Hong Kong

Hong Kong Protests Show Dangers of a Cashless Society

Many digital payments can be tracked, potentially assisting an authoritarian crackdown.

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It can be easy to take cash for granted, especially in a wealthy, developed economy. Those fortunate enough to live in a stable society usually suffer no lack of payment options. They are getting more advanced all the time, with financial technology (fintech) companies constantly developing new ways to quickly and cheaply make purchases and send money. It sometimes seems the days of old-fashioned cash, with its dormant physicality, are numbered.

Allowing cash to die would be a grave mistake. A cashless society is a surveillance society. The recent round of protests in Hong Kong highlights exactly what we have to lose.

The current unrest concerns a proposed change to Hong Kong's extradition laws that would allow island fugitives to be transferred to Taiwan, Macau, and mainland China. The proposal sparked mass outrage, as many Hongkongers saw it as little more but a new way for the People's Republic of China to erode the legal sovereignty of Hong Kong.

This week, anti-extradition protests reached another crescendo, as Hongkongers took to the streets again to commemorate the anniversary of Hong Kong's handoff to China, highlighting the deep political dynamics at play.

Specifically, protestors fear that the Chinese judicial system, with all its attendant human rights baggage, would come to supplant Hong Kong's. This would be no small problem. China isn't shy about cracking down on political dissidents, even those from other states under their control. For example, in 2017, a Taiwanese pro-democracy activist was detained in China and sentenced to five years in prison for "subverting [Chinese] state power" in his home country.

So tens of thousands of Hongkongers took to the streets to protest what they saw as creeping tyranny from a powerful threat. But they did it in a very particular way.

In Hong Kong, most people use a contactless smart card called an "Octopus card" to pay for everything from transit, to parking, and even retail purchases. It's pretty handy: Just wave your tentacular card over the sensor and make your way to the platform.

But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne'er-do-wells. Traveling downtown during the height of the protests? You could get put on a list, even if you just happened to be in the area.

So the savvy subversives turned to cash instead. Normally, the lines for the single-ticket machines that accept cash are populated only by a few confused tourists, while locals whiz through the turnstiles with their fintech wizardry.

But on protest days, the queues teemed with young activists clutching old school paper notes. As one protestor told Quartz: "We're afraid of having our data tracked."

Using cash to purchase single tickets meant that governments couldn't connect activists' activities with their Octopus accounts. It was instant anonymity. Sure, it was less convenient. And one-off physical tickets cost a little more than the Octopus equivalent. But the trade-off of avoiding persecution and jail time was well worth it.

What could protestors do in a cashless world? Maybe they would have to grit their teeth and hope for the best. But relying on the benevolence or incompetence of a motivated entity like China is not a great plan. Or perhaps public transit would be off-limits altogether. This could limit the protests to fit people within walking or biking distance, or people who have access to a private car—a rarity in expensive dense cities.

If some of our eggheads had their way, the protestors would have had no choice. A chorus of commentators call for an end to cash, whether because it frustrates central bank schemes, fuels black and grey markets, or is simply inefficient. We have plenty of newfangled payment options, they say. Why should modern first world economies hew to such primordial human institutions?

The answer is that there is simply no substitute for the privacy that cash, including digitized versions like cryptocurrencies, provide. Even if all of the alleged downsides that critics bemoan were true, cash would still be worth defending and celebrating for its core privacy-preserving functions. As Jerry Brito of Coin Center points out, cash protects our autonomy and indeed our human dignity.

We don't even need to contemplate hypotheticals of what a digital financial surveillance system would look like. China's ubiquitous social media and messaging service WeChat doubles as a primary payment method for millions of mainland Chinese. It's easy, it's effective, and it's integrated into every facet of Chinese digital life.

But Coin Center's Peter Van Valkenburgh calls apps like WeChat Pay "tools for totalitarianism" for good reason: Each transaction is linked to your identity for possible viewing by Communist Party zealots. No wonder less than 8 percent of Hongkongers bother with hyper-palatable WeChat Pay.

Of course, Western offerings like Apple Pay and Venmo also maintain user databases that can be mined. Users may feel protected by the legal limits that countries like the United States place on what consumer data the government can extract from private business. But as research by Van Valkenburgh points out, US anti-money laundering laws afford less Fourth Amendment protection than you might expect. Besides, we still need to trust government and businesses to do the right thing. As the Edward Snowden revelations proved, this trust can be misplaced.

Hong Kong is about as first world as you can get. Yet even in such a developed economy, power's jealous hold is but an ill-worded reform away. We should not allow today's relative freedom to obscure the threat that a cashless world poses to our sovereignty. Not only can "it happen here," for some of your fellow citizens, it might already have.

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  1. Monero, Dash, Z-Cash, . . .

    People should know the names of these products. Otherwise, they come to imagine that we need to depend on the government to protect our privacy until some future technology becomes available.

    No. Monero, Dash, Z-Cash. Merchant services to let online retailers accept coins like Monero: https://globee.com/

    The future is here. You can use this stuff now.

