Tuesday, December 29, 2015

Some potentially severe negative implications of a cashless society that's fully dependent on digital wallet services as storehouses of value and for electronic payments

If societies become cashless, or more appropriately free of physical/printed currency, there will be some positive and some negative implications. A major negative implication is that at all times, your money will be with someone else [be it a bank or some digital wallet service such as m-pesa or Paytm or MobiKwik]. It’ll never be with you. Your money, essentially, is your only as long as the service holding your money is solvent and benign. If it becomes insolvent, it could, at least theoretically, confiscate some or all money of some or all of its customers [especially if some nefarious, special-case clauses are hidden deep in its terms of service agreement]. If the service becomes malign – say due to a corrupt/rogue employee – your money could get partially/fully lost.

Further, a rogue government could act outside the law and could force a digital wallet service provider to debit the account of someone without his knowledge and/or consent, on malicious pretexts.

In essence, with digital wallets, you’re trusting someone else with all of your money at all times, and hoping that your money is safe. The probability here is not 1.

A related prediction by me [from February 2011] on the future of paper-based currency is here.

No comments:

Post a Comment