Will our appreciation for money’s value disappear in a cashless society?
The reasonable person will agree that, even if we refrain from touching notes, cash cannot change hands at the distance of two meters. Instinctively, our attention is persistently diverted towards the prospects of alternative forms of payment. This is not a new phenomenon; centuries ago transactions were typically conducted by exchanging goods, and this was not sanitary during plagues either. Nonetheless, the technology that we are equipped with today is a game-changer due to its ability to eradicate such obstacles. Analogue objects are increasingly replaced with digital counterparts in correlation with John Penny Barlow’s analogy: ‘from the bottle to the wine’. These counterparts represent the value that we attribute to them; if we decide that they are equal to cash then so be it.
In the recent climate of rapid digitalisation, many have come to notice that the value which they attribute to money does not necessarily correlate with its physical value. Even the factors on a coin that determine its worth to be a penny can be quickly contradicted through the duscovery of the exact mint mark and date of the coin, thus attributing its physical characteristics a higher value than its nominal definition would. Penny coins today are merely copper-plated circles. Had this not been the case, the same sized (entirely) copper circles would be worth more than £0.01. Nonetheless, the caveat of physical versus nominal value still persists. The Lockean understanding of money as something that is pivotal in shaping social relations underpins the above logic. Money derives its value primarily from the very notion that it will be accepted by another individual as a form of payment.
Elaborating on this point, one can reasonably suggest that other forms of payment, such as cryptocurrencies, have the potential to replace cash in the foreseeable future. They key premise is that they need to be widely accepted as a common form of payment (by merchants in particular). Bitcoin, for example, is not the first alternative currency; a simple case being the Tulip-Mania in the Netherlands at the beginning of C17th where, just like with bitcoins, the prices of tulip bulbs had reached extraordinarily high levels and were used as a means of exchange. This occured until their value severely collapsed after two years. However, Bitcoin’s roller-coaster of volatility is much more complex and not understood by the average lay person today like the value of tulip bulbs was a few centuries ago.
Transaction records are added to the blockchain (i.e. Bitcoin’s public ledger) through mining. This is a process carried out through a software which uses mathematics to confirm that transactions are legitimate and can therefore be added to the blockchain. If successful, the miner is awarded with the newly created bitcoin. Due to their complexity, cryptocurrencies are more likely to be a lifestyle choice (just like American Express points for some) rather than a catalyst towards a cashless society. For some, it may even be the choice to a lifestyle of crime as it is prone to facilitating illegal behaviour too. Some may call it a lifestyle choice influenced by an individual’s social status. Unlike other alternative currencies, which have died relatively quickly, Bitcoin is still operating and becoming increasingly popular as people become more aware of it. It also differs from other alternate currencies in that the popularity of the latter was hindered primarily due to a capability to assist only a limited number of businesses. This meant that as soon as an individual travelled to a different town, the currency was not accepted there; there were other forms of payment instead. In other words, those merchant tokens were limited in their geographical scope.
Bitcoin is, theoretically, accessible across the globe and does not have a central point where executive decisions are made. However, in practice, the social life of Bitcoin (i.e. the communities of computer scientists who know how it works) is limited to specific groups; predominantly male computer scientists. It is not controlled by governments like cash is, but it still has something that alludes to a social structure; a structure without a central point of authority. It is a flat horizontal network; an exclusive network of people. The value of the a currency is not merely dependent on economic ideas but largely evolves around state control and the way individuals identify with a currency. In the particular case of Bitcoin, we come to discover a hierarchy and social divide by virtue of there being a limited number of programmers who understand how the cryptocurrency work; we are faced with a situation where it is mainly the particularly influential voices that are heard in decision-making (i.e. those who truly know how Bitcoin funcitons).
The average lay person is not involved in the communications with these influential infividuals on online platforms such as Reddit. Unlike the Euro, which also functions across borders and can be seen as a symbol of Europe as a supranational institution, Bitcoin is limited in its scope because its complexity entrenches a divide rather than encouraging unity. Therefore, it should be seen as something that can succeed as an ideology, or even hobby for some, but cannot become a universal currency until this divide is eradicated. Here, we speak of both a social divide and economic divide. The immense amounts of power that need to be generated for the mining process to occur are not sustainable for developing countries which lack technology in their infrastructure as it is. Furthermore, the premise of a monetary currency is built on a foundation of trust while the ideology of Bitcoin remains trust-free. This makes any strict comparison between how the two systems work unreliable.