  2. I always use cash for certain types of purchases, just because. Cash is an awesome thing.

    As for the broader deal here, I feel for Hong Kong… They would have been better off staying under the British umbrella… Or indeed going completely independent. I hope they continue to stand up against the commies on the mainland… Maybe if we’re really lucky the tail will wag the dog, and the people of Hong Kong will eventually be the ones that sway the mainland to become a free society.

    1. …and the people of Hong Kong will eventually be the ones that sway the mainland to become a free society.

      That would be awesome.

    2. In the past, China’s concerns about Hong Kong were partly driven by their concerns about Taiwan. If Taiwan sees China mistreating Hong Kong, then why would they want to join the club?

      http://focustaiwan.tw/news/acs/201906230011.aspx

      1. Only an IDIOT would voluntarily go into political union with China as it presently exists. The Taiwanese aren’t idiots.

    3. “They would have been better off staying under the British umbrella…”

      It was only the island of Hong Kong that was ceded to the British in perpetuity. Mainland Kowloon and the rest were to be handed back to the Chinese when the lease expired. The British thought that splitting the island from the mainland would be impractical so they returned the whole thing over to the Chinese, with full and enthusiastic support from Hong Kong’s business community.

      1. “with full and enthusiastic support from Hong Kong’s business community” who had apparently lost sight of the fact that Beijing’s was playing the long game.

        Honestly, who in 1997 didn’t see this all coming? I am not prescient, this was completely predictable.

        1. As time moves forward, my faith in the wisdom of businessmen is shaken to the core. Few people are as profoundly moronic as businessmen.

      2. The Brits should have taken it all in perpetuity when they had the Chinese on their knees.

        But what’s done is done!

  3. Hong Kong isn’t sovereign.

    Neither is Taiwan.

    One China.

    As far as China is concerned, this is equivalent to Seattle complaining about federal jurisdiction.

    1. Go to bed Chairman Mao. It’s late in Beijing.

      If Taiwan is part of China why do they have a government and military and foreign relations that adamantly insist otherwise? Or is it because its the last remnant of the government the communists chased out of the mainland in the fifties that you never managed to finish off?

      1. The Taiwanese Independence movement is rather small, I believe. Conservatives like the KMT still believe that Taiwan is part of China. They also believe that Tibet and Mongolia (Inner and Outer) are part of China.

        1. Actually its not. It just lives under constant military threat of mainland china. They’ve been pushing for their own separate Olympic team for years now, but the IOC is to pussy to step on Chinas toes.

          But China will probably poison itself before we need worry about it taking over. All sorts of birth defects and cancers are on the rise, while their supply of clean water is shrinking. WHO estimates that by 2030 over 80% of groundwater in China will be unsafe for human usage. And they’ve got provinces like, I think it was called xinshao but id have to google it again, where 18% of newborns are born with visible birth defects. And that’s just visible…

          1. “They’ve been pushing for their own separate Olympic team for years now”

            I’m pretty sure Taiwan sends a separate team if not to the Olympics, but to other lesser events like the pan asian games. They go under the unlikely name of “Chinese Taipei” and compete under an unrecognizable flag rather than the familiar drapeau of Sun Yat Sen.

            “But China will probably poison itself before we need worry about it taking over. ”

            Q: Where does Hong Kong get her drinking water?
            A: Communist China.

        2. >Conservatives like the KMT still believe that Taiwan is part of China.
          Only in the “We are the temporarily-displaced-by-communist-rebels rightful and legal government of all of China” sense. They do not consider the government currently residing in Beijing to be legitimate.

          1. “They do not consider the government currently residing in Beijing to be legitimate.”

            Taiwanese politicians do sit down with Beijing politicians and discuss matters of mutual interest. That confers legitimacy on Beijing, though it’s hardly necessary. The UN and every member nation recognizes the legitimacy of Beijing, including the USA which has done so formally since the Carter years. They also recognize that Taiwan is a part of China

            1. That’s only because might makes right in the real world…

    2. China just wants to tear down the wall between the mainland and Hong Kong.

  4. I think there probably is plenty of video surveillance the government could use to track the protestors. Also, I imagine they could use the lack of normal Octupus activity as evidence against them.

    It appears the communists are getting bolder by an improved economy and will eventually swallow the great Hong Kong experiment.

  5. Another reason why we cannot allow political office to be a long term career. Vote everyone out, every time.

    1. word. ban incumbency.

  6. Non-cash is fine as long as its anonymous. Say buy credit on an “Octopus Card” with cash.

    Even the US government tries to prevent anonymous banking or credit card types of transactions. Even many Americans are tied to their cell phones and dont use anonymous cell services. Most ISPs tie internet service to a person. These are not coincidences.

    I bet there are thousands of other ways the tyrannical Chinese government can track people in China. I bet cell phones are a prime method.

    1. They use facial recognition to track minor offenses like jay-walking, then auto-deduct your fine from your WeChat account. Seriously.

      1. Holy crap. That’s some Police State shit right there.

        I guess having money on WeChat is also mandatory.

        We American Patriots would never pay that, demand a jury trial for the criminal offense, and definitely use cash from then on.

