Bitcoin’s Role in the War on Cash

Lawmakers and central banks are in the midst of a movement to gradually diminish and ultimately eliminate the use of cash by their citizens [1]. This global trend comes in all different flavors as over the past year and a half, some countries have eliminated high-value banknotes (India) [2] or restricted ATM usage (China) [3]. Others have chosen less intrusive and more bespoke routes, such as allowing cashless donations to the homeless (Amsterdam)[4]. The reasons for this push to phase out cash are just as varied – a few are attempting to combat inflation (Venezuela), while the majority, including Singapore, are aiming to prevent money laundering and tax evaders [5]. To these governments in the latter camp, cash is too often used to aid criminal enterprises that thrive under the cloak of anonymity made possible by these cash transactions. However, to citizens across the globe, this ubiquity and obscurity are exactly what make cash so useful.

Given the long-standing and widespread use of cash, it is no surprise that this is a highly sensitive issue with polarizing positions – governments tend to view it as a step toward greater transparency made possible by technological process, while many citizens decry it as an invasion of privacy coupled with a stirring interruption on their daily lives. To that end, Sweden’s largest advocacy group representing pensioners recently delivered a petition with 140,000 signatures to the country’s financial markets regulator to halt Sweden’s move to a “cash-free future”, railing against the fact that 80% of payments are now done online there. In their eyes, “cash is needed and a modern society has to offer many different means of payment [6].”

The Swedish pensioners may be on to something there, as these measures to eliminate cash have created opportunities for other methods of payment. Fortunately, there may be a solution that addresses the concerns of both sides of the issue: Bitcoin. Bitcoin may provide governments with a simple electronic alternative to cash, letting the billions of ordinary people who rely on it to continue leading financially productive and secure lives as essential contributors to the global economy. Digital currencies such as Bitcoin allow for safe and anonymized payments all over the world, mirroring how cash is used today. Perhaps not so coincidentally, as the war on cash has risen, so too has Bitcoin’s value – although it dipped heavily one day recently, it has been on a steady rise for the past few months, more than doubling its value [7].

Regardless, it would be foolish to close the book on cash just yet. It has not gone unnoticed by many that two of the leading economies embracing this trend, India and Venezuela, have seen their currencies devalued and citizens panicked in wake of enacting their respective regulations [8]. No matter the outcome, the war on cash, and Bitcoin’s role in it, will be up for debate for the foreseeable future, and it will certainly lead to lively discussions the world over.