Friday, August 05, 2005

A Cashless Society

For literally decades now, science fiction authors as well as pundits have been predicting that we will soon move to a completely cashless society. More and more, I'm seeing evidence that this is true. Now that fast food places are routinely accepting credit/debit cards, I'm finding that the only time I use cash (greenbacks and coins, that is) is in Coke machines.* Yesterday I was able to use a Coke machine that would allow me to swipe my credit card to buy a Coke (in fact the cash acceptor wasn't working on this particular machine). While I still don't like to travel around town without a $15 or $20 of WAM (walking around money), I'm finding that I actually use that cash less and less. Even my check use is tapering off. I have arranged for direct debiting of every bill I can, so we pretty much only use checks to pay my daughter's preschool bill and the bills for our utilities. I have an online bill paying service, so I could (and probably will) even get away from using a check for those bills if I wanted (the only reason I haven't so far is because the utility bill amounts are variable, so I can't make the payments automatic). Since my paycheck is direct deposited, we could literally live without cash entirely, if we were willing to accept just a tiny bit of inconvenience.

But just because we don't have to physically handle the greenbacks any more does not mean we are living in a cashless society, however. Even though the cash is not in my hands, I could get it in my hands, if I wanted. If we truly lived in a cashless society, exchange rates would be meaningless -- there would be no currency to buy and sell. I've just recently started working on a novel (my first, I've only written short stories up until now), and I need a cashless economic system for the society in which they live. As an exercise, let's see if we can develop one here and work out its ramifications.

First some technological assumptions. The system will need to be completely portable and require no external server. It should be credit card sized or less and easily carried. Given that many spacefarers will likely not wear clothing (see my entry on Nudists in Space for why), it needs to be able to be carried while completely naked. The system should have some way to send and receive funds directly to another user on the network. Of course, the system needs to be secure, both in the sense of being un-hackable as well as having a guarantee of zero data loss. What it must not be is tied to any currency, precious metal, etc. The fundamental idea is that "credits" (to use the popular SF name for it) represent units of performed work and not arbitrary piles of gold or some other "standard." Essentially, a cashless society is a sophisticated system of barter of goods and services. Credits simplify the task of saying, "I'll bake bread for you if you will build a house for Joe and give me the flour he will give you in return." Instead of having to find buyers for each step on the chain, you pay me in credits that you received from Joe in exchange for building his house, and I will use the credits you give me to buy more flour from Joe. At no time is there any need to reference a gold standard or any other standard (in fact, U.S. currency hasn't been tied to a gold standard for years and years). We have agreed on the value of our respective services and products and make the exchange accordingly -- no government need be involved. Of course, different people will value different goods and services differently, but that's what makes a free market economy. There's no inherent reason to standardize the value of bread, or flour, or house construction. Barter inherently eliminates the need for "exchange rates." The price of a particular good is whatever the parties involved say that it is. Of course, if you wish to trade with someone who is not on the network, you will need to revert to "hard barter" -- trading the physical goods and services instead of the credits represented by them. In this case, if we want to buy some alien trinket, we would first have to find something of ours that the alien wants and use our credits to pay someone to create that item for you. If the alien society is still currency-based, you might could work out an exchange rate, but only if the alien government does enough business with your society to make it worth their while to accept your credits and pay its people in its currency. This is essentially the system we have today between national currencies and is the cause of a large percentage of the complexity in the global economy (it's also one reason I applauded the Euro, for all its problems). In my novel, there are no aliens. In fact, it takes place entirely in the Solar System among seven Solar Nations, all of which (with the exception of Earth, which is still as balkanized as it is today) were formed at approximately the same time and with approximately the same technology. For that reason, a network for the transmission of credits as defined here can be plausibly formed. (There will be some problems interfacing with Earth, which still uses currency systems in its various countries, but that's just a fun source of conflict.)

