. And second, Bitcoin has the digital payment systems characteristics because it can be transacted digitally and it also has cash money characteristics because it can be transacted, peer-to-peer.

The decentralization nature of bitcoin makes it permissionless and censorship-resistant and depending on how you use bitcoin it also offers a considerable level of privacy.

Bitcoin is only 10 years old and it is still in the early phases, but governments and bankers pushing for a cashless society are only accelerating its mass adoption.

Bitcoin with its fixed monetary policy is a hedge against inflation. We have seen that in Venezuela where bitcoin and cryptocurrencies became very popular amid the hyperinflation that hit the country. Bitcoin is indispensable in a cashless society to give people an option to escape the fiat system.