Look, I’m not exactly a huge fan of grimy greenbacks, but I do feel a need to point out something that most coverage of current Valley darling Square seems to miss: The “Death of Cash” also means the “death of anonymous transactions” – and no matter your view of the role of government and corporations in our life, the very idea that we might lose the ability to transact without the creation of a record merits serious discussion. Unfortunately, this otherwise worthy cover story in Fortune about Square utterly ignores the issue.
And that’s too bad. A recent book called “The End of Money” does get into some of these issues – it’s on my list to read – but in general, I’ve noticed a lack of attention to the anonymity issue in coverage of hot payment startups. In fact, in interviews I’ve read, the author of “The End of Money” makes the point that cash is pretty much a blight on our society – in that it’s the currency of criminals and a millstone around the necks of the poor.
Call it a hunch, but I sense that many of us are not entirely comfortable with a world in which every single thing we buy creates a cloud of data. I’d like to have an option to not have a record of how much I tipped, or what I bought at 1:08 am at a corner market in New York City. Despite protections of law, technology, and custom, that data will remain forever, and sometimes, we simply don’t want it to.
What do you think? (And yes, I am aware of bitcoin…)
BTW, this mini-rant is very related to my last post: First, Software Eats the World, Then, The Mirror World Emerges.
A good point I hadn’t considered. I wonder though if the entire receipt is saved as data in the cloud, or just the final purchase price. You may have been buying headache medicine at 1am in New York.
Or something that reflects poorly on me that I’d prefer to keep private! I mean who buys anything that late that they are proud of, in general!?
I’m sure we will, as a society, have this debate in the next ten or so years.
I think everyone does at one point or another in there lives buy something 1 am and it does not have to be illegal or embarrassing as we do have perfectly legitimate 24 hrs shops and supermarkets. An yes I have done a big shop at that time of night at Tesco and it was an absolute pleasure walking through isles with no one else around.
The trend is certainly in favour of a more digitised life, and I don’t think we’ll have to wait as long as 10 years before this debate happens more openly. Many people already operate cashlessly (EFTPOS + credit card + paypal) and certainly for larger purchases it’s quite difficult to do otherwise.
According to Daniel Solove in an essay extracted from his book about the (false) tradeoff between privacy and security (http://chronicle.com/article/Why-Privacy-Matters-Even-if/127461/), the problem seems to be more about the power and structure of government; humans require privacy and the risks to society from having data points about everything are not only those typically associated with Orwell’s “1984” (ie. surveillance, control) but echo Kafka’s “The Trial” (ie. power imbalance, information processing). (It’s a good essay)
These are non-trivial issues and in our quest for profit, we may be inadvertently putting our own necks in the noose. Can government (or any organisation) be trusted with unfettered access to our data? Absolutely not. Does that mean we stop creating it? Or do we have to build in the checks and balances that make it incredibly difficult to piece it all together – kind of how it is in the analogue world.
It reminds me of the ‘identity card’ debate that has come up a few times in the past 10 years here in Australia. No one wants to be tracked, and cries of Big Brother (Orwell’s one, not the crappy TV show) dominated the argument. Ultimately I think many people (myself included) are skeptical that we can effectively watch the watchers when we see so many examples of corruption at the highest levels of government and corporation, but what else can we do but try?
Thanks for the link to the essay, I will be reading it.
I think our government is probably not nearly as much the “big brother” as ourselves – do we trust our own society with this kind of data – and also, what kind of a society do we want to live in – one where this kind of data exists and is exploited, or one that considers it sacred and personal? I’m not taking sides, just asking the question.
Agree it’s not really about government per se, although the line between government and corporation looks awfully blurry sometimes (or maybe I’m reading too much Chomsky). I do think most of the current factors leading our society towards a decision here are explicitly economic in nature, and to your point, this debate should be broader in scope to include those human factors that economics often ignores.
I do think that cash (or some equivalent) will survive in one form or another; legally on the fringe, or as a black market. There are too many people relying on its highly liquid and untraceable properties for it to disappear completely.
Look at sweden, i’ve been cash free for years. It is good in all aspects I can think of. No need to withdraw cash and find ATMs, no coins. It’s all good, and I haven’t seen any of the downsides you talk about. Interesting for the future noW that the libor scandal has blown up.
