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Book Summary: Cloudmoney – Cash, Cards, Crypto, and the War for Our Wallets

Cloudmoney (2022) provides an overview of our present payment landscape. As it turns out, the age-old question of “cash or card” is not as simple as it seems. Underneath the push toward cashless is a murky world of powerful interests trying to extract profit and data from people’s purchases. And the disappearance of cash has more disadvantages than you might think.

Book Summary: Cloudmoney - Cash, Cards, Crypto, and the War for Our Wallets

Content Summary

Genres
Introduction: Discover the ongoing “war on cash” – and how it affects all of us.
The war on cash
“Cash doesn’t crash”
Cryptocurrencies and the future of money
Summary
About the author
Table of Contents
Overview
Review/Endorsements/Praise/Award
Video and Podcast

Genres

Technology and the Future, Money, Investments, Economics, Business, Science, Finance, Currency, Politics, Encryption, Computer Cryptography, Web Encryption, Processes, Infrastructure, E-commerce Professional, Macroeconomics, Monetary Policy

Introduction: Discover the ongoing “war on cash” – and how it affects all of us.

In the modern societies we live in, we spend a lot of time buying things. And whether it’s online or offline, cashless ways to purchase goods are on the rise. Gone are the days of having to count out coins for the cashier – now, all you need to do is tap your phone or card against a payment terminal and, like magic, the transaction is complete.

But underneath the speed and convenience of cashless transactions lies the murky world of big finance and big tech. When you pay with cash, it’s a direct, usually anonymous transaction between buyer and seller. In the world of digital payments, though, this is not the case.

In this summary, we’ll take you on a journey through today’s payment landscape. You’ll see that big tech and big finance are waging a sinister “war against cash.” We’ll look into how this came about – and what can be done to stop it.

The war on cash

Let’s take a look at how we got to where we are today. Our story begins during the 2008 financial crisis. Back then, anti-bank sentiment was rife – big financial institutions were viewed as the cause of the economy’s crash, after all. The ramifications of the crisis were huge, and much of the global economy entered into a recession.

At the same time, a technological revolution was happening. In the summer of 2007, just before the financial crisis really got moving, Apple released the first iPhone. This led to startups quickly coming up with apps for all sorts of things, including finance. The promise of this new “fintech” industry? To disrupt the power of the banks, democratize finance, and widen financial access. In the near future, they declared, we would live in a “cashless society” with frictionless transactions.

But what happened next was not the promised revolution over the banks. Instead, as the tech industry morphed into “big tech,” it became part of the established order it had promised to replace. Companies like PayPal that originally set out to disrupt finance ended up being a new interface to transmit money from our existing, traditional bank accounts.

If anything, the advent of fintech has embedded the financial industry even more into our daily lives. We’re fed the narrative that digital, cashless payments are the way of the future, and that we don’t need cash anymore. We see this in the slow disappearance of ATMs and bank branches – the excuse is that customers are moving toward digital payments and no longer require them. But is this actually a big, collective desire from below? Are people really demanding a cashless society?

It turns out that this bottom-up narrative of customers clamoring for a cashless world is false. In fact, there’s been a huge top-down push against the cash system from powerful financial institutions. They have two goals here: to make profit and get data.

Let’s consider a perfectly normal situation – you’re ordering a drink at one of the increasing numbers of cashless bars. To do so, you need to download an app. Then, to log in, you’re asked to confirm your identity with Google or Facebook. Two commercial bank accounts are involved, as well as Visa or Mastercard who enable the transaction between the banks.

During this process, you’ve interacted with at least three corporate giants. Visa or Mastercard have taken a small fee for conducting the transaction. Studies show that the marginal transaction cost of a cashless payment is 50 to 150 percent higher than when using cash.

Meanwhile, Google or Facebook now know what you’ve bought. They’ll harvest the transaction data and sell it to companies who’ll use it to target ads toward you. Who knows – you might even receive ads related to the drinks you like to purchase at bars!

At the end of this process, you receive one drink. Of course, in most bars you can still pay for your drink with cash. But with the war on cash accelerating, more and more businesses are going cashless.

