Igor Bubelov About Blog Photos

Improving Financial Privacy

September 24, 2019

The world is going cashless, and I don’t think that anything can reverse this trend. There are plenty of reasons why people prefer cashless transactions and the most obvious one is convenience. Some older people still struggle to figure out how to make payments in a progressively cashless world but the younger generation reveals its overwhelming preference for cashless ways of paying for goods and services. I’m not even going to list all the benefits of going cashless because they are obvious. Instead, I’m going to cover the dark side of a cashless world.

Table of Contents

Location Matters

The popularity of cash payments varies from country to country, and it’s not a question of technological advancement. USA is the catalyst of tech innovation but the staggering 40% of its payments are done in cash. On the contrary, Norway is far from being a tech hub filled with innovation, but it’s citizens will soon forget what the Euro bill looks like: more than 90% of their payments are now cashless.

What can explain such a difference in cash preference? No one knows for sure, but I tend to agree with people who say that its mostly a cultural thing. US culture is based on ideas of liberty, personal autonomy and decentralization of power. That would also explain the American obsession with stockpiling assault rifles. You know, just in case. Many Americans are less trusting towards their government and having control over your own money seems like a good way to protect an individual from administrative abuses.

People in Scandinavian countries are more trusting to their governments and their peers so that might partially explain why they don’t want to bear the costs of using cash.

Money and Power

Let’s say you’re a nasty bureaucrat, and you want to punish a journalist who tries to expose your hidden business empire. Killing a person would cross your moral red line, you might be a crook but not a murderer. What can you do to silence that inconvenient voice? What about calling your police friends and asking them to freeze the journalist’s bank account. That would do the trick. Imagine how exposed the journalists might be in a progressively cashless society where it’s hard to get or spend cash and where every cashless transaction can be blocked by your bank or your government. Bureaucrats and CEOs would become your masters and great power leads to great abuse.

Surveillance Capitalism

Do you eat enough healthy food? Are you a smoker? How much alcohol do you consume? Well, it’s not my business, and you may not even know that yourself. I tried to record my eating habits for one month and, lets say the results did not match my expectations. Do you know who knows all of those answers for sure? It’s your bank and your payment processor such as Visa and Mastercard. They don’t only transfer money, they dig into your receipts and try to understand your spending habits and your lifestyle in general.

What’s wrong with that? Well, some people don’t mind living under surveillance but let’s think on what might motivate a company to collect such data. Indeed, there is only one true motivation for a company: profit. There are people who would love to know your spending habits down to a single transaction. This may sound far-fetched, but if you stop and think deeply about this, all pieces of this puzzle start to click. Next time you get an ever-increasing bill for medical insurance, it might be because of that pack of cigarettes you paid for because one of your friends forgot to take their wallet.

Why Cash is Important

Money is coined liberty, and so it is ten times dearer to a man who is deprived of freedom. If money is jingling in his pocket, he is half consoled, even though he cannot spend it. ― The House of the Dead

Cash is not perfect, and it’s expected to become less convenient in the future. I believe that there is nothing that can stop its demise and that should be worrying. The cash system spreads the spending power of individuals more or less evenly, and it might be argued that having free and uninterruptible transactions are more important than many cornerstones of our society such as the democracy itself. People tend cast one vote every few years, but they may cast dozens of votes every day by preferring one product over another. When you vote for your representative, you have to choose between a few clowns all of whom might not (and often, do not) deserve your trust. When you buy something, you often know exactly what you’re going to get, and you can sue a seller if he over-promised and under-delivered. Our well-being depends on uninterrupted ability to express our preferences and nothing good can come from having a middleman who can potentially disturb that constant flow of “votes”.

Speaking of disruptors: have you noticed that the interest rates on bank deposits are close to zero, and we don’t even include inflation. That is a harsh treatment of anyone who dares to try to save money in a world where central bankers want everyone to go on a debt fueled spending frenzy. Why those interest rates can’t go below zero? The only thing that stops the world from punishing savers even more is cash. If a government decides to force its banks to offer negative interest rates on bank deposits, we would still have the option to withdraw our money in cash and avoid bearing ever-increasing costs of someone’s reckless policies.

To have no cash is to have no exit and that would be pretty scary. Fortunately for us, most central banks can’t ban cash and recent surveys suggest that people are strongly opposed to going fully cashless. That’s good news for democratic countries but some more authoritarian countries such as China can probably get away with banning cash.

Best of Two Worlds?

That would be really nice to combine the convenience of cashless payments and the privacy and self-sovereignty of cash. We’re not there yet, but I think that Bitcoin can solve that problem. Unfortunately, it’s not that convenient now, and it’s also quite volatile which blocks its adoption as a medium of exchange. It can serve as a promising asset class for many investors, and it’s often used as a store of value in countries going through hyperinflation, but I think that Bitcoin’s use cases will expand in the future.


The world is going cashless and that creates a lot of risks for consumers. I like to compare it with smoking: it can feel good when you do it, but it can do a lot of harm in the long run. It’s easy to get hooked on short term positive effects and forget about the long term risks. I enjoy watching scenes from the old movies where everyone seems to be a smoker and people even smoke on their flights. It’s so hilariously stupid, and it makes me wonder what else will be considered stupid and harmful a few decades from now. It seems that the whole world was built for smokers and that, of course, encouraged more people to smoke: it made it convenient. Those days are long gone, and now we’re trying to do the opposite: to make it more and more inconvenient to behave in the ways that can harm us in the long run. I’m pretty sure that exposing our financial data will be one of those things.