As we move closer to the cashless society that many governments would like to see implemented, the drawbacks of the plan become more pronounced. And while the benefits of a cashless society accrue almost exclusively to the government side of the ledger, it is becoming evident that the ordinary citizens are left to deal with the drawbacks.
Certainly there are privacy issues in a world where 100% of currency is digital. Those warrant a great deal of discussion. As payment systems and the creation of money itself becomes more reliant on technology, the problems with safely linking you to your money also increase.
- What happens when your bank becomes exclusively tied to your smart phone?
- How do you secure access to that phone?
- How are data breaches prevented?
- What happens when there is an error in the system?
- How easy will it be for identity thieves to cover their trail?
- Will there be sufficient redundancy built into the system?
Certainly, application of blockchain technology and smart contracts can significantly mitigate or eliminate risk. However, nothing can completely eliminate all areas of risk.
FinTech is set to make major strides in bringing more people into the financial services industry and compete with monopoly monetary systems. However, it too will need a system of healthy checks and balances. Something that will tie it back to the principles of sound monetary management.
Might we suggest gold and silver? Throughout history, gold and silver have been revered as the ultimate check and balance on monetary systems that rely too much on man’s ingenuity. The coming era of major FinTech innovation will be no different.