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http://edition.cnn.com/2014/07/02/business/is-a-cashless-society-on-the-cards/index.html?iid=article_sidebar An interesting article about the decline of paper currency in civilized society. One can surmise that the absolute end of physical paper/metal currency is not far off. The technology is now ubiquitous and the advantages are palpable. As I discussed in an earlier post, this has wider economic implications as it is the first step in greatly reducing or even eliminating a government's ability to harm anybody with currency inflation. If nobody actually carries any physical currency, then the whole of our liquid net worth--every last penny--is stored in computer memory somewhere, which can be rapidly manipulated and quickly traded out of any particular currency instantly and automatically, making the currency your savings is denominated essentially meaningless. The existence of this phenomenon would in turn make intentional currency inflation self-defeating for any government that tried it.
Article: Ron Paul: Bitcoin could 'destroy the dollar' First of all, a caveat: I'm not a Bitcoin believer. I think they have a gimmick that's capturing a lot of people's imagination, and they've walked into the limelight, but I see the hype of Bitcoin tapering off at some point. I could be wrong, but I just don't see it. Maybe they will spawn into something else, or they might find an application for their technology and do alright, but I don't see it as "the next big thing". However, Bitcoin is serving a valuable purpose in the discussion about currency and economics. It's going to change people's minds. It appears to have already changed the mind of Ron Paul. How? It's finally putting to rest a conspiracy theory that many libertarians have held for years: that the Fed secretly controls all trade by controlling The Currency, and it maintains a government-protected monopoly, the conspiracy theorists say, over anything that one could call "money". Never mind the fact that barter in various forms (including complex financial instruments) has been both legal and ubiquitous in the USA since the country began, and that the Fed no more has a "monopoly" over US citizen's transfer of wealth than the mint of Paraguay does. No, the conspiracy--stemming directly from the old Illuminati stuff from the 50s--is still with us in cruddy old corners of Libertarian thought, even overlapping into so-called Objectivists. So today's story is a bit of a celebration for me. Ron Paul has been perhaps the leading warrior in the USA banging the drum about the various Federal Reserve Conspiracies for decades. Now he's in a logical pickle: if Bitcoin could "destroy" the power of the Fed and US dollars--and they are perfectly free to do so--then he's just knocked the teeth out of his own argument. In other words, we're left to say to Ron Paul, "Ron, if a tiny group of eggheads can invent a better product than the US mint and eliminate them in the free marketplace, then why again are we supposed to live in fear of their unassailable power again?". It would appear that the only "conspiracy" the US dollar is a part of is its relative stability and practical usefulness. Take those away and it turns to dust, just like any other product in the free market. I daresay that with that choice of words, Ron is projecting what is in his own mind right now: that Bitcoin has "destroyed" is many of his own long-held beliefs about the power of the Federal Reserve.