When will Crypto replace Cash? It seems Sooner rather than Later…

In a recent tweet by Elijah Schaffer, the increasingly restrictive approach of governments towards cash usage is highlighted, underscoring a growing global trend. Over the past years, many governments have been implementing limitations on the use of physical currency for a variety of reasons, from combating tax evasion to deterring money laundering. While there are genuine concerns associated with the untraceable nature of cash, its gradual phasing-out is raising alarm bells about individual financial autonomy and privacy. When will crypto replace cash?

Why is Cash Good for Transactions?

For centuries, cash has symbolized unmediated financial freedom. In its tangibility, it offers an immediacy of transactions unmatched by any electronic medium. Cash transactions leave no digital footprints, ensuring that users maintain their financial privacy. The freedom to use money without intermediation or surveillance is an intrinsic part of many societies. It protects vulnerable groups, offers an alternative in times of systemic digital failures, and provides a safeguard against negative interest rates in banks.

Why Governments are Restricting Cash

As the digital age unfolds, the drawbacks of cash have become pronounced in the eyes of many governments:

  1. Tax Evasion: High-value cash transactions, especially in businesses, can enable tax evasion. By maintaining transactions off the books, revenues go unreported, leading to significant tax revenue losses for the government.
  2. Money Laundering and Terrorism: The anonymity of cash makes it a preferred medium for illicit activities, including money laundering and financing terrorism.
  3. Economic Policy Implementation: In an era where negative interest rates are becoming a tool for central banks, the existence of cash can impede its implementation. If bank deposits start costing money, people might prefer to hoard cash, undermining the policy’s effectiveness.