With the Death of Cash, Privacy Faces a Deeply Uncertain Future by@daniel-jeffries

With the Death of Cash, Privacy Faces a Deeply Uncertain Future

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Daniel Jeffries

I am an author, futurist, systems architect, public speaker and pro blogger.

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The Coming Death of Cash and the Battle for the Future of Money. In One Future We have a Private, Anonymous Alternative to Cash but in the Black Mirror Future the Money in Your Pocket Knows Everything About You.

Cash is dying.

And with the death of cash, privacy faces a deeply uncertain future. In my article on privacy coins I said governments would drive physical cash to extinction in twenty years. Now I feel it won’t even take that long.

China’s relentless push to build a state backed digital currency, the economic disaster the global pandemic wreaked upon the world, and the incredible rise of decentralized cryptos like Bitcoin and Ethereum has accelerated the timeline to kill off cash.

The only real question now is what will replace it?

Will it be decentralized, borderless, open source, privacy preserving money like Monero, or will it be nation state driven digital surveillance money?

More and more it looks like nation states have the advantage.


Open source communities started off strong, releasing Bitcoin and privacy based alternatives like Zcash and Monero before centralized powers knew what hit them. But nations states were watching very closely and they’ve learned and adapted fast. Almost every central bank in the world is rapidly making plans to build their own digital currencies.

That means there are two very different visions for the future developing.

One is where cash is killed off and nation state digital money is the dominant form of money. The money is tied to your centralized identity and your location data and everything you do is recorded by powerful government computers that understand more about you than you do about yourself. Decentralized money is also outlawed and crippled by draconian laws.

The second scenario is where nation state money smashes cash but we see a parallel economic operating system of open, privacy preserving digital money developing alongside that nation state money. The open money mirrors the same anonymous properties of cash.

Notice that in both scenarios, physical cash is illegal and no longer getting produced.

I see no future where physical cash still exists, other than in the black market, where some of it survives being rounded up and burned. But eventually physical goods wear out and as the old bank notes degrade there won’t be a central bank printing more of them and they will slowly disappear.

These are two very different futures.

In one of these futures you control your money.

In the other, your money controls you.

The Battle for Tomorrow

Make no mistake, the battle for the future of money is a battle for control.

Who has control now? Who loses control? Who gets more control?

Whenever the structure of how we do things in society shifts, the balance of power shifts with it. Someone gains more power and someone loses power as control changes hands.

We’ve seen this pendulum swing back and forth again and again throughout the arc of history.


Above: Roman Coin stamped with the face of a long dead ruler

In the west, the scattered power of decentralized “city states” in the time of the Greeks was replaced by the centralized might and majesty of the Roman Empire. But then the empire crumbled, replaced by a collection of shifting nation states bound loosely by Christianity and surviving Greek ideals of art, architecture and math. Decentralized to centralized and back again, over and over throughout human history.

Money’s evolution mirrored the movement of human history. It evolved organically over time, as people wanted to find a way to replace bartering. Money became a promise. We all agree its worth X and we can trade it for anything from horses to cheese.

When nations were unstable, money was more local. It often changed as fast as the rulers who lived and died by the sword. They would conquer territory, only to lose it a few years later.

But as people began to trade with people they didn’t know they needed more universal kinds of money. Why would someone in the sprawling steppes of Mongolia or the hills of northern Africa accept coins stamped with the face of a local ruler who had no power over them? So universal money developed that international traders could exchange back to local money later.

On the silk roads, international traders paid in silk for any other good or service because silk was so valuable. Traders knew they could easily sell it back home for a very consistent price. Silk was the one of the first true international currencies, facilitating trade between nations, tribes and kingdoms like never before in history. At other times, different goods served as a stand-in for money, like pepper, salt, and scraps of tree bark. Salt was so powerful as a form of money that the word “salary” comes from the salt rations given to Roman soldiers known as the “salarium argentum.”

It was these universally loved commodities acting as a store of value that swiftly replaced bartering and that was a good thing. Bartering is a horribly inefficient system. It makes it hard for everyone to get what they want, when they want it.

Maybe if you wanted to trade cheese for bread, that wasn’t so hard. Neither commodity takes up a lot of space. Both people just carry cheese or bread in their satchel and do the exchange.

But what if you’re rich in horses and you want to buy six furnaces for three horses?

