As some countries go cashless, new issues of privacy and surveillance are bound to emerge.
If you’re Norwegian or Swedish, for example, then you likely haven’t touched cash in months, perhaps even years. However, as Scandinavian countries are increasingly evolving into cashless societies, this development is not typical across Europe.
Attempting to go cashless when paying your bill at an alpine Gasthaus whilst on holiday in Austria will leave you with puzzled looks or worse - possibly stranded. As of late, some voices in Austria have even been demanding that the use of cash be enshrined in the Austrian constitution. So why is Austria, and most of Europe, still obsessed with cash?
Europe’s ongoing love affair with cash
In 2017, the European Central Bank published a study entitled “The use of cash by households in the euro area” - and the results were telling. During the year before, the ECB had surveyed approximately 65,000 people across Europe and concluded that 79% of all point-of-sale transactions were made using cash. This amounts to 54% of the total value of all payments.
The study found that cash is especially popular in Germany, Austria and countries such as Malta, where 92% of transactions are made in cash, as well as Greece and Cyprus (88%). The study was the first of its kind to be conducted across the nineteen-member monetary union and appears to contradict arguments by some that Europe’s future will likely be (or should be) cashless.
Every step you take, every move you make...
There are numerous reasons behind many European countries’ resistance to going cashless. For one, there are massive concerns in parts of the population regarding privacy. Keeping your finances to yourself is as old as time in cultures around the world.
In 2016, for example, Harald Mahrer, former Austrian Federal Minister of Science, Research and Economy, told Austrian public radio station Oe1:
“We don’t want someone to be able to digitally track what we buy, eat and drink, what books we read and what movies we watch […] We will fight against rules everywhere”.
Many cash advocates favour the freedom cash allows and wish to keep things the way they are. Also, unlike electronic payments, cash transactions leave few, if any, digital breadcrumbs for countries and companies.
Another reason cash is the preferred method of payment is that even in more digitised societies, many are unfamiliar with digital payment methods. There are concerns regarding the impact of going cashless on pensioners, children, and the homeless.
For one, older generations may lack the skills of tech-savvy Millennials and feel anxious about dealing with new technologies. On the other hand, if children never see actual cash exchanged for goods, they may develop the idea that money is unlimited and not learn about the difference between savings and credit. And for homeless people living on the streets, cash is essential as many of them have neither a bank account nor access to technology.
Transparency and privacy
One of the major advantages of cash is that it can be used without intermediaries and government surveillance. This is one of the attributes cryptocurrencies such as Bitcoin share with cash - Bitcoin also offers anonymous transactions to users.
It is a fact that a large share of the world’s population are still living under authoritarian regimes. In Venezuela, for instance, people use Bitcoin to evade financial controls and hyperinflation. Currently, using Bitcoin to receive money from abroad is the only way for Venezuelans to circumvent local banks, which are under government pressure to disclose all details on transactions, including what the money is to be used for. This leaves Venezuelans between a rock and a hard place, with Bitcoin offering privacy and relative ease of use.
However, at present, cryptocurrencies are still far from mainstream and worldwide adoption in more stable economies. Fewer than 40 million people around the world - the equivalent of less than 1% of the world’s population - have ever used Bitcoin, with the majority of cryptocurrency users being Millennial males working in IT and finance.
Bitcoin is a nascent technology which means that there is still room for improvement in terms of features such as usability and transaction speed. New technologies such as the Lightning Network are projected to scale the possible number of Bitcoin transactions and to make Bitcoin more accessible for adoption by the masses.
Also, increased convenience, such as user-friendly wallets, better education materials and more exchanges are key to increase the number of cryptocurrency users. Using cryptocurrencies offers a large number of unbanked people around the world, that otherwise cannot utilise traditional banking, access to financial services.
A mixed bag
If cash does get abolished at some point, it is cryptocurrencies that will offer transactions with a basic level of privacy. In light of the fact that a cashless society is bound to be more vulnerable to financial control, surveillance and authoritarianism, some view bitcoin as a hedge against these developments.
Bitcoin is the perfect answer to this predicament as it is decentralised, pseudonymous and highly secure. As a matter of fact, Bitcoin is the only means of payment that moulds physical cash and digital payments into “digital cash”. Bitcoin can be sent between two parties without an intermediary and - with the right precautions - without surveillance.
As society is advancing towards a fully digital future ever more rapidly, it is bound to need some kind of “digital cash” - be it Bitcoin or something else.