Several financial developments are converging, and together they create the possibility of significant changes in our money and the ways we transact, around which there should be awareness and open discussion.
Firstly, there is the general move towards cashless payments. It has become normal to pay without cash, and there are places where almost all businesses now possess the hardware to rapidly process cashless payments.
In fact, the pendulum (if it is a pendulum, a word which implies a move back later) has swung so far towards cashless that there are now operators in some locations that will only accept cashless payments.
This varies by geography, but there are places where it is apparent and has happened rapidly, and seemingly without discussion.
Secondly, there is talk of CBDCs, as governments around the world explore the prospect of switching the money supply to central bank-issued blockchain-based digital currencies. These diverge from decentralized cryptocurrencies such as bitcoin by being absolutely centralized and under the control of the issuer.
Thirdly, there were recent developments around Tornado Cash. This was not a widely reported story outside the crypto world, and may not have entered mainstream awareness.
However, what happened has implications beyond the crypto bubble. Tornado, a decentralized open-source tool which enabled privacy by allowing users to obscure their crypto transactions, was declared off-limits by the US authorities, with its use by criminals given as the reason for sanctions.
Crypto wallets (including the vast majority who are legitimate users) that had transacted with Tornado were frozen out of some crypto platforms, and a Tornado developer was arrested in Holland. At this point, it looks as though there will be legal challenges to the sanctions, on the grounds that they target code rather than individuals.
And then, finally, we have the most critical factor in the current state of digital money, which is Bitcoin, along with the many other cryptocurrencies and blockchain developments that have followed in its wake.
How Do These Things Tie Together?
Take those first three factors: a move away from cash, research into CBDCs, and the shutting down of a popular crypto privacy tool, and what patterns are apparent?
One answer is that we…