  7. Keep banging this drum loudly!!!

    To preserve individual liberty, along with the first and second amendment, we need a 28th amendment to declare that hard currency (by which I mean gold, silver or copper) will always be legal for individuals to own and / or use for ANY transactions or payment of debt to any party or entity, including any governmental body.

    It shouldn’t take a genius to realize that we are quickly headed down a very steep, slippery slope to a dystopian future of total surveillance.

    1. Gold (and silver and copper) is not currency. It lacks a critical element to be considered currency. To be able to exchange easily in transactions. Which you can’t do with Gold no matter its form.

      And there are already technologies that allow you to purchase items anonymously. Such as IC cards (see Suica in Japan).

      1. LOL

        You can buy things VERY easily with gold or silver… Anywhere in the world if need be.

  8. Now if the people in Hong Kong had guns…

    1. Meanwhile, the Democrats are thinking: If only the US had “sensible gun laws” like China…

  9. “What could protestors do in a cashless world?”

    How about taking a lesson from history? 1917, Petrograd. Radical tram workers seize control of public transit and let the public ride for free, cashlessly.

    1. Radical tram workers seize control of public transit and let the public ride for free, cashlessly.

      I get it “cashless”.

  10. This is about as silly as the folks claiming that “the revolution will be televised”.

    Which is to say, you’re letting your ideology delude you into thinking your personal interests are what will stave off your personal fears.

  11. I don’t care if they know I imported Japanese ass-molds of cute guys. In fact, I hope somebody goes through my credit card transactions and discovers this.

    1. That’s fine for the moment, that war looks to have been won. But what about the next one? What if alcohol prohibition becomes a thing again? How are you going to feel about having your yeast tracked? Or worse, how do you feel about having your ammo purchases being recorded? So long as you’re dealing with adults and don’t violate the NAP, what business does anyone have tracking your purchases, travel or writings without your explicit consent?

  12. Think maybe this applies…..? 🙂

    “Then you will see the rise of the double standard – the men who live by force, yet count on those who live by trade to create the value of their looted money – the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law – men who use force to seize the wealth of disarmed victims – then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

    Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.”

    Or this….?

    “When money ceases to be the tool by which men deal with one another, then men become the tools of men.”

    I don’t think a cashless society is a good idea quite yet.

  13. A lot of the ruling elitist filth in DC want America a cashless society for the same reasons why the ruling elitist turds in the People’s Republic of China insist on a cashless society, and that’s not a coincidence.

    1. +100

    1. Democrats oppose voter ID, but they’ve put a poll tax on supporters of their 2-dozen presidential candidates, requiring them to have 130,000 individual donors to qualify for the next round of debates.

  14. Of course we need cash. Ever snort a line through a credit card?

  15. also shows the dangers of communists running a country and disappearing dissidents

  16. Why not decry the added costs for local small businesses while the “fat cats” benefit?

    Yes, most will use cash payments to under-report income, thereby cheating on state mandated theft, aka taxes. The enlightened few understand that electronic payments come with a 3% direct fee upon their revenues. This puts the honest retailer in comparative disadvantage with the likes of Walmart or Amazon, driving most out of business.

    I, for one, believe this is unacceptable. My opinion is that libertarians of all walks should be against state-enforced wealth transfers from Main Street to Wall Street. The way to correct this problem is to end government laws that require businesses have to charge the same price when customers use credit, despite the far higher costs to small business stemming from bank fees electronic payments come with.

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  18. […] pushed for ONE reason: To make it hard to escape the heavy hand of big […]

  19. Any Hong Konger who believes that the city is sovereign in the face of the Beijing government is seriously deluded. The more brazen the demonstrations, the more rapidly the central government will crack down harshly. What or who is to stop them. Nothing and Nobody.

    1. “The more brazen the demonstrations, the more rapidly the central government will crack down harshly. What or who is to stop them. Nothing and Nobody.”

      Question: Are these demonstrations being shown on Chinese TV? If so, perhaps a crack down is coming as a show to the rest of the country. It happened in Tiananmen a couple of decades back. I don’t think there are any great numbers of Chinese security forces in Hong Kong and local police may tend to sympathize with the locals. Don’t be too quick to write off the resourceful and courageous people of Hong Kong.

  20. […] cash to die would be a grave mistake. A cashless society is a surveillance society. The recent round of protests in Hong Kong highlights exactly what we have to lose.In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay […]

  21. […] But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the […]

  22. […] But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the […]

  23. […] But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the […]

  24. […] Hong Kong Protests Show Dangers of a Cashless Society Many digital payments can be tracked, potentially assisting an authoritarian crackdown.By ANDREA O’SULLIVAN Jul 2 2019 https://reason.com/2019/07/02/hong-kong-protests-show-dangers-of-a-cashless-society/ […]

  25. […] Source: Hong Kong Protests Show Dangers of a Cashless Society – Reason.com […]

  26. […] cash to die would be a grave mistake. A cashless society is a surveillance society. The recent round of protests in Hong Kong highlights exactly what we have to lose. In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay […]

  27. […] potentially assisting an authoritarian crackdown […]

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