Over the years, the anti-cash front of financial giants has used many arguments to get businesses and their customers to go cashless. In the past, it was convenience and speed. Now, in the age of Covid-19, they’ve used a new argument to dramatically accelerate the war on cash:hygiene.

Take large retailers, for example. Egged on by payment companies, many of them stopped accepting cash payments at the beginning of the pandemic. Sports superstore Decathlon was one of them. But were they right? Well, England’s central bank released a report early in the pandemic saying that card machines, shopping wagon handles, goods, and self-checkout screens all posed a much higher risk of transmitting the virus than cash. So what’s going on here?

The fact is that the anti-cash alliance is able to afford huge amounts of propaganda in the form of lobbying and PR. This means it’s becoming harder and harder to fight back. After all, who’s fighting on the side of cash? Central banks are essentially neutral on the topic. With financial institutions having a lot to gain in defeating cash, what do the rest of us have to gain in preserving it?

“Cash doesn’t crash”

To understand the value of cash, let’s unpack a metaphor which anti-cash advocates often use – that of the horse cart and the car. The insinuation is that those clinging on to cash are similar to the people who clung on to the out-of-date horse cart after the invention of the better, faster car. Eventually, though, horse carts became a thing of the past – and financial institutions want the same thing to happen with cash.

But this metaphor is problematic. While slow horse carts did get in the way of faster cars, cash doesn’t block cashless. A better metaphor is cash as a bicycle instead of a horse cart. Phasing out cash is like closing down bike lanes that run alongside roads – all in order to make more space for cars. But although bikes are slower, they’re also safer, don’t produce air pollution, and reduce traffic.

Back in the day, car manufacturers touted all the benefits of the new car while suppressing news of car accidents. The same is the case with banks and payment companies today – they’re all for promoting the speed and convenience of cashless, but you’ll never hear them promoting surveillance or cyberhacking.

And although cars and cashless are usually faster, this isn’t actually always the case. In fact, in our modern, congested cities, cycling can sometimes be faster and more effective than sitting in a traffic jam. The same can be said for cash. When communication systems are about to be jammed by weather events like hurricanes, people flock to withdraw “offline” cash, as it will never fail. Similarly, take the 2008 financial crisis. All over the world, huge lines were commonplace in front of ATMs because customers were afraid that their bank would be the next to fail. But “cash doesn’t crash,” as the saying goes.

Unfortunately, when economic, political, or climate crises strike in the future, it will be much harder for people to withdraw cash if current trends continue. One reason is the slow death of the ATM. British government data shows that between 2015 and 2020, the amount of ATMs shrunk by 24 percent.

This brings us to the class element of the war on cash – its usage is associated with working-class and minority groups. This makes sense, as these sections of society have most often been historically discriminated against by elite institutions like banks. For them, cash is an important way to participate in capitalist society while having some protection from exploitation.

Unlike a credit card that might put you into debt, cash is honest. So it comes as no surprise that cash helps working-class people save money. Ironically, studies from Visa itself show that people spend more with their card than with cash in various situations. At a family restaurant, for example, customers dole out 40 percent more money on average if they’re paying with card.

Cash is physical and tangible, and you can literally see it disappear as you spend it. Card companies, on the other hand, want us to spend more. The more we spend, the more we go into debt – and the interest on debt payments leads to more profit for financial companies.

It’s not even a stretch to say that cash has a history of association with progressive social change. There are plenty of previously illegal things that relied on the use of cash, such as homosexuality, interracial relationships, or the black market for illegal substances.

Take Prohibition, for example. Although drinking alcohol was illegal, tens of millions still engaged in it. It may have been illegal, but it wasn’t immoral. Like so many other previously illegal activities, it existed in a gray area and was pushed underground.

Without cash, these gray areas would be much more difficult to maintain. The push for legalizing cannabis would not be possible in a cashless society, for example. Cash provides life support for the cannabis industry; at the same time, its supporters advocate for its use. This has allowed medical marijuana to become widely available and provide relief from countless illnesses.

Whether it’s for an illegal rave or raising money for disruptive climate activism, cash is key for advancing social progress. And the rise of cashless payments is slowly choking out the possibility for creative deviance. This is particularly true if you consider how easy it is for the state to request a payment history of bank customers. Under legislation such as the US Patriot Act, the government doesn’t even need to inform the citizen that they’ve accessed bank records. And a citizenry that’s being watched is less likely to engage in subversive activities.

