This means that, although there are various options for making online payments, digital cash actually does not exist. This is not just a theoretical distinction. Banknotes have been on the decline for years, a trend that accelerated during the pandemic, as more and more businesses decided to stop accepting paper money. This poses risks, most notably for the so-called no bank—People who cannot afford a bank account and therefore cannot access cashless forms of payment.
Governments around the world, spooked by the rise of privately issued cryptocurrencies, have been exploring so-called central bank digital currencies, or CBDCs. Imagine a government version of PayPal or Venmo. This could solve the unbanked problem by creating a public banking option for low-income people, but it will not replace cash. As the economy moves relentlessly towards digital transactions, a future where our only options are payment apps, banking, crypto or CBDC means a future where everyone Financial transactions are subject to scrutiny by governments or private companies.
The ECASH Act, introduced by Representative Stephen Lynch, a Massachusetts Democrat and chairman of the House Task Force on Financial Technology, seeks to avoid that fate. (It stands for Secure Cryptocurrencies and Hardware Act — a perfect legislative acronym.) The bill, which Gray consulted, would direct the U.S. Treasury Department to proceed. a pilot program for a digital dollar version that works like cash.
“If we are to have a public option for digital finance, it needs to be inclusive of everyone,” said Raúl Carrillo, a researcher at Yale Law School who consulted with Gray on the law. “A big part of that is being able to go offline.”
What will it look like? The Treasury will issue digital dollars, just as it has issued paper money since the 1860s. To function like cash, money cannot exist on government books or on a distributed blockchain ledger. . That means the balance must be stored on the hardware. It may look like a standalone device, or it may be a secure hardware environment on your mobile phone, similar to a SIM card — essentially a chip that is physically separated from rest of the device, so that it doesn’t depend on the security of the entire operating system.
This idea has been around for a while. During the 1990s, companies like Mondex developed stored-value cards that could support offline payments. However, governments had no idea of issuing digital currencies and those companies were bought out by the credit card industry. (Like WIRED’s Steven Levy Written, in 1994, “When I called a Federal Reserve spokesman to ask about cryptocurrencies, he laughed at me. It was as if I was asking about the exchange rate with the UFO. “)
Today, technology is more and more beautiful and its applications are clearer. Last week, I spoke with Razvan Dragomirescu, technical director of WhisperCash. Through Zoom, he showed me his company’s products. One that looks like a credit card has both a touchscreen keyboard and a miniature Kindle-style e-ink display. Payments can be sent between cards using Bluetooth or by entering the recipient’s ID number and amount. In the second case, the transaction generates a 10-digit cryptographic hash that encodes the parties to the transaction and the amount. To receive it, the recipient must enter the code on their own card. WhisperCash’s other major product, a secure chip that attaches to a SIM card, turns a phone — even a low-cost “feature phone,” which is popular around the developing world — into a digital wallet number.
