You, Me, and BTC Your Liberty & Bitcoin Podcast
As the novel coronavirus has us all on a fast-paced trajectory to a cashless society, can DeFi and crypto keep us from failing?
While the newest push towards a cashless society can't be totally pinned on the COVID-19 global pandemic, it'd be impossible to say that it didn't have an effect on the speed at which this new payment paradigm is growing. Lockdown measures taken worldwide have seen more people turning towards e-commerce for the attainment of their everyday necessities. And fear has inspired many to rely on cashless forms of payment when they do find themselves inside a brick and mortar store.
Cashless payment systems have been a staple of our society for decades. But recently there has been a notable push to begin embracing them in a way that looks to make cash obsolete. A cashless society could realistically offer a number of benefits. It's definitely cleaner, but it could also cut back on organized crime, black market dealings, as well as cut into centralized banking profits. But with every upside, there is always that downhill slope just around the corner.
A cashless society could prove to be a nightmare for the underbanked and unbanked. It could be tough for certain groups, like the poor, near poor, and elderly communities, to exist. It also raises some legitimate concerns over privacy and government overreach. But DeFi and Bitcoin can help. Platforms like Bitvavo make it easy, even for the unbanked, to create an account that offers more than mere privacy.
The Digital Currency Revolution
In 2011, nearly 25% of households with an annual income less than $15,000 had no bank account, meaning that 7.7% of people nationwide are without a financial institution. Since the advent of cryptocurrencies, the unbanked and underbanked have been given a new option. However, this option can quickly dissolve in poor and elderly communities. That is, those with poor access to electronics or low computer literacy in general.
Other criticisms surrounding this newfound cashless revolution are more clandestine, yet entirely founded. Lack of privacy in a cashless society can be a genuine problem for many who rely on cash transactions to maintain personal security. Centralized banking systems are often targeted for cyber hacks because they contain large pools of personal and sensitive information. Things like names, birthdates, social security numbers, and other personal information are often stolen, or worse, sold to data farms. Many worry that a cashless society would only increase the insecurity of their personal identity and investments.
An increase in centralized control over monetary function is also a concern. Many institutions already cost users millions of dollars in annual fees, take a long time to process transactions, fall subject to ever increasing tax laws, and discourage savings and cash transactions to serve their own needs. Many centralized institutions and governments rely on their citizens incurring debt in order to protect against inflation that can result from quantitative easing practices. A centralized cashless society could indeed lead to a more totalitarian regime regarding surveillance and control, should there be no way to interact within financial systems outside of the governmental system.
Old World Tactics in New World Order
Seeing these growing concerns over moving to a cashless society, coupled with the interest in decentralized digital currencies, many large government entities are moving quickly to embrace cryptocurrencies of their own. Central Bank Digital Currencies, or CBDCs are making a fast grab at the digital financial space. With many existing governments looking for a first-mover advantage over other countries building structures for the same.
Deutschland Bank recently unveiled a report noting that "worldwide lockdowns and social distancing measures have only increased the use of cards over cash. To respond, companies and policy makers must design alternative to credit cards and remove middle man fees. For now, the priority must be on regional digital payment systems. In the long term, central bank digital currencies will replace cash."
If the digital cashless revolution is indeed upon us, it seems that centralized authorities have completely, or conveniently, forgotten about Bitcoin and DeFi. Crypto and DeFi platforms offer a democratized solution for a better digital payment and finance system. If the latest Deutsche Bank report is any indication, the world is moving towards a cashless paradigm, whether we are ready for it or not.
Cryptocurrency offers something that most other financial systems are now clamoring to start: a history of conducting digital finance. The system already exists, and is beyond functional - specifically as more traditional financial institutions and retailers have already begun to accept cryptocurrencies.
DeFi, or decentralized finance, offers crypto the functionality of centralized systems without the cost and inequity of centralized practices. This could provide a smooth transition into a cashless, secure, and democratized financial future for all.