But there is some good news for the future of cash at present – although not for the best reasons. The use of cash is currently on the rise due to the growing number of crises humanity is experiencing. Whether it’s Covid-19 (and the associated economic impact), war, or climate catastrophe, there are quite a few crises the world is currently dealing with. And as cash doesn’t crash, people everywhere are reverting to money they can touch and see – and store in a box under the bed rather than in the faceless digital aether that might melt away at any moment.

All of this is not meant to overly romanticize cash. But considering its positive effects in helping to put the brakes on financialized capitalist growth, as well as affecting social change, it’s definitely worth defending. At the end of the day, cash helps human beings interact organically. It empowers them to be autonomous rather than relying on middlemen to facilitate all monetary transactions – and charging a fee to boot.

Cryptocurrencies and the future of money

So, we’ve established that it’s important to protect cash in order to fight against corporate capitalism’s advance. But is there anything else we can be doing? Are there any new weapons we should be developing to attack the power of big tech and big finance?

Well, once upon a time, there was the hope that Bitcoin and other cryptocurrencies might facilitate a payment system that didn’t rely on big banks. That was back in 2008, when the notorious person or group known as Satoshi Nakamoto brought Bitcoin into the world. Indeed, its stated goal was to be a peer-to-peer electronic cash system.

Sadly, over the years it became clear that cryptocurrencies wouldn’t save us from the growing corporate stranglehold over our wallets. This is due to a number of reasons. One is that from the get-go, crypto enthusiasts were mostly divided into two camps – those who advocated for crypto to be used as digital cash, and those who wanted it to become digital gold. Sadly, the latter have now all but won – crypto these days is not much more than a speculative, digital asset.

The other reason that crypto doesn’t work as digital cash is that it’s unable to act as a “means of account.” In other words, essentially zero prices are ever denominated in cryptocurrencies. Even if someone purchases something with crypto, the price of the good is still attached to the value of fiat currencies like the dollar. With crypto prices now fluctuating more similarly to speculative assets than currencies, it’s unlikely that people will start pricing things in crypto anytime soon.

Aside from crypto, there are a few other candidates that might help in the fight against big tech and big finance. One is a central bank digital currency, or CBDC. This involves citizens having digital bank accounts with their central bank, like the Federal Reserve in the US, rather than with a commercial bank. The benefits of such a system could be transformational.

For example, as central banks are not profit-making institutions, there’s no need to include payment fees in every CBDC transaction. Lower transaction costs means lower prices. A CBDC system also makes it easier to facilitate payments directly from the state to households – meaning concepts like universal basic income become much easier to implement. And unlike money stored in a PayPal or commercial bank account, money in a CBDC account isn’t prone to being lost by banks going bust.

Countries like Sweden and China are in the process of introducing CBDC systems, and there are other countries considering developing them. This makes it important to consider some of the downsides of CBDC. The biggest one is that of state surveillance. Just as with existing digital payment systems, CBDC infrastructure as it’s currently being developed would allow for state surveillance over our financial lives.

There are some ways this problem could be addressed, however. One would be to combine a CBDC with a private blockchain system. This would yield anonymity similar to crypto currencies, allowing people to hold state money in private accounts. Implementing such a system would be the closest we’d get to having a true “digital cash.” In fact, an anonymized CBDC could be the system that ends up breaking the power that commercial banks currently have over our lives. This doesn’t mean the banking industry would be abolished – the systems would simply run alongside each other, like bikes and cars.

Summary

The Key Message in this summary is:

Big tech and big finance are waging a war against cash, and in many ways they seem to be winning. Their propaganda is slowly convincing businesses to move away from accepting cash payments. And their goal is to convince populations that cash is destined to die out, just as the horse cart did after the invention of the car. But cash is not a horse cart – it’s a bicycle running alongside a traffic jam. It may not be as fast, but it is safer. And when a crisis strikes, you’ll always be able to access the cash under your bed; if your bank goes bust, you might not be as lucky. While we’re defending cash, we need to investigate alternatives to the stranglehold that corporate capitalism has over digital payments. Central bank digital currencies seem like a good option, but they’ll need to be optimized and improved if they’re to truly become digital cash.