Now the furnace maker also has to have a way to keep horses, so he’s in the stable business too. If he doesn’t want your horses then you can’t buy your furnaces. Since you’re rich in horses and nothing else, you can’t give him anything else. Meanwhile someone else in town desperately wants horses to take his family to another town but he’s only got iron shovels and the horse breeder doesn’t need those things.

Symbolic money made everything easier. The guy sells his horses directly to the family that wants to move. Then the horse breeder takes his money and buys furnaces. The furnace guy can buy whatever he wants and he doesn’t have to worry about the caring and feeding of horses.

The rise of nation states mirrored the rise of money. As tiny tribes gave way to fiefdoms, raiders and wars pushed and pulled borders into more stable configurations and money evolved into more universally accept standards. More and more we saw precious metals like gold and silver come to dominate what people saw as money. Then precious medals were pressed into coins with fixed values. After coins, we started using little pieces of paper backed by stores of precious metals. Eventually we cut the ties to precious metals all together, as countries went off the gold standard.

But the physical evolution of money has reached its peak.

The War on Cash

Just as we saw chemical film evolve over a hundred years, getting more and more refined, only to get suddenly and swiftly eclipsed by digital cameras, so too will paper cash suffer the same fate. It will get replaced by fluid, easily transferable digital money.


The move to cashless societies started years ago. China is already a largely cashless society, a massive and swift change from only seven years ago when I visited in 2014 and cash was still king. Only seven years later, 86% of all people in China use mobile payments, skipping the ancient Visa and Mastercard PoS system in favor of ubiquitous QR codes.

In late 2016, Prime Minister Narenda Modi suddenly banned most of the country’s currency with the stroke of a pen. It was supposed to cut down on corruption and get people paying their taxes. They backtracked a year later but that’s only because they moved too fast. Australia tried to ban using cash for purchases of 10K or more. The measure failed but these early failures don’t mean the war is won, just the battle.

The ideas won’t go away and they’re a clear signal of how governments view cash:

As a threat.


Because cash gives nations very little control. They can’t easily see where it goes and who has it and who spent it on what.

Nation states have gotten very used to that control. Today nearly every person on Earth lives under the power of a nation state with a clear border, a coat of arms with special colors and symbols known as a flag, and a patriotic song. And as nation states became the ultimate power on the planet they seized control of the power to print money and eliminated anyone else’s power to create it with laws and force.

Initially, physical cash emblazed with the symbols of that nation state were the ultimate source of prestige. Having your own money meant you were a full fledged, independent power. Physical money was a source of pride for a nation.


Above: Old Diner’s Club card — not related to me (I don’t think)

But that started to change as money got more and more virtual. As it got
more virtual, it got more easily trackable. It lost its anonymity. As credit cards rose to power in the 1950s and 1960s, money and where it was flowing became increasingly transparent, with physical ledgers held by private companies like Diner’s Club and Visa showing that movement in great detail. As computers and networks took the world by storm in the 1980s and 1990s, all those ledgers became digital and ever more transparent. Governments peered into those ledgers and controlling the movement of that money became even more powerful than printing the money itself.

Now governments are used to seeing every transaction and where it goes and they don’t want to lose the power. Killing off cash would eliminate that anonymity forever. Nobody could so much as buy a lamp at a tag sale without them knowing about it.

There’s just one problem. They can’t get rid of cash yet.

As we saw in India, people revolted. They refused to turn the bills in and they used them anyway. After a year, India had to put the bills back into circulation because their digital system wasn’t ready to handle the load. In Australia the pandemic crushed any delusion that Australia already had a digital payment system strong enough to replace cash and they knew small businesses would fight so they scraped the plan to stop cash payments above 10k.

Tofinally kill cash nation states need more than laws. People won’t accept the death of cash until they have a powerful alternative that has killer features they didn’t have with today’s money. A dominate technology doesn’t go away until a new one comes along with almost all the features of the old tech and a bunch of new ones nobody can live without.

And that’s where digital money comes in.

True digital money didn’t come from a nation state.

The innovation started with Bitcoin.

But it won’t end there.

Bitcoin was just the cave man’s fire of the new world.

The Empire Strikes Back

Most nation states were terrified of Bitcoin and the international, decentralized nature of it. Nation state leaders have enjoyed control of the money supply for so long that they can’t imagine an international currency like silk or salt anymore.

Nation states reacted to cryptocurrency with fear and rage. When Facebook tried to launch the Libra, congress and other world governments went after them. When Telegram tried to build a fully scalable digital currency that could easily fly over encrypted messengers, the US government crushed them, despite the fact they raised all that money from accredited investors.

