Brett Scott is a journalist and financial hacker who writes about the intersection of money and digital technology. His work can be found in publications such as: Guardian, new scientist, Wiredand CNN.

Here Scott shares five key insights from his new book. Cloudmoney: War for Cash, Cards, Cryptocurrencies and WalletsListen to the audio version read by Scott himself in the Next Big Idea app.

1. The US dollar is three different currencies with the same name

We are often led to believe that digital payments are an advanced upgrade to physical cash, which is highly misleading. live under a hybrid currency system with The first is physical cash issued by government agencies such as the Federal Reserve. The second is a bank-issued digital dollar. The third is issued by companies such as PayPal.

Imagine me walking into a casino and handing over $100 in government cash in exchange for $100 in casino chips. The casino took ownership of my cash and issued me casino chips, a type of private money. Here are his two types of currency: government cash and privately issued casino chips that can be exchanged for government cash.

of this image privately issued tip Very helpful when trying to understand the banking sector. When you deposit cash with a bank, the bank takes ownership of the cash and issues a “digital chip” that can be used within the bank’s payment system. They can also issue far more digital chips than government cash, and vast amounts of what we call “money” are actually issued in this form by commercial banks. Players like PayPal can take ownership of bank-issued chips and issue their own chips.

2. “Cashless society” is a top-down euphemism

A “cashless society” is one that is completely dependent on digital chips issued by banks and companies. Calling this a “cashless society” is like calling whiskey a “beerless alcohol.” avoidance. I was recently in a ‘cashless’ pub in London. To pay for one small item, at least he had to download an app that required him to interact with three giant companies. Using Google or Facebook for identity, and for digital money he was to use two commercial banks and Visa or Mastercard as a means of messaging to those banks. “Cashless” is a euphemism for a distant conglomerate of data-hungry, profit-seeking corporations trying to get between me and the people I’m going to pay.

The move towards a cashless society is portrayed as if driven bottom-up by consumer choice. The truth is that there have been top-down wars over cash for decades, driven by institutions that want to make us more likely to choose digital payments. It includes banks, payment companies, fintech companies, big techs, and even governments. A commercial player has two goals for her: making a profit and getting data. Politicians have one goal: to increase their power.

3. Physical cash is the bike of payment

People often talk about convenience as if it could be infinitely increased with more technology. As technology advances, we think we’ll have more leisure time, but in reality, we’re busier than ever.

Convenience is a relative concept. Imagine a person in the suburbs of Los Angeles wondering how to get to work 10 miles away from town. In this context, walking seems inconvenient and a car seems convenient, but think about why this person lives ten miles from his office in the first place.this is because car’s. Technology is rarely used to increase leisure time in a capitalist economy.rather used to expansion Accelerate the economic system. When that happens, our environment is readjusted. Those who live in the suburbs of Los Angeles are not free from the convenience-providing auto industry.they are captured They rule their lives by the structural chokehold of the industry.

Just as millions of people “choose” to buy cars in urban environments transformed by the automobile industry, so too do many people in an economy dominated by huge finance and huge technology. You will “choose” to use digital payments. These industries have much more to gain from digital payments than we do, and the ‘convenience’ that digital payments provide is premised on us becoming dependent on their power. In this context, the digital payments industry presents cash as the payment carriage. This is an obsolete form that is clogging the economic highways. In effect, cash is like a public payment bicycle, enabling peer-to-peer, localized and resilient transactions.

4. Fintech isn’t revolutionizing finance, it’s just automating it

After the 2008 financial crisis, entrepreneurial technologists argued that digital technology could disrupt and democratize finance. Fintech companies called themselves revolutionaries, but they rarely wanted to make deep changes to the financial system. They just wanted to make the same old system faster and more automated by designing a pasteable app. Bank branch services He recommends self-service over the phone rather than interacting with staff. Fintech has also moved to automate the work of bankers. Instead of humans evaluating loan applications, algorithms do it.

This is why the fintech industry is anti-cash. The fintech sector considers cash obsolete because offline cash is difficult to integrate into automated systems. These so-called revolutionaries are slowly but surely blending into the incumbent financial system. Banks have started to absorb fintech as they have a strong appetite for automation. On average, the fintech sector has reduced costs for the banking sector, thereby allowing fintech to spread to previously marginalized parts of society. This is often called financial inclusion, where people are embedded in data-hungry corporate systems with enormous power dynamics.

A simple, slow, small system can be far more resilient and comprehensive than a complex, fast, large digital system. Rather than uncritically jumping on the fintech bandwagon, we need to ask ourselves how to balance digital and analog systems.

5. Bitcoin does not challenge the monetary system.

In the 1990s, a group of activists known as cypherpunks experimented with building alternative forms of digital cash to act as a counterforce to the banking sector. In 2008, a person or group pseudonymous Satoshi Nakamoto took various cypherpunk innovations, combined them into an elegant recipe, and called the result Bitcoin. It is a system that allows a vast network of strangers to issue tokens and move tokens between them without a bank. Bitcoiners claim that this can save us from the vortex of big tech, big finance, and big government.

I was involved in the early Bitcoin community and quickly found the system to be a sophisticated means of moving crude tokens. Innovative technological architecture leads people to believe that tokens are also sophisticated, when in reality they are just limited edition digital objects. branded as money. Think of them as digital medallions that mimic the appearance of surface money while being traded in dollars within the real monetary system.

These digital medallions can be used for exchange via a process called counter-trading. For a $1000 computer he can give him two $500 watches, but the implied reality is that he actually sells the watches to the owner of the computer for $1000 and takes the money. to buy a computer. An alien watching the exchange might think the clock is a form of money, but the money is actually the dollar system behind it. Similarly, you can reverse trade a dollar priced bitcoin fragment with a dollar priced computer, but the reason why bitcoin is effective here is because Parasite Stay away from the dollar instead of trying.