Only a few years ago, many signs suggested that major powers in the West, and its populations, were increasingly becoming attracted to converting traditional paper or physically based currency to a more uniform system involving “digital money,” i.e., fully computerized transactions at the consumer level. This conversion to non-banking resources and systems come with challenges, but also suspicions about the implications about the change to digital. And with that has come hesitations about moving forward to the new paradigm, led by three considerations.
Concerns About Fintech
According to economist Martin Armstrong, “Fintech is a hybrid for “financial technology.” It’s a catch-all term for any technology that’s used to augment, streamline, digitize or disrupt traditional financial services. This is part of the push to eliminate paper money. The IMF is behind Fintech because they are out to eliminate all paper currency and force all transactions into the digital world.” The bad-mouthing of the new industry is connected to concerns about a ‘secret agenda,’ or alternative motives behind the timing and the capabilities of the technology.
A chief fear entertained by those critical of a fully digital takeover of all finance, is the spectre of uncontrolled or unaccountable inflation due to the ease by which money can simply be digitally ‘printed,’ with no physical currency and assets to act as a offset to either government debt or deficit spending. “Not only has gold failed to keep pace with the expansion in debt, which is simply money that pays interest, but the entire toolbox of economic theories has failed,” writes Armstrong. “This is why these people are pushing to eliminate paper money, for instead of accepting any blame for their fiscal mismanagement and adopting Marxism to bribe the people for votes, they always blame the people.”
Concerns about ID Privacy
As the late consumer health reporter Bill Sardi reported, “Alibaba and Google are moving into the loan business. Banks are going to compete with the likes of Amazon, Facebook and Apple… TechFins pose a bigger threat to banks than any other disruption. A bank reform leader, Genpact, says: ‘Once Amazon knows more about me than my bank knows about me that becomes an existential challenge for banks.’”
But the emergence of these alternatives has come with greater awareness of the potential loss of identity and user independence. As a result, there has been increased discussion about restoring full anonymity to consumer transfers, such as with bitcoin exchanges, using the fintech platform itself to reintroduce privacy protection. It is hoped that such methods may fully realize crypto’s status as “freedom money.”
In the absence of ID protection or anonymizing features, many suspect the real purpose of pushing for a transition to the financial alternatives is to make currency holdings systematic ally more trackable, or even cancellable. Whatever the truth about this theory, the perception that fintech is a stalking horse for eliminating financial sovereignty has been growing, thus chilling broader embrace of the technology.
Doubts about NFTs and Crypto Value
There has a well been a loss of confidence in the valuation of Bitcoin based value and blockchain products in recent months, following the recession-based volatility in crypto products. The drop in BTC value during early to mid 2022 has been much more severe than suits the taste of many currency investors. Acceptance and reception of NFTs have also seen fluctuation, with many parties enthusiastically embracing the concept, while others (even in the blockchain community) taking the view that many of the items created are an overvalued scam.
The widespread treatment of crypto as a short term investment, as opposed to it acting as an alternative means of exchanging value, has probably contributed to the stall in accepting digital coins. Long term valuation models of BTC indicates it has stability to grow as a de-facto currency, but its viability is likely being distorted by speculators who desire a strong return within months. This has resulted in potential users questioning Bitcoin’s prospects based on focusing on the wrong indicator.
The combined factors of skepticism regarding the nature of fintech, privacy concerns, and the current volatility of crypto have made the future of digital finance more difficult to value, thus harder to trust. This means transferring commerce completely under a digital umbrella will take longer to develop, until dynamics in the economy and public confidence change.