But while the US and other governments were reacting in fear, China was watching blockchains closely and they understood their power before any other nation on Earth. While other superpowers were sleeping on blockchain, or laughing at Bitcoin, or striking out at it in blind, animal fear, China got building.

Of all the swirling variables that will kill off cash, it’s now China’s digital Yuan that will light the fuse that speeds us to the explosive and sudden death of cash worldwide, not laws or Bitcoin.

The Chinese Dream

China’s digital payment system has world powers spooked and it should.

They’re years ahead of western powers.


Above: The Chinese Dream posters in China

They’re already rolling out tests of the digital Yuan, doing airdrops and letting citizens buy things with free money. Based on videos and reviews I’ve seen, it’s a slick platform. It lets users exchange money whether they’re offline or not, just by touching phones. It syncs the transaction later.

China was smart. Instead of seeing the wild price fluctuations of Bitcoin that had idiotic western economists like Dr Doom railing against it, they saw a way to warp the initial libertarian design of Bitcoin to build a centrally controlled powerhouse of digital surveillance. They saw it as a way to build a state sponsored system that can easily cross boarders, break through international sanctions with ease and eventually even smash the US dominated international banking system. They took the privacy preserving, decentralized foundations of blockchain and threw it out the window, replacing those idealistic traits with a tool of centralized control, a permission based, dictated “consensus” model that sets those original utopian ideals on fire.

The Chinese also saw that a decentralized, borderless currency controlled by the hard to change rules of an algorithm meant governments could no longer devalue or inflate the money by removing some from circulation or printing more of it. They would lose the ability to impose currency controls or tell you how much you can take out at a time or how much you can send to someone else. Privacy focused cryptocurrencies were even worse, because it means everyone gets the same privacy, backed by ironclad cryptographic protocols that can’t be altered because investigators want to take a shortcut rather than do real detective work.

China saw all that coming and wanted to get ahead of it before borderless money took over the world because by then it would be too late. So they moved fast. They banned Bitcoin exchanges in China and forced Bitcoin miners to register. Then they built a centrally controlled version of digital cash to swiftly crush decentralized money.


Above: The Belt and Road Show sing-a-long

They’ll seed the currency through their belt and roads initiative, which has the Chinese investing heavily in developing economies, building roads, bridges and infrastructure or offering loans to do it. In no time, they’ll expect developing countries to pay back those loans using the digital Yuan. They might face some resistance at first, but eventually small countries that don’t have heavily built payment and banking infrastructure will see how simple and easy and painless it is and they’ll start to use it more and more often. They’ll also see the backwards, archaic and absurd system the US and Europe still uses for banking and skip it entirely.

Want to send money through the western system? Write a note, sign it, scan it, and fax it to someone. Then maybe a day later someone gets to it. A few days later, your wire appears across the border, as long as the teller didn’t screw it up and the wire didn’t bounce back. Of course, that’s if someone in a third world country can even get a bank account in the first place, or if a small country business can even comply with all the FACTA requirements if they want to do business with Americans.

Soas they struggle with the archaic international banking system built with a thousand ill conceived and conflicting choke points, they’ll also fire up their digital Yuan wallet on their smart phone or use a beautiful digital dashboard on their desktop and they’ll zap money across the world in seconds using the Chinese system.

Guess which one they choose after that?

While the US abandoned their leadership and investment in other countries, turning inward with a disgusting, selfish, absurd “me firstnational populist view of the world, the Chinese were investing in the future. While Americans fight a pointless and destructive culture war, the Chinese are out investing in 70+ different countries across the world, the ones with unstable governments and piss poor infrastructure. They’re buying the future with a few roads and bridges, while the US builds walls.


Of course, the western world doesn’t want to see a Chinese nation currency come to dominate the emerging worlds of Africa and the far east. The other central banks of the world are racing to build their own digital currencies to counter the threat but they’re already incredibly far behind. Italy wants to go totally cashless. So does Europe, which intensified its work on a digital Euro. But western powers are up against a beta test of a live system in China, while they’re still drawing up plans on the white board.

Western powers will eventually catch up though and soon we’ll have an all out arms race of nation state digital currencies, all vying for supremacy. Some of them will be hampered by horrible IT and programmers, some will have terrible designs, some will screw up security and get hacked, but some of them will get it right and the nations that fail will simply adapt to copy the successes.

And with those new central bank digital currencies (CBDC) countries have full surveillance right in your pocket at all times at all times. Every transaction you ever make. Everywhere you ever go. All of it tied to your identity and history and geolocation data.

