Banking authorities in China and elsewhere are cracking down on use of the bitcoin. Among other reasons, financial authorities point out that this virtual currency is not traceable and so is being used for dubious activities such as the drug trade.
Really? How traceable are the currency notes then? For all you know, the hundred dollar note in your wallet may well have been a part of some dubious transaction a few hours ago. Currency notes are the favoured means of payment for drug cartels, smugglers and money launderers, several studies have shown.
In his book The End of Money, David Wolman quotes a 2010 US government study which found Mexican cartels ship between US$19 billion and US$29 billion as cash from the United States.
Across the Atlantic, a Bank of Italy study found the €500 note was the main instrument of transaction for such groups. They preferred notes as they are difficult to trace - unless coated with special chemicals as in a sting operation - and easy to dispose of.
A very high percentage of British pounds in circulation are coated, but with traces of cocaine, says another study. Wonder what a similar study about Hong Kong banknotes would turn up?
So much for the clean bill of health for currencies! And we are not even talking about the expense involved in printing and circulating these notes.
Electronic gadgets are making currency notes almost redundant anyway. When is the last time you handed over a wad for anything? Credit cards, mobile banking and utility cards such as Octopus are dimininshing our interaction with notes. It is like that landline phone that sits in a corner of your home, used once in a while.
So it is inevitable that some sort of electronic currency will emerge to replace notes and coins. The problem with bitcoin is no central bank has control over it as they have over printed notes. But a bitcoin-like currency issued by central banks of each country emerging soon is plausible.
If you think that is all baloney, imagine the trouble Marco Polo must have had in the 13th century trying to tell the Europeans, who were then using gold coins for trade, that in China bits of paper sanctioned by the emperor were being used as cash.