Cash vs bitcoin vs banks vs what

[jack]

Currently we have:

Physical money
- partially traceable
- no way of undoing transactions

Bitcoin
- partially traceable
- no way of undoing transactions
- is destroying the planet

Traditional banking
- mostly user friendly
- transactions can be rolled back if there's fraud
- lets the government spy on you
- for weird historical reasons, "consumer protection" and "get credit for everyday use" are bundled together

New faux-banking (including both things like paypal and cryptocurrency exchanges)
- perform many of the roles of banks
- some of the convenient, some of the protection, but sometimes not
- race to see how fast existing banking legislation covers them

There's a natural two tier system. Banking is built on top of money (originally physical money, now electronic money). Most significant bitcoin transactions use an exchange, even though someone can in principle make the transactions themselves.

Bitcoin was an ingenious technical innovation which unfortunately made so much unneeded cryptographic calculation it significantly impacted global warming with farms of graphics cards :( Probably it won't last.

Likewise, as with many "disruptive" technologies, the new banking systems had some benefits (you can just send someone money by doing so, without giving VISA veto power over whether your purchase looks kosher or not) and many problems (they started deciding for themselves whether to claim your transaction was fraudulent and keep your money, and were a power grab by people hoping to put the power in the hands of random tech companies, instead of governments)

So, "traditional money and banks bad, new fake money and banks good" is not a convincing narrative.

But in my opinion, "the new systems are destined to fail, therefore everything is fine as it was before" isn't convincing either.

There are extensive problems. If you're a small organisation, can people make small purchases from you? In person yes. Online, only if it's socially acceptable and you give patreon or VISA N%. Can you travel without the government knowing exactly where you go? Only if the transport takes cash, or TFL start taking anonymisation seriously. New systems helped temporarily with some of those problems.

Anything similar to consumer banking will need regulation the way consumer banking does now for the same reasons. Fraud will happen and there needs to be answers. Sufficiently large transactions probably do need to be scrutinised by the government for illegal activity.

But it would be nice if there were a more systematic approach. If there was an easy "just pay cash" equivalent where you accept a small risk of fraud in exchange for convenience. Where transaction fees didn't make small transactions so hard. Where everything you'd ever done wasn't stored in a convenient database one damoclesian law change away from being audited for "is this person sufficiently 'our kind of people'". But I don't know how we get there.

Comments

[ewx]

Where transaction fees didn't make small transactions so hard.

This doesn't need new technology. It barely even needs a new configuration of existing technology - there are business accounts with no payment fees (according to a random "top 25 UK business accounts" page I found), same as personal accounts. (A lot do charge fees. But much smaller ones than bitcoin l-)

[mair_in_grenderich]

where does something like https://en.wikipedia.org/wiki/EcoCash fit in?

[jack]

Good question, I don't know. What would you say?

[mair_in_grenderich]

I don't know anything about the technology behind any of these things (traditional banking or the modern things), I'm afraid.

[naath]

My current experience with conventional banking is that paying 70p for coffee with my phone, accessing my Starling bank account directly is hassle free. And the coffee place don't complain (good, cash is fiddly and inaccessible).

[ewx]

Can you travel without the government knowing exactly where you go?

Again yes, with no new fintech required: busses and taxis still take cash. For the able-bodied and leaning slightly hard on exactly, travel to somewhere within, say, 15min walk/cycle of your real destination, by any means you like, walk/cycle the last leg of the journey. Remember to turn off your phone first...

But I'm pretty sure you know this perfectly well so I'm unclear what problem you're trying to address there?

[jack]

I think what disturbs me is if your movement being recorded is the default. If your past movement can be mined for suspicious patterns (e.g. you regularly visited the area where a lot of your friends belong to a protest organisation retroactively designated watchable under some terror law). Or if paying cash becomes treated as evidence of suspicious activities itself.

[ewx]

If anonymous means of exchange are considered suspicious by your adversary then I don't think you want an electronic one at all, you want to stick to physical cash (or something essentially similar), so that someone has to get up close and personal with you to discover that you're using it, rather than remotely breaking into you or your counterparties' computers, doing a bit of traffic analysis, or whatever. Computers are really bad for your privacy.

(Cash is already suspicious in some contexts: if someone is operating their business largely or entirely in cash then we start to wonder if they are paying their taxes.)

[damerell]

FWIW my Oyster card has only ever been paid for with cash, so it would at least take some effort to trace it to me.

However, if the government seriously wants to track use of (say) the Tube, new financial technology won't help; the government will mandate not using it.