A decade after that you won’t file your taxes, they’ll get yanked out automatically every time you buy a second hand toaster at a garage sale. If there’s a mistake, you’ll call to fight it or have an accountant try to get you a refund while the government takes a free loan from you for a year. The money won’t even pass from central banks to private banking institutions, it will go right into your pocket and those panopticoins will know everything you ever did from cradle to grave.

Central bank currencies are coming and coming fast.

And despite naive proclamations to the contrary in the crypto community, people will absolutely use those central bank currencies. Even more, they’ll be proud to do it.

The Nature of Trust and the Failures of Decentralized Money so Far

Of course, they’ll only be proud and happy when their government is in good working shape.

When things are going right the abuses in the system won’t effect enough people to rise above the public’s radar. Only the “bad guys” will pay the price, but probably not anyone that average citizens know personally, so the system will mostly work for most people. They won’t care about privacy because they’re just buying diapers for their kids and books on Amazon and coffee in the local shop.

But when things go wrong in a government, like we’re seeing now in the United States with the Capitol insurrection, their ideas will change fast. A nation state backed currency is only as good as the government that controls it. You have to trust it and in order to trust it you have to trust the people behind it.

You can’t think of an institution as a fixed concept.

America is not a fixed thing. It’s a collective of people behind every government agency that’s always in motion. IBM is a company but the company is always changing. That’s because the people behind it change. The Department of Justice isn’t the Department of Justice unless you ask which Department of Justice? What year? Who was running it? There is no Department of Justice, there is only the people running it at the time.

Trust is based on who’s in power and what they do with that power.

Trust is a moving concept.

And trust is often broken. It only takes one breach of trust to shatter it forever. A man might be loyal to his wife for ten years only to cheat on her and destroy all that trust in a single instant.

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust,” wrote Satoshi in 2009.

When governments go crazy, they’ll now have the power to pass that crazy on to you. Want to take your hard earned money and move to another country with less crazy people in power? You can’t. Currency controls are now in place. Your money is frozen. Spend it in the country or nowhere else.

When China eventually ties their social credit score to their currency they’ll be able to stop someone from getting on a bus or buying anything but basic food because they expressed an opinion on WeChat that the Party didn’t like at all.

Maybe you think all that’s a good thing? Shouldn’t a nation state hold the
power to control the flow of money in and out of the country? They’re just trying to protect their citizens and the economy from the devastating effects of a crisis.

But you might feel differently if you lived in Iceland, which adopted strict currency controls after the 2008 financial crisis and they didn’t lift them until 2017, a decade later. That meant that everyone living there was only under the illusion that they owned their money when they never really did.

Want to buy a house overseas and move your family there with your hard earned income because it holds the prospect of a better life? You can’t anymore. Want to buy shares in Tesla or another tech stock that’s going up 1000%? You can’t. You can only invest in local businesses that are suffering and making negligible or negative returns.

Of course, a lot of folks in the crypto space feel that nobody in their right mind would choose a nation state backed surveillance coin over a borderless, decentralized, privacy protecting system. That’s just selection bias at work. They’re in the community because they believe in decentralization but it’s a super small community.

The average person doesn’t give a rat’s ass about privacy because they don’t know what it means. I’ve got nothing to hide, they think, because they’ve never really thought about it, or lived in a world where a wicked government knows everything about them.


Above: Stasi in East Berlin

They never lived in East Berlin where the Stasi could show up at your house and take you away for any reason, at any time. They never lived in Venezuela where the economy collapsed and it suddenly cost a year’s salary to buy bread.

That’s why they’ll quickly adopt whatever centralized digital currency their nation shoves down their throat. They won’t even think twice about it. If governments make it easy or mandate its use or both, that will just accelerate the adoption curve because they’re up against clunky, ugly, decentralized currency experiences that still leave much to be desired.

In The Five Keys to Crypto Evolution, I wrote that for decentralized, nationless cryptocurrencies to take off they need to be more than just money. They need to be a complete and total ecosystem. The system needs to distribute the money, exchange the money automatically, and offer amazing goods and services in that money all without ever needing a change back to traditional, nation state fiat currency. Decentralized Stacks (DecStacks) need to gamify the delivery of money, remove any and all centralized choke points like exchanges and create a super compelling ecosystem of goods and services that nobody can resist.

But they’ve failed so far.

