Tuesday, March 05, 2024

Money Developments (1) Digital Money

Because they misunderstand Revelation 13, many Christians become concerned when they read about changes to currencies and the emergence of a cashless economy. They don’t seem to realise that persecution of Christians does not begin with the Mark of the Beast and is not limited to it. The New Testament explains that persecution is normal for Christians (1 Peter 4:12). Actually, the lack of persecution of Christians in the West over during the last century is what is abnormal, perhaps due to our lack of zeal.

As society changes and new technologies emerge and are accepted, changes naturally follow in the way that people use money. This gradual economic change is normal. At this time, several big developments are changing the nature of currencies and the way people buy and sell. These changes are related and happening at the same time, so we need to think about each one in a coherent way to understand how they will affect us. The five big changes that are happening are:

  • Banking is digital.
  • Cash (notes and coins) are disappearing quite quickly.
  • Private payment tools have been developed.
  • Cryptocurrencies that are not controlled by governments have emerged.
  • Central banks are planning to offer digital currencies.
These changes are related, but I will examine each separately.

1. Digital Money
Fifty years ago, all bank records were on paper. When you entered a bank to withdraw cash, you went to the ledger counter first, and a person checked your identity and your account and recorded the transaction. You then went to a teller with the stamped form, and they handed over your money. That has now changed.

These days, all bank records are digital. The money in our savings and cheque accounts is recorded as digital records on the bank's computer systems. If you go up to a bank teller, they complete transactions by accessing these digital records through a computer terminal. There are no bars of gold backing this money that we have put in our bank account. The payment of wages or salary is recorded as a digital transaction. Likewise, the money that we use to buy food, pay the rent and buy things is a digital record on a bank’s computer. This means that we are already using digital currency.

Banks no longer keep paper records of our accounts and transactions, although they can be printed out if necessary. This change brings risk. Digital records can be hacked by criminals, whereas paper records are hard to change. More seriously, a powerful electromagnetic pulse from the sun or a military weapon might wipe out a bank's electronic records. I am not sure if they have plans to deal with this problem, but it would be an enormous disaster if it occurred.

The disappearance of cheques was the last step in the move away from paper transactions. They are quite inefficient because the paper cheque has to be transported from the bank of the person banking it to the bank of the person who had issued it. Here in New Zealand, many retailers will no longer accept a cheque, and many people rarely use them. I can’t remember the last time that I wrote a cheque.

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