Could Blockchain Be Used More Appropriately To Facilitate Cashless Society?

Thinking out loud is often done in a haste hints the nature of it.  Thus my thinking out loud in this post isn’t solid, but I like to dabble on here.  One thing people fear about a cashless society is that once the digital numbers are being erased somehow, their worth would be gone without any trace for recovering.  Thus, people are definitely still preferring cash as a mean for emergency backup.  After all, if their digital world is being shut down, they got cash to help them survive daily such as buying foods and whatnot.

Bitcoin is probably going to be an enemy of the banks since banks want to be the middlemen of the transactions.  Bitcoin takes out the middlemen role and allows people to have a direct transaction between the two parties.  In order for the bank to receive commission and gain liquid fund, the bank needs to be able to insert itself into the deal.  Simply put, Bitcoin is against a traditional bank which isn’t accepting Bitcoins!

Banks can accept Bitcoins, but people won’t use banks as of how they would use a traditional bank.  Bitcoin users may want a bank to behave as a trustful Bitcoin exchange to facilitate the Bitcoin transactions in safety manners.  This way any Bitcoin bank can still insert a banking role in a non-traditional way into the deal.  Since Bitcoin will be more transparent — plus demoting a traditional banking role somewhat, I don’t think the banks will be able to create more creative derivative means for creative investments.  I could be wrong since this is thinking out loud session.

Bitcoin is also very similar to a cashless society because it isn’t cash and it’s digital medium.  Taking away Bitcoin, underneath it all is the technology itself which is the blockchain.  The blockchain technology is more important than the clothes it is wearing such as a crypto coin (i.e., Bitcoin).  Why?  I think blockchain technology is good at keeping transactions honest.  This honesty is rather important for cashless society don’t you think?  Nonetheless, current Bitcoin way isn’t helpful for blockchain technology since the implementation is rather crude, allowing people to hack and steal each other Bitcoin without a clear way to trace back to the original owner of the lost Bitcoins.

If I’m not wrong, a will be successful cashless society could use the blockchain technology to keep cashless money honest so the original owner of the money won’t fear the tyranny of a cashless society shutdown event.  By that I mean the only way for a person in such a society to lose wealth is being incriminated with evidence and wealth get confiscated by a court of law.  In such an orderly way the blockchain technology could be used to keep track what money belongs to whom before the exchange takes place and long afterward so a cashless society shutdown event which occurs by any other mean besides the legal ones such as the one I stated just a moment earlier would be a futile effort.

I think people would be able to accept a cashless society when their wealth won’t be suddenly disappeared overnight in a mysterious event.  Of course, people are still going to fear that if they’re innocent and being convicted wrongly; their wealth got confiscated in such a rude event — they could be helpless as they would not be able to survive daily when their digital wealth got shut down in a cashless society.  I think once one accepts a cashless society, one has to accept such possibility as there won’t be any legal cash laying around to act as a legal tender for acquiring daily things.

By writing this blog post, it doesn’t mean I support a cashless society!  I just merely thinking about the possibilities and effects of it all when such a society occurs.  Although China isn’t a purely cashless society, because paper money is still going to be a legal tender within China.  Nonetheless, China is one of those countries that is leading the race in facilitating the use of money through digital devices such as the smartphone.  I think once the money becomes digital numbers, money is indeed facilitating a cashless society.  A cashless society is definitely taking some shapes or forms around the world, and so I’m writing this to amuse myself with both negative and positive possibilities of such a phenomenon.

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Feeling Like A Broken Record, But I Admit Cryptocurrencies Are Really Broken! I Don’t Trust Bitcoin!

Why I trust the bank and not Bitcoin or any other cryptocurrency?  Simple!  Origin’s traceable trail!  What do I mean by this?  The time you deposit your money into the bank either through electronic means such as mobile or you could deposit your money in person, a third party, in this case, the bank is there to take the responsibility of safekeeping your money.  Sure, the bank could have a system hiccup where your bank account would show up with a wrong value, but the bank has the responsibility to generate other traceable trails of your money such as paper statement, online bank statement and so forth.  Bitcoin or any other cryptocurrency is a different matter because there is no third party that is responsible for your money!  When something goes wrong with your electronic wallet such as corruptive memory on your device would destroy everything you store!  Cryptocurrency exchanges could be the third party to be responsible for your crypto coins, but these are new institutions that you could not trust and they got hacked too often!

In China, people are going cashless by using their mobile phone as the main medium to pay for things.  Still, their digital currency in their electronic wallet is tied to a medium of cash and a whole lot of other mediums such as check and so forth that could eventually generate into very noticeable trails of origin.  With such noticeable trails of origin, the owner of the money could always demand some sort of compensation when everything goes wrong such as the value of money is suddenly being misreported somehow.  These people, although in cashless society (almost), would be able to morph their medium of payment effortlessly — cash to check to digital numbers on their mobile to whatnot — with some sort of confidence that some sort of traceable trails of origin would back their transaction up clearly.

Although cryptocurrency’s blockchain is very rigid and vivid in showing transaction trails, the sender and receiver of the crypto-coins could hide behind the transaction which in the end could hurt their claim of the transaction.  What’s worse is that they could face a perfect storm when their device got corrupted or hacked and their wallet somehow was rendered broken — they won’t be able to open their wallet to show that they got the traceable trail of origin to back up their transactional claim so they could receive any compensation from whatever party that they’d dealt with.  As of now though, even if they’re proving that they’re the owner of a crypto wallet that sent out the crypto-coins, they mostly like are going to face anger and confusion as once the crypto-coins leave their wallet — these crypto-coins are gone forever and nobody would be able to compensate for the lost crypto-coins.

I think until the cryptocurrency tech could address the worries and weaknesses of the transactions that are being made by the blockchain and the frontend technology such as the cryptocurrency tech (e.g., Bitcoin, Litecoin, Namecoin) itself, nobody could fully feel comfortable of using such tech as a replacement for traditional forms of currencies.  I hate the feeling of being a broken record, but let’s be clear cryptocurrencies are facing real hurdles such as hackable, not widely acceptable, not being supported by the governments, relying too much on an electronic wallet as the trail of origin, facing corruptable electronic memory (i.e., RAM/hard-drive), no mean of compensation once crypto-coins got loose from the crypto-wallet, too much saturation as too many cryptocurrencies are in the existence, and so forth.

One more thing!  If someone stole the medium that you store your crypto-coins on such as your smartphone, you will never get these crypto-coins back!  Traditional forms of money such as the digital numbers that represent the dollar amount you got in your smartphone app would still be yours if your smartphone got stolen!  After all, the app on your smartphone is probably connected to your bank account and the app could once again be re-download and reconnected to your bank account. Perhaps, you’re using an app such as Starbucks app which requires you to preload the number of dollars before you could use it to pay for coffee — even a stolen mobile phone won’t be a problem since you could always re-download Starbucks app and reconnect to Starbucks’ server which got the proper dollar amount in your Starbucks account as before!  Crypto-wallet?  I don’t think so!