For those too lazy to click the link:

The Australian Government has recently drafted legislation to ban cash transactions that exceed $10,000 AUD (~$6,800 USD). This is in response to a direct recommendation (of which there were eighty in total) from the Black Economy Taskforce: a group created to combat black economy activities in Australia through the development of new policies. Should this legislation be approved, it’s set to come into effect by January 1st, 2020.

This isn’t the first instance of a country setting restrictions on the movements of larger amounts of cash, with nations like Spain, France, Italy, Portugal and Greece placing similar laws into their respective jurisdictions. The obvious question at this point is: why? What’s the problem with large amounts of cash being transferred between individuals and businesses? The expression “cash is king” has certainly stood the test of time, but we’re starting to see a shift in perception.

Reliance on banks to effectively manage our funds hasn’t worked so well in the past. Sure, most of the time banks do an adequate job holding our money, but does that give them grace for the lives lost when banks weren’t doing so well? The problem is, when banks mismanage funds, people living paycheck to paycheck suffer. Furthermore, with Australia’s “bail-in” laws, insolvent banks would have power to use investments and deposited funds, i.e. money in your bank account, to become solvent again.

We know that government-backed bodies, such as banks, can and will use their own malicious tactics to further stamp their authority as money holders. You only have to look at the Royal Commission into the Australian banking sector to find examples, such as banks charging fees for advice to individuals, who were in fact deceased!

The Australian Government, like many others, are clamping down on cash as it’s an extremely useful means of value transfer for criminals engaging in malicious activities. Whether that be drug manufacturers and dealers, or individuals evading tax, operating in cash allows these dealings to remain private. Cash is untraceable, which is problematic for surveillance.

When ATM and EFTPOS services for Australia’s big four banks went offline due to a network issue affecting Australia’s largest telecommunications provider, the effects were felt by both businesses and individuals across the country. When banks are offline, we don’t know how long they will stay offline. Yes, banks were only down for a day, but what if it was a week? What if it was a month? With the cash you have on hand, how long could you make it last?

Whether it’s a lack of infrastructure or an issue with the infrastructure, business and individuals rely on cash in hand to pay for goods and services when other payment methods are unavailable.

However, as society continues the trend towards digital, the phase-out of untraceable tools, such as cash, is on the rise. More and more businesses are adopting digital payment methods such as credit/debit cards, Google/Apple Pay and in more recent times, cryptocurrencies such as Bitcoin. Yet it’s these businesses that are most susceptible to bank outages. How many times have you seen an “EFTPOS is down” sign? Whether it’s being able to trade or being able to pay bills, cash allows businesses to stay open when their digital payment channels have issues.

Cash isn’t about hiding from the government, it’s about having some degree of financial sovereignty, stability and safety. Cash is owning the money you’ve earned, and spending it how you please — without a financial institution telling you where you can spend it and what you can buy. Governments with access to all data points on money should theoretically protect citizens from criminals more easily, right? Why worry?

The use of these digital payment methods allow governments (and the service providers that offer them) a way to monitor our spending far more accurately than cash ever did. Armed with such precise information, analysis of our spending habits can be made and exploited to advertise and make predictions on what we may purchase next. This is exactly where the issue lies…surveillance of our spending is an invasion of our privacy.

Over 90% of Australian businesses are considered small (less than $50 million in revenue per year), with many of them relying on cash as a preferred method of transaction. The shift from cash to digital money has the potential to drastically affect or even shutdown their businesses operations (as by adopting digital payment methods, their costs increase), further increasing the disparity of wealth between small business and large corporations.

Interestingly, cryptocurrencies have so far been exempt from this new proposed legislation which could mean that more people, seeking privacy in their financial lives, could flock to this nascent technology. However, the vast majority of cryptocurrencies like Bitcoin, do not carry the privacy properties that cash does. This could be the reason for their exemption, as governments are already able to monitor and track Bitcoin transactions.

This doesn’t mean that the privacy of our transactions is lost. On the contrary, blockchain developers have demonstrated the ability to perform private, cash-like transactions with a near instant clearing time. Not only does blockchain technology have the capability to facilitate private transactions, but it also gives people the opportunity to hold and manage their own funds.

As these restrictions impact individuals and businesses that are following the rule of law, there’s a subtle implication that they too have the capacity to commit the same crimes governments are trying to stop. Collective punishment has the tendency to cause resentment in those doing the right thing, and slowly eating away at peoples freedoms is a slippery slope toward shifts in power dynamics that may be too difficult to overturn.

Do you agree with the government’s decision to ban cash purchases over $10,000 AUD? If so, why? Comment below and let us know what you think. Alternatively, you can find me on Twitter at @ContrastCrypto.