Criticisms like "perfect for criminals" and "no consumer protection" do make sense. Cash is great for money laundering and has no reversibility. The whole point is that these weaknesses are 100% real--and yet not necessarily a barrier to adoption or successful use.
Cash sucks for serious money laundering. It's fairly anonymous in small quantities but start talking about millions/ billions and it's bulky enough to be hard to transport across borders and each bill is tracked by serial number which means spending it involves a lot of leg work. Gold is way better than cash when it comes to money laundering.
PS: Drug kingpins have been known to dump small denomination bills as not worth the hassle.
I thought that was the main use of the $100 bill. Supposedly 2/3 of the $100 bills circulate outside the US [1], presumably for money laundering type activities.
US Cash is often used for Legal transactions outside the US. Basically, people often trust USD more than there local currency's. Either from inflation concerns or simply there ability to spend it outside of there home country.
Someone mentioned this in a bitcoin thread but money laundering is harder with cash than bitcoin for the simple fact that at one point somebody needs to take the physical bills.
A seller of an object must expose himself when he tries to collect his cash. With bitcoin, he can simply give a wallet.
Just the opposite. They can't make sense when applied to the current banking system because the idea is to show that criticism of bitcoin also misses the point.
So the flaws of cash listed in the article are superficially plausible but we know they weren't much of a barrier to wide adoption.
Cash was "adopted" because it is backed by the United States Federal Reserve System. It is legal tender. It is fungible: every checking account is equal. It is issued by regulated institutions, people who sue you are obliged to accept it, and the IRS will take it as payment.
This was not always the case.
Before the advent of central banking, cash was just as dodgy as Mt. Gox internal transactions. You were unlikely to be able to use cash more than five miles from the bank that issued it. Balance statements were purely arbitrary because you had no insight into your (unregulated) bank's books. In the 19th century, transactions across long distances looked more like hawala than anything the modern man would recognize as banking.
This satire was written by someone who does not understand what he or she is attempting to satirize.
Since you're aware of the history of the US central bank, you are also no doubt aware that its invention was the subject of highly contentious debate that lasted decades. It was by no means an easily accepted invention and many, many people ridiculed and mocked it along the way.
Perhaps the author understands what they're satirizing a bit more than you're giving them credit for.
There was a lot of (justified IMHO) controversy around the formation of the Euro union as well. I'd say it's a little crazy for one country to have 40+ currencies -- and apparently so did a lot of people -- but it certainly is a tool for independence (which is why I think the Euro was a bad idea and the Dollar was a good idea).
The fact that bitcoin is not legal tender is not an argument that the article parodies. Just because there are real arguments against bitcoin does not mean that the others cannot be parodied.
Being legal tender means a group of thugs who regularly rob me accept this currency but not others. If we must tolerate being regularly robbed by thugs, this is a desirable feature in a currency, but it would be better to not be robbed by thugs at all.
Our current systems evolved slowly over the course of thousands of years. They weren't dreamed up one night in some nerd's basement. They were formed over time through public debate and useful exchange of value. Farmers aren't using Bitcoin. Bridge builders aren't using Bitcoin. Armies aren't using Bitcoin. This isn't some situation like where we're choosing between two Ruby libraries that do S3 uploads. This is a situation where we have the institutions that evolved over time vs. some dudes with a new idea on the Internet. Ya'll be ignorant.
Quite. Bitcoin has built-in authentication, which is a key feature of a traditional currency, and scarcity as well. But as long as it's not any kind of legal tender, there's no guarantee that any transaction or payment of debt offered in Bitcoin will be accepted, and that introduces considerable friction into its use as a currency. Also, the scarcity is arguably deflationary; nobody goes into solo mining any more because it's obviously not worth it, and the more coins that are mined the lower the incentive to go into mining. This means holding bitcoin results in appreciation proportional to population growth, even though no useful economic activity is taking place when someone sits on top of a pile of cash. The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms.
>The whole point of inflation is to reflect the natural rate of economic growth and to discourage economically inefficient hoarding. Runaway inflation is of course a bad thing, but no inflation at all, or deflation, is just as bad in economic terms.
Consider where that initial cash came from. You worked your ass off between 18 and 60 and you got a bunch of cash in exchange. Some you spent on consumption, some you saved for use later. In fact, cash is just 'tokens for exchange later' where later is a time window that varies from 1 hour (hand-to-mouth) to 50+ years (surplus productive capacity people).
Wouldn't it be great if you could use your tokens for their promised exchange-value through your retirement and see those years of hard work payoff? In fact, multiply, because as you said the population grows, more goods are produced, and your cash tokens buy more and more of those goods.
It's a great way to retire. Unfortunately for the retired, they are on fixed incomes (pensions) in an inflationary world: those people get SCREWED to the extent where they can't afford heating in some US States.
These are people who worked hard all their lives and just wanted to live off the proceeds, the surplus they had generated.
The evolution is not always slow: the Banking Act of 1863 transformed American currency very rapidly, for example[1]; as did the foundation of the Bank of England in 1694 for the pound.
Of course, your underlying point is correct - both these examples are coterminous with vast transformations in the two societies (the civil war and the Glorious Revolution), which equally were not dreamed up by a nerd in a basement.
[1] James McPherson's Battle Cry of Freedom has some interesting material on this.
Not all of the satire works, but enough works that I found it to be damn clever. The "perfect for criminals" part was especially enjoyable, given that it's easier to trace the history of bitcoin payments than cash transactions if you aren't marking bills.
When satire doesn't work, the author looks sillier than your target. I don't think this was a goal.