So, let's look at our technological and economic requirements one at a time and see what we come up with. First of all, what would a typical transaction look like under this system? We some way to ensure that only the authorized user can transfer credits out of an account, but anyone should be able to send credits into that account. While we might argue that the user shouldn't need to approve transactions going in, we in fact need to authorize these transaction as well -- think of the possibilities for framing someone if millions of unearned credits suddenly appeared in their account! Therefore, any transaction must be authorized by both parties. Because the transaction needs to be authorized, at a minimum we need to be able to activate the system, enter an ID to send the funds to (or beam it directly or both), enter an amount of funds to transfer, and then enter a security code or some other authorization system that is unique to the user. The need for nude use means that the system needs to be either implanted under the skin (with all the problems that causes), stuck to the skin with adhesive, or worn on the body as jewlery. This novel takes place some 50 years or so in the future, so technology in the story will not be so very different from technology we have today. Implantable chips are becoming a reality today, but how will you enter data into it? Voice is about the only way, but that's also going to be true for any device smaller than a credit card. Human biology being as diverse as it is, you can bet there will be some people who will not respond to implants well. So, while this may be an option for some people, it shouldn't be the primary method.

The next possibility is the adhesive method. No one is going to want a large credit card permanently stuck to their wrists (or wherever), so you can imagine this will voice activated as well. The difference between this and implant (for a usage standpoint) is that the device could be tapped in a specific manner to provide the equivalent of the PIN number used with today's ATM cards. Technology would have to have advanced to the point at which electronics are not only very small, but also very flat. That's not, however, too much of a stretch (consider the USB memory sticks in wide use today). Assuming you could come up with some sort of permanent (or at least very long-lasting) adhesive, this method has most of the advantages of the implant method and almost none of the disadvantages.

The last method would be to have the device as a piece of wearable jewelry. If worn as a pendant, we can make the device large enough to have a keypad, but I don't think that's really necessary. Basically, anyone who didn't want to phsycailly attach their device to their skin could simply wear it on a chain. The most effective and convenient type of jewelry, however, is a ring. It's small enough that you can easily forget you are wearing it. It's hard to remove, so it won't get lost as easily as a necklace. It will stay on the finger without any high-tech adhesives. It has all of the advantages of the previous two systems and none of the disadvantages. If all three methods mentioned here were available, I strongly suspect that the public would take the wearable jewelry. We love to customize things, to express our individuality. Just look at collectible phone cards! Given this, let's assume that our device is in the form of wearable jewelry, with rings being the most popular.

Okay, after that lengthy discussion we've decided to place our device in a ring (for most people -- others may customize it into any form they wish). Our requirements also state that we shouldn't need a central server or bank. That means that the device must be equipped with some sort of communication system to transmit data to other devices. For security purposes -- and due to power limitations -- we probably don't want to be able to send credit data out into the air, even encoded. Therefore, we can envision that the system runs in device-to-device mode only. A direct light link (a laser is not necessary -- you would only need an LED) is one of the most secure forms of wireless communication imagineable. We still need some convenient way to get paid for our jobs, however, as well as some way to pay the bills. Everyone will have access to small personal computers in their quarters. We're almost to that point today, and building that capability into the habitats in the Solar System of the near future is trivial. Essentially, payments can be sent to the computer via encrypted email. The computer will have a light link device that immediately transfers the funds to the user's wearable device. Similarly, the user can compose an email and "attach" funds from her ring to pay bills or shop online. Shopping in the store is easy, it works just like a credit card today, but you don't have to sign anything -- just connect the light link to the store's cash resgister (essentially a larger device like the wearable devices) and authorize the amount shown on the register's display. Similar devices are already being tested at gas pumps and grocery stores now -- just wave a magnetic wand at the pump.

This system is convenient and, as long as the technology is kept secure from destruction or tampering, is actually safer than depending on a bank to hold your money. Your credits-- the physical represenation of your buying power -- are with you at all times. There are no bank balances to reconcile or bank errors to worry about, and no government to interfere or track your transactions (which, currently, is one of the sole advantages of cash).

Having laid out the basic system, we're free to explore implications of it and use those implication to generate conflict in the story. Even if systems such as these never play a pivotal role in your story, you had better know ow everything works so that your tale is internally consistent!

*By the way, being from the South, a "Coke" is any soft drink. Here out west they call it a "soda, " up north they call it "pop." Yankees are baffled when they come into a Tennessee store and, upon asking for a Coke, are asked, "Well, what kind do you want? We got Dr. Pepper, Sprite, Pepsi ..."

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