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The price of a cashless society

Audio narration of The price of a cashless society

With the rise of digital currency, how much longer can cash withstand time?

At the beginning of the last decade, a cashless society seemed like a far-reaching concept. But today, digital currency no longer feels so foreign. Tapping credit cards and using Apple Pay have become the standard, begging the question of whether cash is becoming obsolete.

Possibly. Ben Perrin, Bitcoin expert and host of the YouTube channel BTC Sessions, believes that a cashless society is a likely future because many people are opting to use cryptocurrency, particularly Bitcoin, which eliminates the need to go through a bank. This way, people can avoid interest rates from a third party. 

However, this isn’t just going to happen all at once. It will take a long time before any cryptocurrency becomes mainstream, Perrin says. “A lot of central banks are trying to create their own digital currencies that they’ll be able to issue,” he says. “But there would be a lot of implications with that.” 

One potential consequence is a loss of profit for governments. Laurence Booth, finance professor at the University of Toronto, says governments derive a significant benefit from traditional banks. 

This is why he thinks it’s unlikely that Bitcoin will become widely used any time soon. “I don’t see Bitcoin ever replacing any formal currency,” says Booth, “mainly because it means the central government and central bank lose control over their currency and they lose a huge amount of money.”                                                            

The Canadian one-dollar coin, for example, costs approximately two to five cents to produce but is sold to Canadians for $1, explains Booth. This tax equates to a huge profit that benefits the government.

Another implication of the transition to cryptocurrency is the issue of privacy. This is a concern for citizens if their digital currency is stored within central banks, Perrin says. He predicts it will most likely result in constant surveillance from the government, high inflation rates and less freedom. “In places like China or Venezuela where they experience hyperinflation, when you’re dealing with digital currency like that, you don’t have the freedom to do what you need to do and that can set a scary precedent,” he explains.

Whatever happens, Perrin suggests that people should always consider what’s best for them and their assets before making any rash decisions. “It’s worrying because people don’t take digital security into account.” 

This story was originally published in the print version of Emerge magazine.