I’d be interested in Swedish data protection law. Do you have access to all your transaction data? Control over it?
I am relating this to what Zuck told about Facebook in an interview. He pointed out that everyone has an inherent feeling to share things with others and FB makes it easy. On the contrary, everyone wants few things to be kept personal and they will not like it to be recorded or seen by others in any way.
These hot start-ups are still hot even without considering personal aspect, because of the proportion or ratio. But ‘Death of Cash’ will never happen until these things are sorted out.
I tend to agree.
I’m glad you are aware of bitcoins, which *can* be used anonymously. You should also be aware of Shire Silver, which is small amounts of precious metal embedded in credit card sized cards and will NEVER have any unique identifiers that allow tracking.
The degree of anonymity provided by bitcoin is a subject of some debate.
At minimum, it’s useful to admit that no system is ever likely to achieve perfect anonymity. Of course, perfect anonymity is rarely the goal – practical anonymity is something very different and, I think most everyone with knowledge of this space believes that practical anonymity is technically possible. All that said, there is some real debate as to how anonymous bitcoin really is. For most people, using may bitcoin add sufficient privacy protection – this probably includes people involved in low-level illegality (drugs, etc…), but for others, specifically in those instances where the State is willing to turn it’s expertise and computing power at unmasking an individual or organization, bitcoin’s protections may be insufficient. (and the failure may not be in bitcoin itself but in the web of less secure technologies that it sits on top of…)Finally, I’m not qualified to make a determination one way or another, I just wanted to point out that bitcoin’s privacy protections may or may not be as great as popularly believed.- See here: http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html- and more broadly here (not directly on bitcoin but relevant and interesting imo): cryptome.org/2012/06/anon-pub-dead.htm
I think there’s something else that gets missed. Several recent psych studies point out that people are better at keeping track of what they’re spending if it’s not done “by the card.” I think it’s probably related to something about improved ability to remember things if there’s a concrete hook (but that’s me speculating wildly). Anyhow, point is that, in the US at least, one of the common ways to help people who have “spending issues” is to make them use cash only – it’s the physicality of using cash (you can use “counters” as placeholders and that seems to work too). I’m not saying we all have cash issues, but that I wonder if some of the financial issues people encounter (not just people with A Problem) might be exacerbated if nothing physical is available to tie financial health to. Thoughts?
Very much in line with the idea of the “death of physicality” in media (books, newspapers, albums) – and the development of new mores in society around “becoming information”
When i was a teenager i just couldn’t have afforded to let my mom or dad know how much i spent on a date.
Just like facebook and twitter couldn’t obsolete “Emails”, i think payments companies will never be able to obsolete “Cash”
The question is, will our society see the ability to keep what we pay anonymous as a basic human right (related to privacy)….or not.
I doubt we can enjoy privacy in payments. I’m sure payment companies make a lot of money by selling our data to third parties. If we read Square’s terms of use, i’m sure somewhere in the corner they must have mentioned that they may use our data for x or y purpose.
Mobile payments are habit changing technologies. As we use them more and more we experience convenience. they change our behaviour and then over a period of time it becomes a must have for us. They give us a lot of comfort and make our lives simple and in return put our privacy for stake.
But is this issue anything new? We have been using our credit cards for years and banks do use and sell our purchasing data to third parties. Its just that, they will now have access to more micro-data as we will make more and more digital payments
Important conversation.
The privacy is dead meme is overbought. There’s nothing in the nature of the known universe that favors anonymity or transparency – it’s a social choice.
The concern I have about our present situation and plotted course amounts to this, Are we making a conscious choice or are we simply
Absolutely agreed. Thank you for raising the issue. Seems to me just the latest in a series of technological disruptions (government e-snooping, Facebook, iEcosystem) where most punters are happy(ish) to exchange privacy for convenience and it is left to campaigners and geeks to hold the line by demanding safeguards.
The problem, as ever, is that electronic cash is just too good a solution to pass up. The safeguard here will have to involve laws to limit data storage. Another obvious possibility would be a standard for e-cash cards which could be bought with real greenbacks. Not as convenient on the charging side, but the advantages for small-scale spending would still be there. Of course, this is doable already and it hasn’t been done. But there’s surely a market for it.
Cash includes everyone. Cashless economies exclude.