Less cash and more cryptocurrencies
Crypto

Less cash and more cryptocurrencies

By Marco Cavicchioli - 14 Sep 2019

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For some time now it seems that a real war is beginning against the use of cash which could do well for the spread of cryptocurrencies. 

Initiatives aimed at substantially reducing the use of banknotes by replacing them with digital currency are multiplying. 

In China, the Central Bank would even be ready to launch its own digital currency, in some ways similar to Libra, the stablecoin of Facebook, to try to convince the Chinese to stop using banknotes. 

But even in some European countries, the fight against cash seems to be one of the priorities of governments. In fact, apart from some countries such as Sweden, where over time the population has largely voluntarily abandoned the use of banknotes, in many other countries, such as Italy, cash is still used for most payments. 

The reasons for this are always the same: fighting criminal activities, money laundering, tax evasion and undeclared work. 

Banknotes are perhaps by far the least traceable method of making payments, especially if delivered by hand, making them a perfect means of payment for those who do not want the state, law enforcement agencies, or government agencies to be aware of the transactions. 

For example, in Italy, new rules are coming into force to monitor the transactions of those who, within a month, will move on their accounts more than 10,000 euros. 

Banks and other financial institutions will provide the Financial Intelligence Unit of the Bank of Italy (FIU) with the names of those who will exceed that ceiling, and the FIU will then be able to decide whether or not to initiate investigations into the origin of that money. 

In the country has even been proposed a “cash tax” to be applied to withdrawals of banknotes at ATMs. 

However, it is not only criminals, or those who have something to hide, who appreciate the total anonymity of cash transactions. Instead, there are many people who want to maintain a high level of privacy with regard to their monetary transactions, even if they are absolutely legitimate. 

Therefore, the fight against cash could favour the spread of cryptocurrencies, and in particular anonymous cryptocurrencies with a high level of privacy. 

Also because, contrary to what is commonly believed, according to some studies bitcoin, for example, would not encourage recycling. On the contrary, it would help the police to fight it. 

Bitcoin is not a completely anonymous currency, but only “pseudo-anonymous”. Moreover, the use of intermediaries such as exchanges obliges users to reveal their identity, making it much easier in case of need to trace the names of the owners of public addresses used for example to send or receive BTC to and from the exchanges. 

So why could the fight against cash favour cryptocurrencies? 

First of all because there are cryptocurrencies with privacy levels far higher than Bitcoin, such as Monero, Zcash or Grin. 

In these cryptocurrencies, the transactions on the public blockchain are recorded and encrypted, so that observing them it is not possible to acquire information about their amounts for example. 

In addition, if you do not use exchanges, or if you use decentralized exchanges without KYC, bitcoin can also be used anonymously enough to not easily allow you to trace the identity of the wallet owner. 

Therefore, the less cash is used, the more it is possible for its users to move towards the use of cryptocurrency with a high level of privacy, or bitcoin only with decentralized and anonymous tools. 

In other words, the fight against cash could prove over time to be a sort of “favor” done by states to anonymous cryptocurrency, since anonymity will still remain one of the needs of many users, regardless of the reasons that may lead to prefer anonymous transactions. 

The key role in all this will be that of the financial intermediaries, such as the banks, recognized and authorized by the States to operate as such, and sources of information that will be transmitted to the public supervisory offices to which the task of carrying out the checks will be delegated. 

Decentralised cryptocurrencies allow those who so wish to avoid both traditional intermediaries and any other type of intermediary, making it impossible for states to obtain information on transactions. This is probably not as easy as many might think, but it remains at least possible. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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