How to live without cash?

If cash disappears, then all everyone will have is electronic money stored in the bank. This is a process of strong economic control. The power of the central bank will be infinitely magnified, and the nerves of the financial system will become extremely sensitive.

    The hot August is finally here. In the impression of Chinese people, "8" is a festive number, which means making money. However, for China, which is in the Internet age, "making money" has added a more futuristic meaning. In the hottest time of the year, Alipay and WeChat Pay have started fighting again in August, which represents wealth. Almost at the same time, they launched cashless theme activities. WeChat Pay launched the "August 8" cashless day activity, while Alipay went even further and directly designated the entire August as cashless month.

     For ordinary consumers, this is another festival for the rich to compete for wealth and pick up money everywhere. And this money must be picked up online. You can't see or touch it, but it can satisfy your needs for food, drink and entertainment. Whether it is Alipay or WeChat Pay, the biggest wish of Internet payment institutions is to eliminate cash. When Ant Financial's MyBank was established in June this year, Jack Ma emphasized that Alipay (Ant Financial) is not competing with VISA and UnionPay, but cash. A few days ago, after the "Administrative Measures for Internet Payment Business of Non-Bank Payment Institutions (Draft for Comments)" came out, the Internet was almost unanimously criticizing the central bank for its overbearing suppression of private payment institutions. Although it is true that the central bank's introduction of such a management method is suspected of "protecting its calf with deep affection", we should also see that the emphasis on payment security and payment channel characteristics is also the main content of the management method.

     Therefore, from this point of view, the overall development of Internet payment in the future will be towards scenario-based and channel-based directions. Although the core resources are not in the hands of Alipay, they are still encouraged to fully occupy the market in form. This also implies that with the development of the Internet economy, the official is also pushed to realize cashless consumption.

No need to count money to live

     As for cashless payment, we have already experienced it in many life scenarios. Although payment institutions are young and vigorous, they have to admit that the biggest contributor to the cashless payment is undoubtedly bank cards, especially the powerful credit cards, while Alipay and others only occupy a place in small and scattered consumption scenarios. No one will use Alipay to buy a car or make a huge transfer. However, it is the major payment institutions that will make a leap forward in cashless payment in the future.

     Let's first take a look at how Denmark, which has been making a lot of noise recently, practices cashless. In May this year, Denmark implemented a series of plans, including no longer forcing retailers nationwide to accept cash, and linking the mobile payment software Mobile Pay with bank accounts and national ID numbers, etc., aiming to promote the popularity of mobile payments and strengthen national supervision of mobile payments. Currently, one-third of the Danish population is using mobile payments. Denmark plans to achieve cashless nationwide from January 2016. Europe is the region with the highest mobile payment penetration rate in the world, and Denmark is at the forefront of the world.

     Most non-cash payments in Denmark are made through bank cards, and more and more people are using mobile payments. Mobile pay is one of the main mobile payment providers in Denmark. This application installed on the phone also has a scan code payment function similar to Alipay. For the Danes, they will soon say goodbye to the days of counting money . As a typical Nordic country, a developed economy, high welfare and a small population are all necessary conditions for them to achieve full cashlessness. In daily consumption, Nordic people have little chance to use money, and countries like Denmark and Sweden have not joined the euro zone. Therefore, for the Danes, saving the large expense of coinage not only saves the people from the trouble of counting money, but also saves a lot of expenses for the government. In addition, cashlessness can also achieve the goals of environmental protection and reducing crime rates.

More than just saving paper

     Most ordinary people think about cashless from the consumption function of physical currency, but it is not that simple. All we can see is M0 (cash in circulation). The amount of virtual currency in the financial system is several times more than the currency in circulation. If there is an economic crisis like the one in Greece, there will be a bank run, and at this time, the cash in circulation will not be enough to redeem all financial assets. If a similar crisis occurs in China, it is conceivable that the government will definitely not allow bank runs and bank failures to happen. The only thing it can do is to release liquidity as much as possible. In addition to crazy over-issuance of currency, negative interest rates are not impossible. By then, the inflation caused by the chain reaction will be difficult to estimate.

     Of course, this is just what would happen if a crisis occurred. Under normal economic conditions, completely cashless is not a perfect thing in China. In fact, the one who wants cash to disappear the most is not Jack Ma or ordinary consumers, but the central bank. No cash means more control. After all, cash, as a physical object, can be controlled by individuals. No matter how the central bank regulates it, I don't have to hand it over.

     If cash disappears, then everyone will only have electronic money in the bank. This is a process of strong economic control. The power of the central bank will be infinitely magnified, and the nerves of the financial system will become very sensitive. In addition, the abolition of cash will lead to people having no privacy when paying, and will lead to an increase in criminal activities such as hacking and bank card fraud. In addition, if the payment system is paralyzed or a large-scale power outage occurs, people will not be able to buy daily necessities.

A beautiful illusion - Bitcoin

     To talk about cashless, we have to talk about the perfect form of achieving it. In fact, Bitcoin is one of the forms in theory. Why? It almost never has the problems mentioned above. It is not related to reality, not related to any country, not related to any issuer, and has a fixed quantity, which best reflects the independent logic of virtual currency.

     Why did so many people pursue Bitcoin when it appeared? It is because it is a decentralized currency with decentralized storage. Its entire logic is exactly contrary to the global central bank in the cashless world. Because it does not need the credit endorsement of national sovereignty, but has the function of perfect currency, there is no need to worry about the central bank's over-issuance, exchange rate fluctuations and other issues when using Bitcoin, and privacy will be absolutely protected. Therefore, this is a zero-sum game process. Either the whole world uses Bitcoin, or no place uses it. Of course, many people have seen that Bitcoin is actually just a utopian pursuit caused by people's dissatisfaction with the current monetary system. After all, this is a diversified world. It is a distant ideal to let the whole world use a unified currency, not to mention Bitcoin-unregulated and advocating extreme equality of monetary rights. Because of speculation, Bitcoin still reflects a considerable value, but its true value is destined to remain at the theoretical level.

     Mobile payment has indeed greatly facilitated the lives of Chinese people and is an irreversible trend in future society. However, China still has a long way to go before it can go completely cashless. However, there is no doubt that Bitcoin could never be China's cup of tea from the very beginning.