The New Cash? Why Governments Don’t Like Cryptocurrency

By Nicholas West

Cash is a problem for banks and governments. And, as we know, banks and governments are joined at the hip — each creating policies that strengthen the power of the other. It is no mystery, then, why we continue to see an acceleration in the “War on Cash.” Cash creates a barrier to tracking and control and removes the ability to charge a wide range of processing fees and hidden charges. Cash impedes easy tax collection for governments, and creates the perception that governments are allowing crimes and corruption to occur without the ability to swiftly crack down on “evildoers.” Clearly, such an instrument would become the enemy to these institutions.

But we now live in a globalized, connected world where people are embracing the digital economy in all of its forms. Studies show that debit and credit card use is surpassing cash in places like the UK. We have also embraced the full range of digital devices that make us more mobile and provide more options for communication and banking. As it stands, this has only elevated the exposure the average individual has to all manner of tracking, taxation, and the fees imposed by the banking structure. Bitcoin and other cryptocurrencies are aiming to fill the need for modern methods of money storage and transference while simultaneously decentralizing the means for doing so, thereby reducing the power for a host of middlemen to grab pieces of our earnings along the way. Thousands of people all over the world now carefully watch the Bitcoin price every day, buying and selling as they see fit, just as others do with stocks and bonds. That is certainly a valid approach to the crypto space, but the blockchain itself — which underpins all cryptocurrencies — is also enabling the development of new tools that can promote economic freedom to more people in more places than ever before.

This is precisely why we have been strong promoters of cryptocurrency. While, yes, it does technically contribute to going cashless, it still thwarts the centralized control mechanisms of the dominant players in traditional banking which have proved to be usurious at every level. Moreover, cryptocurrencies provide the necessary distributed network of currency options, as well as payment methods that can offer more choice to more people.

For example, CoinText is an application that allows anyone to instantly send various types of cryptocurrency via text message, even with a non-smartphone and no Internet connection. This turns cryptocurrency into a text-based, as-good-as-cash system of payment transfer. No bank account is needed and no crypto wallet is necessary. Similar applications, as well as those we haven’t thought of yet are propagating across the crypto space, each with a mission to decentralize and lessen the cost of money transfer.

When US Treasury Secretary Steve Mnuchin addressed the Economic Club of Washington earlier this year, he compared cryptocurrency to “Swiss numbered bank accounts.” Weeks later, thousands of miles away in India, the nation’s Finance Minister said his government would “take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.” These are just two examples, but they speak volumes. Governments across the globe are greeting the rise of cryptocurrency with suspicion and cynicism at best and often with downright hostility. This is precisely the reaction that governments have with fiat cash. Why is that?

Lest we pretend that governments have our best interests at heart by trying to get everyone into their version of a cashless world, their policies so far have caused chaos and cost lives in poorer countries such as India with its disastrous demonetization strategy. But make no mistake, this is a global agenda.

The Better Than Cash Alliance is the United Nations framework from which the plans to “de-cash” the globe originate. The alliance forms a system of interlocking governments, companies, and international organizations that have partnered in the cashless agenda.

Perhaps not mysteriously, the two largest global payment processors are also at the forefront of working with the goals set out by this Better Than Cash Alliance.

Visa spokesman Andy Gerlt famously stated that they were “declaring a war on cash,” the very same rhetoric that we hear from governments. The Visa strategy is multifaceted, including a controversial plan for awards (bribes) to merchants in the U.S. and U.K who accept their “cashless challenge” and commit to completely removing cash from their establishments.

On the other hand, Visa’s 60-page plan detailing “Visa Government Solutions” reads like a blatant commitment to collusion with the State in order to compel establishments to remove cash as a payment option, of course embracing credit card options first and foremost.

Mastercard then issued its own report called “Measuring Progress Toward a Cashless Society” which highlighted 33 countries most representative of the “Cashless Journey.”

However, there is a rising tide of people who are beginning to see the effects of State and corporate collusion to insert themselves into each transaction. Even in nearly cashless countries such as Sweden, there has been pushback. The elderly, refugees, or anyone who is not tech savvy becomes literally unable to participate in such a system, exactly as we are seeing play out on a mass scale in India. The best tools in the cryptocurrency space enable even the non-technical to circumvent these restrictions.

In fact, the First World should be taking note of Third World solutions that are already in place such as Kenya’s M-Pesa, another mobile-based money transfer system that now conducts billions of transactions among its tens of millions of users.

The real reason why governments are scrambling to combat cryptocurrency is that the average person inherently wants to do business cheaply, efficiently and safely. This is the promise of fiat cash, but as that option becomes invalid a new system must take its place if we are to protect ourselves from predatory governments and their corporate partners. Crypto finance in effect becomes cash by creating a method for people to transact in a way that is as equally accessible and as simple as any physical currency. In a best-case scenario, crypto solutions can become even better than cash as they are not a debt instrument that loses value through inflation like the U.S. dollar. However, unlike the government version of the “Better Than Cash Alliance,” cryptocurrencies and blockchain technologies can offer pure instruments of trade that are not susceptible to any of the issuance and control mechanisms that are inherent in traditional finance.

Governments clearly don’t like it when people take financial sovereignty into their own hands and build systems that serve their own best interests.

Nicholas West writes for Counter Markets.