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We are living in a cashless society

It is interesting to think about cash and where cash is going.  Can we really be cashless?

history of cash, as those who know my presentations, is that it was
invented for sex.  I know a lot of people don’t believe this, but the
first form of money was the shekel.  The shekel was invented because
5,000 years ago Sumeria, which is now Iraq, was moving from the
disorder of the ancient world to a more formalised society.  As one of
the most advanced of the Ancient Civilisations, Sumeria used religion
as the political force to manage law and order for their society. 

was that they had no way to control that society.  Therefore, the
Sumerian priests invented the shekel to ensure farmers worked hard on
the land and behaved.  But why would a farmer want a shekel?  A useless
bit of metal with little real value.

The answer was that
the shekel could be used at the temple to meet Ishtar, the goddess of
fertility.  The Goddesses were actually ordained women, priestesses,
who represented Ishtar on earth and, in exchange for a shekel, these
women would have intercourse with the farmers as a holy act.

gave their shekels to the priests in exchange for sex with the
priestesses and the world’s most ancient profession was launched.

For much more depth on this subject, or for those who have no knowledge of the subject and want to know more, please read this link where, halfway down, it explains the currency of Ishtar.

5,000 years later, both prostitution and cash are around in abundance and are still as difficult to manage, police and control.

In the case of cash, it is all about the fact that you have a
real-time exchange of guaranteed value that is anonymous.  If you give
me your credit or debit card, can I really trust it’s you and it’s not
a fraudulent transaction?  Also, if you give me your card then everyone
knows it’s you and what you purchased, from whom, when and where.

With cash, we don’t have those concerns.  As soon as you give me cash, that’s it.  I’ve got the money.

I sell a car and I don’t want a banker’s draft.  I don’t
want a cheque.   I don’t want a money order.  I want cash.  I want to
know the money is clear before I give you the goods.  Only cash gives
me that reassurance.

I hire a cowboy builder to stick a
conservatory on the back of the house and, guess what, I give him
cash.  Avoid the tax and all that guv’nor.

I want to move my $205 million of drug runner’s illicit earnings
across borders, and so I stick it in the bedroom.  It’s the only way to
ensure I have my most liquid asset to hand, and I can always stick it
in a suitcase to move bits across borders.

I go to see the
goddess Ishtar, which I don’t by the way … but if I did, would I use
cash or a credit card?  I think cash still rules there too.

Cash rules.

is why most societies thrive on cash.  For example, recent research
sourced from a variety of diverse groups* provided me with this picture
of cash usage worldwide:

%age of total payments made in cash
94%    Russia
90%    China
79%    Japan
77%    Spain
67%    Italy
40%    Australia
21%    America

figures reflect, in some cases, the sophistication of the markets’
usage of alternative payment mechanisms, such as cheques and cards,
rather than the ‘cashless’ society.  For example, Russia and China have
very low usage of credit and debit cards today, but this is changing.
America has low cash usage but cheques, or checks if you like,
constitute 36% of all payments which is why Check21 is so important for
the USA.

Even so, most low-value transactions are made in cash,
and how the hell will we ever get rid of cash when it fuels the
underworld, allows those who want anonymity to be anonymous, and
ensures those who want real-time value transfer to have it?

I can start to see a way.   The basis of cash is that it needs to
maintain those two key elements of being anonymous and providing
real-time transfer.  The former is why direct debits, credit transfers
and cards could never promote themselves as a cash substitute, and even
PayPal has issues with the latter as they run on the bank and card

But there may be a way, and it made me wonder if I
could create a cash injected economy, that was anonymous and outside
the banking system, or the tracking system as we should call it, in

How about starting with PayPal or a prepaid card?

PayPal it’s hard to transact unless you provide name, address and other
details.  However, you can open an unverified PayPal account with no
such information.  You are asked for name and address, but you can
falsify this information to open an unverified account.

This means that anyone can open a PayPal account
as a Premier Account, without giving out bank or other details, and
with a false name and address potentially.   You only need to "Get
Verified" and prove all of this information, if you want to get more
benefits such as higher spending power and increased security.

In order to start my cashless trading, I open a fictitious PayPal account, unverified.  Maybe I put £100 in there by buying an IDT Prime prepaid Credit Card, which also needs no identity proof to transact on the card, unless you want one that’s reloadable. 

put £100 ($200) on the IDT card and transfer that to PayPal, or I start
selling a little on eBay to create a debit float on my PayPal account.
I then take that debit float or prepaid card, and stick the cash into
Second Life’s Linden $’s or Entropia’s PEDs (Project Entropia Dollars).  Through this method I can now have unlimited anonymous transactions.

And, you can generate real cash in these worlds.  We all know about Anshe Chung being the first millionaire in Second Life by buying and selling land that doesn’t exist, but what about Jon NEVERDIE Jacobs
who has become the millionaire owner of Club Neverdie in Entropia, the
most expensive virtual object ever, according to the Guinness Book of
Records. In the press release that goes with this record, there’s an interesting paragraph:

high-end items in Entropia Universe are regularly traded between
players for tens of thousands of dollars. Recently documented sales
include a virtual shopping mall for $70,000 USD, a land area for
$35,000, a top-of-the-line healing kit for $30,000, an Imp MK II
Hunting Rifle for $17,000 USD, a spaceship and hangar for $12,000, a
complete Supremacy armor set for $11,000 USD and a Unique Green Atrox
Queen (mystery) Egg for $10,000."


For fraud and money laundering, there are definite possibilities here, which I’ve blogged about before when I mentioned the Chinese were concerned about QQ for all the reasons above.   

Meantime, there’s also China’s version of PayPal, Alipay.com

is owned by Alibaba, China’s largest ecommerce firm, and is China’s
largest online payments services with 47 million users in August 2007,
with 80,000 new users registering every day! 

Launched in 2005,
Alipay is proving to be incredibly popular for these reasons and also
because their business model is different to eBay and PayPal’s.  Rather
being positioned as a payment service for online trading, Alipay
positions itself an online service to support and promote Chinese
trade.  Maybe this is why eBay have found them to be a pain in the derriere.

in all, between prepaid cards, virtual worlds and online payment
services that allow me to open accounts without providing full and
verified bank and billing details**, I reckon I could quite happily
build a very nice cashless business that is anonymous and outside the
bank network, with real-time value transfers.

This means that
maybe, just maybe, after 5,000 years, we will finally have a society
that can operate electronically and still pay for the world’s oldest
profession with a shekel … but now it’s an e-shekel.


* including Global Insight, National central banks, GIE CB, APACS, ARA and McKinsey’s Payments Practice 

** with PayPal, this is difficult to do, but with some other services not mentioned, it’s a lot easier.




About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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