Bitcoin Turns 10. Is Cashless Next?
Happy Bit-day! You may not have noticed, but this week, Bitcoin celebrated its tenth birthday.
On January 3, 2009, the initial block in the blockchain - that's crypto-speak for a distributed computer ledger - was "mined" by Satoshi Nakamoto and cryptocurrency was born in the form of Bitcoin.
The enigmatic Satoshi is either an individual or a group. Whichever is the case, he/she/they melded cryptography and computer science to create the world's first totally digital currency.
What an eventful first decade Bitcoin has endured - or enjoyed, depending on your perspective.
Cryptocash platforms of almost every kind have seen wild surges and drops in value since they first came to public attention.
Bitcoin is recognised by the US Senate but is not tied to any hard currency, such as the dollar or the gold standard. This arguably made investment in Bitcoin something of a faith-quest for many of its first-generation users.
It is the ongoing interaction between buyers and sellers trading with each other that determines the specific price of Bitcoin.
Scarcity, an important feature of any currency, is guaranteed by the fact that only 21 million Bitcoins will ever be circulation. At present, just over 16 million are out there.
A currency must also possess utility; it must be accepted by large numbers of people as a mechanism of trade. Today, a growing number of companies are starting to accept payment in Bitcoins.
Stores, travel companies and even a few universities now accept Bitcoin. Virgin's space tourism project has long accepted Bitcoin for seat bookings on its planned flights.
The key to Bitcoin's future growth will lie in its ability to further broaden its appeal and to reach a point where its value is guaranteed a higher level of stability.
Whether or not we consider Bitcoin the exciting future of currencies or a dangerous experiment, there is one question that deserves urgent consideration.
If the acceptance and reliability of digital money continue to grow, what is to become of cash?
In many developed economies, the relative hegemony of cash as the go-to method of payment has already been shaken by the rise of Chip-and-Pin and contactless card and phone systems.
In June 2018, the UK saw debit card transactions overtake cash for the first time. In October, in-store contactless payments overtook Chip-and-PIN. Cash is no longer king in the UK and our use of cards has changed dramatically in a short time.
The UK is also are among the top countries in the world for adopting technologies that might underpin a fully cashless economy.
However, I think we should think long and hard before we abandon cash altogether. Yes, cash is messy and bulky and getting access to it is not always convenient.
But cash offers us at least one great advantage over Bitcoin and other alternatives.
Because cash has weight, we can feel it leaving our pockets.
Cards don’t change weight as we spend. Cryptocurrencies are weightless 1’s and 0’s of binary code.
As we de-substantiate money, we encourage people to spend without forethought - and we increase the likelihood of digital debt.
We also make it harder for older folks and for people who have bad internet connections, such as those living in rural areas, to buy and sell.
In Sweden, two-thirds of consumers use a cashless payment platform called Swish. Economists there predict an end to cash by 2023.
Yet 88 per cent of Swedes say that they have a high level of confidence in cash. Meanwhile, 67 per cent say that access to cash should be a legal right.
In some quarters, talk about full cashlessness will be accompanied by calls for the widespread introduction of payment chips under the skin.
Some employers in the US and Sweden are now encouraging workers to have chips embedded into their wrists. Employees can use these RFIDs to open security doors, run machinery and even buy lunch at the canteen.
However, what happens if employers stop “encouraging” and start demanding these chips?
How might we feel about having our bodies turned into hackable and trackable devices? Today, our phones are hackable and trackable, and they do somethings feel like parts of our physiology. But we can leave them at home or turn them off.
Subcutaneous chips are always "on" and always with us.
What's more, how might we deal with chip theft? A thief can steal my cash - and even my cards - without subjecting me to violence. But they can’t steal an embedded chip without hurting me.
Some will argue that linking cryptocurrency to chips-under-the-skin requires a stretch. Yet many Bitcoin advocates have adopted crypto-money more as a cause than a lifestyle option. They speak about it with an evangelistic fervour that suggests crypto is, in their eyes, an existential threat to cash.
Many Bitcoin supporters would doubtless welcome subcutaneous payment chips because they would likely increase the use of digital cash.
So, we should offer a cautious happy birthday to Bitcoin. There is room for cryptocurrencies to co-exist with cards and cash. We would be foolish, however, to seriously pursue a fully cashless economy.
Were we to do so, we might stand to lose far more than we might gain - both in terms of privacy and rising debt levels.
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