However, there remains one similarity between the two: just like previously used alternative currencies excluded individuals from different towns where they did not operate, Bitcoin can be seen to exclude several social classes which are not part of its implicit hierarchy. Lets put this issue into perspective: on the one hand, the former can be pictured to be the lack of a bridge between two destinations; a geographical issue that excludes certain groups. On the other hand, the later can be depicted a ladder with missing steps; the more knowledge one possesses, the fewer steps missing in their own ladder to climb to the top of the social hierarchy which has influence over the functioning of Bitcoin . In other words: the missing steps in the ladder depicted in the analogy are the knowledge and skill that the average lay person typically lacks in comparison to those computer scientists at the top of the Bitcoin hierarchy. This divide is precisely what would hinder the development towards an entirely cashless society. I choose to use the word ‘hinder’ as opposed to ‘entirely stop’ because we are becoming increasingly aware of the entrenched divide around us and this is reflected through the presence of meritocracy and quotas. This is not to say that a change will occur within a few years; it will most likely change over generations as the current implicit biases are slowly substituted in a quest for equality.
Most recent statistics show that 27% of London is in poverty; 700,000 children, 1.4 million working age adults and 200,000 pensioners in London lived below the poverty line in 2017 (trustforlondon.org.uk). Most individuals are aware of the obvious benefits and drawbacks of a cashless society; a reduced need for physical branches and combatting crime as a positive, coupled with difficulties for the elderly and those without bank accounts. What is not always apparent is that it is the people living below the poverty line (and not only) who often rely on an influx of cash from additional jobs in order to maintain a living; something which would be impossible to do in a cashless society as there would be no possibility of managing undeclared earnings. Once again, this is an issue because we are faced with several social imbalances. Moreover, even those who are acting in accordance with the law may simply not want even more data being processed about them than there is already; the constantly working algorithms on all our electronic devices are enough of a form of surveillance. This is not to say that the prospect of a perfectly efficient cashless society will remain forever unattainable; at some point technology will find its way to bridge the gap between the marginalised. An example of this today is homeless charities allowing people to give directly via contactless readers.
What appears to be nuanced in some countries in the norm in others. In Sweden 87% of cashless transactions are carried out through private payment companies; people have ‘e-wallets’ out of which they spend money. Those without bank accounts are, therefore, given broader access to online services and markets. This is sanitary during a time when a global pandemic is disincentivizing people from operating with cash. Not only is this more hygienic, but it is efficient too. For example, in the US, those with E wallets were quicker to receive stimulus payments in comparison to those waiting for paper cheques. However, most parents would not trust their five-year-old child to carry a credit or debit card instead of their coins to pay for a snack at school or for an ice cream from the ice cream van at their local park. Sweden, once again, is a step ahead with the ‘Swish’ app or iZettle that allows cash transfers using just a mobile phone. One would acknowledge that this sounds familiar, but what we do not yet see in the UK is a widespread presence of cards that parents give their children with a certain sum topped up for them to use at school to buy a snack or an ice cream. Some may have come across a card that resembles such functions, but it is not universally used. The closest equivalent in London is an oyster card; once you have no balance you simply cannot use public transport.
Arguably, the physical possession of money is what teaches us about its value. If this premise is followed, then a conclusion would be reached that we are yet to have future generations of people who have no clue about money’s worth. However, the value of money to an individual is relative and, as aforementioned, the reason for why it is important to us all is because we know it can be used as a means of exchange. If this is the case then, just like the child counts the coins in their pocket and makes sure they have enough for their ice cream or snack, they can ration based on the balance on their card. Centuries ago we did not have money, and everything worked by the same principle; if you did not have a means of exchange you could not receive anything in return (unless it was a gift or loan). Evidence of this is seen in the Common Law where we have the tracing of assets. Tracing is concerned with rights; trust rights in particular. For example, in a substitution case, a trustee holds the title to a horse on trust for a beneficiary and swaps this title for cattle. The beneficiary can now claim the cattle. It is called tracing because we trace the value of the horse though substitution (i.e. the asset is substituted). Similarly, if you do not have a means of exchange, you do not have the right to request anything in return. And when we do want something in return, we do not expect to get more than we can give; just like a child will not be able to buy more ice creams via the use of their card than the balance on it permits them to, the beneficiary in the above example would not be able to claim other animals in addition to cattle. The value of money is learned by getting to know how much a given amount can provide us.
If the concerns about not knowing money’s value are disproved, then it can be reasonably concluded that the most likely scenario for the foreseeable future is that the conveyor of payments will change rather than the currency itself. The infrastructure of payment is constantly evolving and will soon do so beyond the telephone or card. For example, the ‘smile and pay’ technology, which is adapted from how passport control gates operate, is now used in South Korea for ordinary transactions in stores. This is something which will become the new normal, but a system as such replacing cash entirely will not happen as rapidly as we presume due to several practical, legal and social implications.
