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.

Cashless Society Encourages Monopoly Money

I’m not an economist, because I’m a nobody.  Thus, my experience in trained economics is a zero.  As a human being, I do have opinions.  By staying informed with everyday experiences, I do form opinions on facts that, I think, are real.  From these opinions and ideas, I can draw some non-expert conclusions.  In fact, right now I like to talk about one or two conclusions I have on cashless society.

I think cashless society is wonderful for governments, bankers, and whatever associations that have control over a society, because electronic traces are available 24/7.  What is scarier is that anybody in the position of power or any hacker who has enough knowledge can just shut you out of a cashless society by changing your electronic numbers.  This is very real, because without any cash on hand, your only option is to rely on the credit system and other electronic monetary forms.  When such a system cuts you out, you are basically helpless and powerless and cashless.  In such a situation, surviving becomes impossible!

Cashless society can also be wonderful for you, but as long the illusion of real efforts and real transactions are actually taking place.  I think bankers can just enter any number of money into a bank account for just about anybody, and the money will form instantly by the electronic means.  You could say money seem to be appearing out of thin air!  Growing on tree, or however you want to phrase this illusion.  I think cashless society will enhance this ability by an infinite time more.  What do I meant by an infinite time more?  Cashless society won’t use cash, because cash cannot be legal.  Thus, cashless society is all about the electronic, monetary numbers, and anybody who has the authorization to form these numbers can just make them out of nothing.  Or they can just delete these numbers whenever!

What makes cashless society humming brilliantly is the illusion of convincing people that real efforts and transactions are actually taking place.  Let’s say, if a doctor who got paid very well by treating his patients in exemplary manner would probably quit his job if the bank could instantly form any amount of money, into the infinity, without any effort.  Why even bother to go to work when you can just go to the bank for an easy loan, and the bank won’t care if you can pay the money back or not since the bank can form infinite amount of credits.  In the cashless society, if the bank isn’t going to lend you any credit, you have to acquire these credits by working for a job or doing whatever to acquire more credits.  But will you be working with a happy smile on your face knowing the bank can form any amount of credits out of thin air?  Demand and supply formula won’t be a good gauge anymore in cashless society, because unlimited amount of credits can flood the system forever.

Even better, why don’t you just form a bank where you, yourself, can electronically form infinite amount of credits?  Wouldn’t this make you an infinite-air?  Why would you bother with taking out someone else’s trashes and problems for a wage/fee when you can just hallucinating yourself with infinite credits of your own bank?  If everyone is into this, then the system got a problem.  The problem is not lacking of credits or money, but the problem is about — nothing will ever get done.  Because nobody will give any real effort in any exchange since credit is created out of thin air without any real effort.  This means the producers see no reason to produce products, because the infinite bank is giving out easy credits freely.  Basically, why produce when you can obtain free credits, right?  Without producers in the equation, the consumers won’t have anything real to consume.  The whole economic system would become meaningless, and so the system collapses.

I guess, the only real demand for cashless society is the demand for more credits, and the easy credits are plentiful available so the demand for more credits could be fulfilled.  Of course, the government and the powerful bankers can just create laws that make the illusion works for awhile.  An example would be you have to pay back the loan you want to borrow, or else you may suffer a consequence of being shutout of the cashless society system.   Knowing being shut out, it means you are not going to be able to buy the most necessities such as foods, and so you know you’re doom for good.

Nonetheless, in a cashless society — a shutout mandate or whatever rules a cashless society wants to impose on the people — the atmosphere can become very toxic for the powerful people.  How come?  If a society can only get poorer while the banks have unlimited amount of credits, the poor people will see this as the greatest injustice of all time.  This means if there is large amount of poor people who are thinking this way will have a king’s head rolls.  Thus, a cashless society needs to uphold not only the illusion of real efforts and transactions, but it also needs to uphold the income equality for the whole society.  As long the majority (e.g., 65%, or 75%, or 80% of the general population) is wealthier than a small percentage of the whole population, then nobody would be able to form a big enough movement to have a king’s head rolls.

If you’ve read thus far, I think you would probably have a notion that cashless society is the same thing as a credit society we’re living in today.  I would agree, but cashless society is more draconian since it outlaws the tangible cash.  With cash in the equation, people can still feel that transactions are real, because something gets sold something gets paid with hard, cold cash (i.e., it’s real).  Even with cash in the system, it’s all about maintaining the illusion that credits are properly distributed.  Taking the cash out of the current credit system to make a complete cashless society, the illusion of proper distribution and exchange will be harder to uphold when the going gets really tough.  Few good examples would be unemployment goes skyrocket, income inequality goes skyrocket, debts go skyrocket and so forth.

Of course, you can argue, when the going gets really tough, with cash in the economic system or not, the whole bubble is going to pop and a king’s head rolls anyway.  Nonetheless, with cash in the system, at least new problems of cashless society won’t be introduced to the general population.  Once cashless society is in place, some traditional problems plus new problems are going to continuously rain down on the whole society, especially when people can be cut off from the system altogether since only credit-like means are acceptable and real.

Cashless society would definitely help the controllers to see the nuts and bolts of the whole system more clearly, because electronic transactions are going to leave electronic traces behind.  Nonetheless, in bad time, this would aggravate people rather easily, because they feel their privacy are being invaded all the time.  When it comes to money, privacy matters!

I think people won’t mind sharing who they’re having sex with, but when it comes down to money people are not that willing to share.  Thus, money is rather private!  So, cashless society is going to have a problem of allowing people to have some privacy with their money.  For an example, if everything is so connected in the cashless society, everyone would know how much credits you have available.  This would mean your local pizza parlor would refuse you a slice of pizza for they know your whole worth is zero or negative credit.  In a cash society, you can just hand over the cash, the local pizza parlor would careless if you have any credit, and off you go with a delicious slice of pizza.  In a cashless society, your shame would be revealed instantly.  Even worse, you will not be able to fill up your stomach when nobody is going to accept cash.  After all, it’s a cashless society!

In summary, I think cashless society can make bad economics worse, because new problems would be introduced to the general population.  These problems may become apparent rather quickly when the economy goes bad.  An example would be people may become less cooperative in making a living, because there are less incentives to encourage people to earn money the hardy way.  People may try to scheme the infinite credit/cashless society to make money the easy way, and economic bubbles would form into gigantic ones till they burst and collapse the economic system altogether.  Instead of really solving the problems of society such as poverty and whatnot, cashless society can only enhance the paranoia of lacking privacy.  Money is a very private matter to many people, and so these people are not going to be very happy about having to live in a cashless society when every known businesses and services out there know how much you are worth 24/7.  At least with cash, people can hide their shame of having less worth.  Basically, any society with a lot of insecurity can collapse, and so the same goes with cashless society.