Four reasons why governments are abandoning cash in favor of digital currencies

Whether you are in Russia, China or the United States, the more modern and advanced the economy, the more vulnerable it is to digital currencies. How governments should deal with digital currencies has been discussed for many years. The only problem now is choosing the right time to launch digital currencies. If your country's economy is not so advanced, such as Pakistan or Guam, you may have to stay in the paper age for quite a long time. But most people are not so "lucky".

Cash has been a focus of attention in major countries for many years. Central banks will limit your currency holdings and even control your bank accounts. In some countries, if the amount of a single transaction exceeds $5,000, your identity information will be retrieved by regulators and you may even be interrogated. The currency of the future will no longer be in paper form. Here are four reasons that explain in detail why digital currency will eventually become the official currency of your country.

Reason 1: If you want to manage a country well, you must first control the money supply

In the eyes of the government, there is only control. The government creates welfare systems, grants subsidies, collects taxes, and gives you the power to trade or live freely for the purpose of controlling the people. The modern banking system usually cooperates with the government to control monetary policy. In between, as long as one party cannot guarantee control over you, the other party will take over as a substitute.

Maybe your transaction amount or transaction location is not monitored in real time, but banks can easily obtain the information they need through a simple phone call, email or suspicious activity report (SAR). All your online, ATM, debit and credit card transactions are stored on a server somewhere, and banks are already abusing this information to invade your financial life. This is only a small part of what we know, and there are many more things we don’t know.

Let's take a step back and imagine what an economy that is far from digital would look like. Let's go back to the era before World War II, when computers and plastic card (bank card) transactions had not yet taken over the world. At that time, your country only had cash, no debit cards, no checks, and even less digital currency. This situation would cause a lot of problems for the government.

How does the government know the total amount of dollars in the country or the balance of dollars? Counterfeiting will become a huge underground industry, even more serious than it is now. How to decide the amount of currency transactions? More or less? Now? There will even be a large number of companies that falsify accounts to evade taxes or legal responsibilities.

However, this is definitely a good thing for people because they can use money as they wish and still keep their privacy. This direct way of transferring value is absolutely private. Whether now or in the future, if you transfer money using a debit card, Bitcoin, or wire transfer, a large number of transaction records will be generated, which may eventually endanger your identity or personal security.

If you are a government and have established a partnership with the banking industry, eliminating cash is the best way to take control. Nowadays, people have more smartphones than toothbrushes. Everyone is spoiled and likes the simplicity and convenience brought by digitalization. So the government should make good use of this.

Local digital currencies cannot be used outside the country. China, for example, is currently dealing with capital outflows that threaten the national economy. In a digital currency system, every transaction, deposit, and balance made by the government and banks is generated on your own centralized computer and can be tracked, captured, taxed, or terminated. How "nice" would that be? This is one of the reasons local digital currencies are coming, because it's a much better "mousetrap" for the government, and guess who the "mouse" is?

Reason 2: Get enough benefits from Bitcoin technology before it spreads widely

If you stay in the world of decentralized digital currencies such as Bitcoin for long enough, you will fully realize that the digital currency system is much smarter than the central bank's inflation method. The purpose of Bitcoin is not to become a national currency, let alone a global reserve currency. On the contrary, its existence is only to provide people with a better investment option.

The problem with Bitcoin is that it will take time to become mainstream. Mainstream media, scammers, and hackers who attack Bitcoin accounts and exchanges are all obstacles to Bitcoin becoming mainstream. As long as Bitcoin is tied to crime and ordinary people do not understand the technology, its popularization will never be achieved.

This situation gives the government an opportunity. They are using their vast resources to learn about Bitcoin technology, trying to destroy its system step by step and rebuild it into their own business model. Currently, blockchain technology is still in a gray area between early development and mainstream adoption. The government can take advantage of this to create its own future currency system and guide people to use their own system before they realize the advantages of Bitcoin.

That’s why banks and governments are so receptive to blockchain and are able to make changes in the short term. They know it’s a race against time. Because they have realized that sooner or later people will see that the “great economic system” of banks is just a centralized tool for exploitation; sooner or later people will start using digital currencies on their smartphones; and sooner or later Bitcoin will become Internet 2.0.

Therefore, banks and governments use this open source technology to build a private, centralized network of relationships. As long as the impact of Bitcoin is downplayed, coupled with more transaction monitoring and strong national economic power, Bitcoin will gradually fade into obscurity.

The Internet expanded "virally" within 10 to 15 years of its birth, and Bitcoin is about to enter its 9th year of development. If you want to stop its momentum, now is the right time, and the government is doing so. From the above reasons, it can be seen that the national digital currency system will soon undergo a radical change.

Reason 3: More realistic reasons

If you live in a large Western country with a high GDP, such as the United States, 95% of your currency transactions are digital. People have become accustomed to digital currency transactions and few people use cash. 80% of people from economically powerful countries use bank cards or computers to conduct currency transactions. One of the most notable is Sweden, which announced that it will completely eliminate cash from its system this year. More major countries will participate in this "beta test" one after another.

No longer will governments spend billions of dollars, pounds, or yuan protecting banks' vast paper assets, printing banknotes, and redesigning them every few years to prevent counterfeiting. The entire economic system will become increasingly centralized and ultimately controlled by one entity. There will be endless taxation. Once your benefits are cut, they can make up any excuse they want. You will just have to sit tight.

There will be no competition, and the bank will charge you whatever it wants. You can't take money out of the bank, because all money is in the form of digital code. Even if they want to give you money, they can't give you anything. Their money is their money, and your money is their money. This trend is becoming more and more obvious, and this is how the game ends.

Reason 4: The government’s economic model has failed

I don't need to tell you that your country's economy is in trouble. You know the details better than I do. No matter where you come from, you are part of this global economic recession. You must have heard that negative interest rates are sweeping central banks around the world, which proves that Keynesian economics is a complete failure.

Your economy is in trouble because Keynesian economics, which advocates central bank planning and control of the economy, has been a complete failure, at least for countries that are not at the top of the pyramid. The Austrian free market economic model is the greatest invention of mankind. It is the economic model that made the United States the unrivaled superpower in the 20th century, bringing it the most advanced technology, business and military power. But the problem is that the free market model is full of corruption and deviance, at the mercy of banks, regulators and government policymakers who control the entire market and are determined not to let the market correct itself.

So once the banks and corporations screw up the reserve currency, suck the last of the economic value out of their own “dying” system, and rewrite all the laws to suit their own interests, they flip the chessboard:

This is our new system. Get started now, because it's your only option!

Maybe you think it doesn't matter, just use Bitcoin. Bitcoin can be an option, but what if the national system no longer accepts Bitcoin? When suppliers can't buy or sell goods with your precious Bitcoin, why should they continue to use Bitcoin? When using Bitcoin becomes part of the black market, why should people choose Bitcoin? The Bitcoin in your hand may be "digital gold", but like gold, it can only be useful if it is accepted by the real world. Gold and Bitcoin will not develop as fast as you think, at least not in 10 years.

Who knows? This is just a prediction of the future. Maybe Bitcoin will grow so fast that it will create its own global economy of goods and services! Maybe Bitcoin will eventually become ubiquitous. Or maybe national digital currencies will eventually drive Bitcoin out of the country. We'll see.

In the past, when you went shopping, you were usually free to choose the payment method, cash or card? In the future, all payments will be completed digitally, and you won't have to set foot in any store at all. Your order can be repeated or modified directly on the store's website; your food will be delivered directly to you...

Or maybe it isn't. It depends on whether you are willing to be controlled by this new system. You already know that this system doesn't accept cash, so do you want to join it?