The cashless economy is an old idea, one of the staples of science fiction going back to the last century. Like the paperless office, though it has been much touted, it has not always delivered as promised, with ever new bottlenecks appearing which could easily torpedo the whole project. One reason why the government wants the economy to stop using cash is because it would make documentation of transactions that much easier, with the effect tax evasion and money laundering would become much easier to detect. However, government efforts, though laudable, are unlikely to do all that much. The economy is turning cashless because businesses are obliged to accept digital payments rather than cash, even if it brings them into the tax net.
In a way, this is the next stage in Mankind’s millennia of dealing with money. After millennia of using precious metals, gold and silver, along with copper for small sums, and then a couple of centuries of using paper money backed by the metals, the 20th century saw the move to fiat currencies, where metal no longer backed currencies, which existed independently. Digitization has made the paper unnecessary, as most money consists of bank deposits, which are recorded on computer, which replaced the cumbersome old ledgers, usually leather-bound, in which entries were made by clerks using quill pens. Indeed, if the economy becomes cashless, banks will become paperless.
The main obstacle to this, and one which was not addressed by the setting up of three committees, in the meeting on this issue chaired by the Prime Minister on Thursday, is security. Even if stained and worn, currency notes are indisputably money, and once received, can be given elsewhere, no questions asked (which is important for bribes). Cashless transactions are not only traceable, but frauds can occur (and not merely the Nigerian who wants some money).
The whole essence of money is security. History is rife with examples of money (generally paper) which were valued at almost nothing because confidence was lost in the issuer. Apart from chances of fraud, connectivity is an issue. Without it, the certainty of cash will be lacking. This at least the government is aware of. Then there is the whole bitcoin issue. The government already faces the wrath of the IMF on this issue. It has forbidden miners being given a special power tariff. It must not see bitcoin as valuable, but realise that it is the future of money.