Instead all they’ve done is make minor iterations on the Satoshi vision. They’ve made the money go faster with new kinds of faster blockchains. They figured out how to layer in privacy with coins like Zcash and Monero. They added new ways to upgrade the chains without forking them in Tezos.

But beyond that it’s just more of the same.

There’s still no killer app of things to buy with crypto alone. There’s still no clever way to distribute it beyond airdrops and miners and centralized exchange choke points. Those are just the old world of centralized distribution grafted onto the new world. There are decentralized exchanges but you already need crypto to use them. You can’t change fiat there. The distribution in crypto mirrors the top down distribution of central banks, with miners and exchanges replaces central banks and commercial banks.

We need a revolution in distribution, economics and commerce for decentralized money to really take off.

At best crypto remains a speculative asset that’s making a few folks rich but that’s it. The user experience is still hideous and convoluted. There’s little to nothing to buy with it. It’s still nothing but an alpha test of the future of money.

If we want to see the second scenario come to pass, with privacy preserving decentralized money existing alongside centralize digital currency that is now inevitable, we have to move a lot faster and get a lot more creative. I think we’re running out of time. The hour is ripening to our doom because CBDCs are coming and coming fast.

Will there be anything to stand against them by the time governments mandate their use and ban all the physical cash?

This is the End of Everything that Stands

A great friend of mine passed away this year and it got me thinking about the crypto user experience and what it means for all of us.

He and I got into crypto together many years ago and it served as one of the long running foundations of our friendship. We made a pact that if one of us ever died, the other would help his family to find and sell all his crypto. I’ve been working through all his wallets and files to get it all taken care of for them. He’s also helped other non-tech savvy friends set up wallets and buy crypto and I’m helping them too.

And every time I sit down to do yet another computer forensic analysis and jump through five hoops to find a password and use the two factor auth that’s tied to his ancient and nearly dead smart phone, I think “who the hell can do this besides a skilled tech person? How the hell would my mother ever do this, much less my grandma?”

Even worse, I think “who the hell can do this for me now? My money will die with me.”

I don’t know anyone skilled enough, that I trust enough not to run off with all my coins.

My friend and I trusted each other completely. I will make sure his family gets every coin and he would have done the same for me. But it’s not hard to imagine someone less scrupulous with the power I have right now. It would be easy to fire off a few coins to my own wallet and who would ever know? Certainly not the family. Luckily, my friend chose wisely.

Others might not be so lucky.

The hideous user experience is the problem. It’s not developing quickly enough for it to catch on with regular people, meaning anyone without a background in computers or an engineering degree or someone who knows somebody with an engineering degree.

And to really catch on it has to be easy to use and easy to get started with. I’m talking three clicks. Not three clicks to set up a wallet and then three weeks of wiring money and getting KYCed on an exchange and making sure you have your passwords memorized really, really well so that you don’t lose all your money forever with nobody to call, like the guy who locked up 7002 Bitcoins worth 220 million because he can’t remember where he put the piece of paper with the password on it.

While decentralized money struggles to get out of the starting gate, China is beta testing an awesome state backed platform.

Since western powers are falling behind, they’re falling back on attacks
against decentralized money that makes it even harder for privacy persevering money to gain traction.

The Financial Crimes unit in the US tried to ram through a new, midnight set of rules before the outgoing administration turns over to new leadership. It forces exchanges to keep names, phone numbers and addresses every time someone sends 3K. So if a mom sends money to her daughter, the exchange needs to keep both their names in one of those highly secure government databases that never, ever get hacked and spews all of our information onto the dark web or into the hands of other hostile nation states.

But make no mistake, even though western powers are behind China, they’ll catch up. They can’t afford not to catch up because money is power. But it’s not just power for the person who owns it. A millionaire or a
billionaire wields a lot of power but their financial strength is dwarfed by a much, much bigger force.

Whoever prints the money holds the true power in the world. The power to mint money is the power of the Gods and nation states know this better than anyone.

They have all that power now and they don’t want to lose it.

To keep it they’ll have to kill off cash and eliminate the threat of international, borderless, private currency.

Unfortunately, Satoshi may have given them the very weapon they need to do it.

Satoshi dreamed of creating an uncontrollable, decentralized system that didn’t require centralized trust but in creating the blockchain he/she/they may have unwittingly given central powers the chain to bind us all forever.



I’m an author, engineer, pro-blogger, podcaster, public speaker. My upcoming book, Mastering Depression and Living the Life You Were Meant to Live tells the story of how I battle depression and still live a big, bold and beautiful life that I’m proud of every day.



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