The Cashless Society

I confess that I don’t get Bitcoin. I don’t know if I should be embarrassed. I’m a financial professional, and I don’t understand one of the biggest financial fads of our time. Or is it a fad? What I observe is that the price of Bitcoin goes up and down like a whore’s pants. The first week in January the price was over $1100 (USD) and in less than two weeks it was almost down to $750, and then this past week it was up to $1200.  What I don’t understand is what stops the arbitrary creation of Bitcoins. What stops the issuer from creating more of them to feed the market, pocketing the sales proceeds. What prevents Bitcoin inflation?  What drives the price up and down? Psychology I suppose. But what are the factors that trigger that psychology?

Maybe somebody reading this will inform me.

In a world going cashless, such cash substitutes will likely grow in appeal. Sweden reports that only about 2% of payments are in cash. Australia, Turkey and Rwanda are close to achieving that low percentage. Governments of several nations are aggressively seeking to eliminate cash: India, Pakistan, Austria, UK, France.  Who knows why?  Well, I think we can guess. When you have to pay digitally, records are made. Your spending habits are manifested in those records. Your interests and preferences and your habits are there to discover.

The millennials --- Generation Y --- a large generation of children of the large baby boomer generation, seem to be all for it. They are the first generation that grew up with digital methods firmly entrenched in their lives. Maybe they don’t value privacy, accustomed as they are to Facebook and other social websites that make their lives translucent, if not transparent.  

I do not know how problems associated with a cashless society --- lack of privacy and also then ones identified at http://gordonfeil.blogspot.ca/2016/11/the-war-on-cash-and-on-you.html --- can be resolved.