While debit cards are already popular in Europe, they have raised red flags with privacy activists. Our experts think reasonably anonymous “smart” cards are a technology whose time has come in the US. “The you-can-protect-your-own-privacy-in-electronic-payments meme is starting t ospread,” Chaum says. Once peace of mind is established, the smart-card infrastructure must be installed, a difficult and expensive task. “That means upgrading all the cash registers,” says Hughes, “mostly all at once.” But this effort will be for naught if Boggs’s future comes true. Anonymous smart-cards will be outlawed, he predicts, due to pressured from lobbyists concerned that “the world’s children are being corrupted by black-market drug lords who survive off the untraceable cash from children’s allowances.”
Will skillful counterfeiters eventually cause the US Treasury to give up on paper money altogether? Our experts are split on the matter. According to Nadler, “counterfeiting will be halted” by advanced antifraud techniques like those used in the new Ben Franklins. In agreement, Hughes calls counterfeiting “an arms race. The issuer of currency can always stay ahead enough to keep the system stable,” he says. On the other hand, you have to spend money to make money: Chaum comments that he’s seen reports estimating that “the cost of paper cash systems range from 2 to 3 percent of GDP,” making electronic cash appear a most cost-effective alternative.
Judging by our poll, you better hold onto your penny jar. While many people find the coins annoying they are cumbersome to count, not accepted by vending machines, and make rounding difficult our experts think that as tired as the cliché is, a penny saved will continue to be penny earned. “The Fed’s policy of price stability means that the penny won’t devalue too much too soon,” Hughes notes. Laughing instead of crying, Boggs says that the penny will “survive forever as a profit center for the government, which will continue to manufacture them from recycled credit cards” and sell them to coin collectors at an obscene markup.
Even though a world-wide currency seems to be a logical step as the global marketplace continues to grow, the political barrier are tremendous. “No nation wishes t ogive up monetary and fiscal sovereignty,” Nadler things. On the other hand, a standard electronic cash system may be a step in this direction. In Boggs’s sci-fi-esque narrative, the best system will come from the “Web Extranationals who formed their own government and declared independence in 2001” but were never taken seriously until their electronic currency scheme proved to be effective. Back in the real world, Hughes things that global currency is already here: “It’s the US dollar, or the yen, or the deutschmark, or…” J.S.G. Boggs fine artist whose work focuses on currency
David Chaum founder and managing director, DigiCash
Eric Hughes Chief technology officer, Simple Access; founder, cypherpunks
Paul S. Nadler PhD, professor of finance, Graducate School of Management, Rutgers University; contributing editor, The American Banker; former adviser to the Federal Reserve Bank of New York
