[Cont’d from Part 1] … A cashless economy presents major problems, which may be traced out using an analogy. I ask the champions of no cash:
Imagine your family pictures, the ones you took over the decades. Precious, aren’t they? You may insure them, and be compensated if they’re damaged, but nothing can make up for the loss. These pictures are unique and irreplaceable. You can’t afford to lose them. Right?
Yes, they nod.
Don’t you want to safeguard these pictures, make sure they’re kept intact so that you and the future generations may benefit from them?
Again they nod, so I continue:
Where would you then store these irreplaceable pictures? On a hard drive that you or someone you trust have control over — a drive you can back up and have access to at all times? Or on a digital cloud that you have access to at all times except when the company in question goes bankrupt (unlikely but possible), the economy collapses and the grid goes down (an outcome less and less unlikely), an economic crisis or war that plunges the system in darkness (getting hotter now), your account is suspended for whatever reason (it happens), or some government has seized control of the company’s servers and decided you no longer have access to them?
Too alarmist a scenario? Maybe, but still, it doesn’t answer the question: What would you do on the off-chance the shit hit the fan and your irreplaceable family pictures were lost?
It goes without saying, I continue, that to store them somewhere where you have no physical access to them, no real control over what happens to them is a risky decision, if not a bad strategy.
The champions of the cashless economy smirk. By this token, they say, we should do away with banks.
Fair enough. Can we at least agree that banks are not risk-free?
Yes, they concede.
Good. Now let’s try another scenario, simpler, and more to the point …
Part 3 to follow