Cryptocurrency has swept the world by storm, raising the eyebrows of many investors and politicians alike. The House Financial Services Committee followed suit with a hearing on the future of money. An exciting topic – what currency will look like in 50, 100, 500 years. Assuming our republic lasts that long (no guarantee with our current fiscal situation). Nevertheless, Congress is doing the right thing by trying to prepare for the future so America does not get left behind. China, perhaps the United States’ greatest threat, has already launched their version of cryptocurrency, and Russia and Japan plan on launching theirs soon.
Hearing witnesses Leonard R. Olijar and David J. Ryder, Directors of the Bureau of Engraving and Printing (BEP) and U.S. Mint, respectively, were quick to point out the risks and downsides of cryptocurrency. They told the committee their biggest concern with digital currency is the risk a cashless society poses to those who do not have access to a computer or smartphone.
While it is true that only 77% of Americans currently own a smartphone, the witnesses failed to give Congress the full picture. A whopping 100% of Americans ages 18-29 own a cellphone and 94% own a smartphone. We can only assume that number will creep up toward 100% as the millennial, gen z, and younger generations grow older. The weight of the statistic is currently brought down by those 65 and older, which, barring a technological breakthrough, will not be alive in 100 years.
As the hearing continued, witnesses seemed more interested in saving their jobs – or furthering their hobbies as coin collectors, than exploring the potential positives of digital currency. However, they did shed some light on serious issues that may befall a future switch to crypto cash.
A cashless society could pose huge risks if a natural disaster or electronic war were to occur. Both witnesses were concerned with how people would buy necessities if a natural disaster wipes out cell and internet towers. In addition, our adversaries could spark mass panic in the U.S. if they were to shut down our electrical grid.
There is also another downside to electronic payment. As the internet grows, more and more people can proficiently use technology to hack into essential systems. The fear is a hacker could drain bank accounts without leaving his or her couch. Mr. Olijar also noted that while counterfeiting cash is very difficult, electronic payment fraud is an increasing concern for nations all over the world.
Despite the negatives, a cashless society would save taxpayers billions every year by not having to print money. Congress is already growing increasingly inpatient with the U.S. Mint about the penny and the nickel. According to the witnesses, it costs about 2 pennies to make one penny, and it costs about 6.3 cents to make a nickel – making each more valuable than they are worth.
Before the end of the year, BEP is expected to have a “penny plan” which will give Congress their take on the future of the penny. One Congressman, a staunch opponent of pennies, says he doubts they will recommend ending pennies, as federal bureaucracies rarely voluntarily reduce their size and scope.
Eliminating the penny has been on the radar for many in Congress for decades – and its elimination is much easier than people may think. If the Mint stopped producing the penny, merchants would round purchases to the nearest 5 cents. So, instead of something costing $10.01, it would cost $10.00, $10.03 would cost $10.05. A minor change that would save taxpayers billions in penny production.
Shining through the laborious assurance from witnesses that physical money is safer and better for Americans, was the optimism of many committee members that wanted to pursue the potential of a new, cashless society. For most of America’s existence, the U.S. has been at the forefront of innovation. Congress must continue to push the envelope in order to continue that tradition.