About the author

Brett Scott is an economic anthropologist, financial activist, and former broker. In 2013 he published The Heretic’s Guide to Global Finance: Hacking the Future of Money, and since then has spoken at hundreds of events across the globe and has appeared across international media, including BBC World News and Sky News. He has written extensively on financial reform, digital finance, alternative currency, blockchain technology, and the cashless society for publications like the Guardian, New Scientist, Huffington Post, Wired, and CNN.com, and also publishes the Altered States of Monetary Consciousness newsletter. He has worked on financial reform campaigns and alternative currency systems with a wide range of groups and is a Senior Fellow of the Finance Innovation Lab (UK). He lives in Berlin.

Brett Scott | Twitter @Suitpossum
Brett Scott | Facebook @brett.r.scott.52
Brett Scott | LinkedIn
Brett Scott | Substack (Altered States of Monetary Consciousness)
Brett Scott | Altered States of Monetary Consciousness

Brett Scott

Table of Contents

Introduction 1
1 The Nervous System 17
2 The War on Cash 29
3 The Giant in the Mountain 49
4 Digital Chips 65
5 The Bank-Chip Society 83
6 Big Brother. Big Bouncer. Big Butler 101
7 The Unnatural Progress of a ‘Rapidly Changing World’ 121
8 Shedding and Re-skinning 135
9 Sherlock Holmes and the Strange Case of the Data Ghost 153
10 Clash of the Leviathans 173
11 A Paranormalist’s Guide to the Spectre of Bitcoin 187
12 The Political Tribes of Cyber-Kowloon 211
13 Raiding the Raiders 227
Conclusion 247
Acknowledgements 265
Notes 267
Index 277

Overview

The reach of Corporations into our lives via cards and apps has never been greater; many of us rarely use cash these days. But what we’re told is a natural and inevitable move is actually the work of powerful interests. And the great battle of our time is the battle for ownership of the digital footprints that make up our lives.

In Cloudmoney, Brett Scott tells an urgent and revelatory story about how the fusion of Big Finance and Big Tech requires “cloudmoney”—digital money underpinned by the banking sector—to replace physical cash. He dives beneath the surface of the global financial system to uncover a long-established lobbying infrastructure: an alliance of partners waging a covert war on cash. He explains the technical, political, and cultural differences between our various forms of money and shows how the cash system has been under attack for decades, as banking and tech companies promote a cashless society under the banner of progress.

Cloudmoney takes us to the front lines of a war for our wallets that is also about our freedom, from marketing strategies against cash to the weaponization of COVID-19 to push fintech platforms, and from there to the rise of the cryptocurrency rebels and fringe groups pushing back. It asks the most pressing questions:

  • Who benefits from a cashless society and who gets left behind?
  • Is the end of cash the end of true privacy?
  • And is our cloudmoney future closer than we think it is?

Review/Endorsements/Praise/Award

“An important reflection on the new world of finance. Brett Scott writes with gusto about blockchain, crypto, and the power nexus between Big Tech and the banks in a cashless society.” — Lionel Barber, journalist and former editor of the Financial Times

“A fascinating and readable guide to the future, and how we can reclaim that future from the clutches of Big Finance and Big Tech.” — Grace Blakeley, author of The Corona Crash and Stolen

“A brilliant, fascinating, and utterly accessible book—a pioneering and political guide to the fast-evolving web of global finance. Combining anthropological insight with the financial acumen of an industry insider, Scott lays out the long view on how tech and finance are rapidly merging to supercharge corporate capitalism. If you want to understand what money is—and what it is in danger of becoming—start right here.” — Kate Raworth, cofounder of Doughnut Economics Action Lab and author of Doughnut Economics

“In a book that is simultaneously irreverent, hard-hitting, and entertaining, Brett Scott blows apart conventional myths about cash, digital money, and crypto, and brilliantly shows us what’s at stake in the coming battles for the soul of money.” — Stephanie Kelton, author of the New York Times bestseller The Deficit Myth

“Told with authority and clarity.” — Kirkus Reviews

Video and Podcast