Book review – The End of Money

Living without physical cash is already easy. But is digital money too abstract?


(Photo: Ronit Novak)

Change, management gurus tell us, is the only constant. And a growing mound of change—nickels, dimes, and the inescapable but unlovable penny—has become a constant presence on my kitchen table. A few weeks ago, I decided to do something about the pile, carting a bag of nickels and dimes to the office. Now, my change has become a constant headache for the poor souls at Tim Hortons, upon whom I dump my bit of currency to feed a daily coffee habit. The pennies, of no use to anyone, still fill old soup cans in my cupboard, out of circulation forever.

Understanding the fate of the lowly penny is just part of David Wolman’s goal in his engaging new book, The End of Money: Counterfeiters, Preachers, Techies, Dreamers—and the Coming Cashless Society (Da Capo). While the Wired contributing editor advocates for an out-and-out end to physical money, he talks with advocates on both sides of the ledger: those who see the waste, inefficiency and malfeasance of our cash-based economy; and those who think a turn away from the almighty dollar is unwise, unpatriotic or even ungodly. To make his point, Wolman also attempts to live a year without physical money.

The most compelling argument presented against cash is on the grounds of efficiency. The facts are startling: fully 40% of all the pennies ever issued in the U.K. are now unaccounted for, while the U.S. Mint estimates that 200 billion of the half-trillion coins it has manufactured over the past generation have fallen out of circulation.

While the disappearance of small-denomination coins can be chalked up to lack of convenience, declining circulation of high-value banknotes is another matter entirely. In 2010 alone, $268-billion worth of U.S. $100 bills were printed, the majority of which, in Wolman’s words, “were or will soon be whisked overseas, because that’s where most of the banks and drug dealers demanding it are.” The U.S. Federal Reserve estimates that 90% of all C-notes have been sent to foreign banks, never to make their way back to American soil.

On this side of the 49th parallel, the cash problem isn’t so much tax evasion and drug dealing as counterfeiting. Canada, by the mid-2000s, had become a hotbed for phony bills: for every one million legitimate banknotes out there, the Bank of Canada was turning up 470 counterfeits— 10 times the rate that most G20 countries consider acceptable. That’s why the bank launched a $300-million revamp of the national currency last year, which will see Canada gradually convert from paper bills to polymer (using a fabrication process pioneered by Australia).

For conspiracy theorists, the government’s licence to print money is nothing short of a stealth tax. He who controls the mint or the printing press, after all, realizes a profit by putting money into circulation (the term is seigniorage), since the cost of making a coin or banknote is usually less than its face value. Last year, the U.S. Federal Reserve earned about $70 billion just by providing its citizens (or, in the case of the C-note, a global criminal elite) with physical money. Profits realized by government can and often are spent on its citizens, but for anti-government zealots like U.S. presidential contender Ron Paul, that’s reason enough to get rid of the Fed.

That’s the libertarian line against governments printing money. The more progressive line argues, as Wolman does, that reliance on cash transactions “perpetuates [poor] peoples’ exclusion from banking and the formal economy” and makes it hard for governments, especially in developing countries, to efficiently serve their citizens. Wolman cites a recent McKinsey study that found that if the Indian government could find a way to make all its payments to its citizens electronically, it could save more than US$22 billion a year—equivalent to 20% of the national deficit, or enough money to fund India’s major food aid program for two years.

The Byzantine Indian bureaucracy makes the likelihood of that quite distant, but other developing nations are further along in the march toward digitization. In Kenya, Wolman writes about the M-Pesa service, run by a subsidiary of telecom giant Vodafone. M-Pesa is a transfer service that allows users, via a text messaging system, to authorize the transfer of money from one person to another. Kenyans can go to any one of the 23,000 M-Pesa agents (usually local retailers), plunk down the cash they want to convert, and get a code from the agent; that code is then sent to the other person, who can then redeem at her retailer. It’s not exactly cashless, but it’s getting there—and after less than four years in operation, M-Pesa counts 12 million users, more than half of all Kenyan adults.

In the developed world, of course, we’ve got PayPal, Google Wallet and a raft of other innovations that make the cashless society seem imminent. Indeed, Wolman’s year of living without physical money proved much easier than he initially thought. No, he couldn’t get a shoeshine. And he expresses some disappointment at not being able to hand out money to street performers or panhandlers, or having to skip a variety of farmers’ markets and street fairs. But, on the whole, Wolman remains unsentimental about the future, or lack thereof, for cash.

Except, briefly, near the very end. Visiting a coin collector in Iceland, Wolman examines a small silver piece designed by Leonardo da Vinci. Handling it, he recognizes that “only in its material form” can money connect us in a meaningful way—in this case, connecting the collector in Reykjavik to Leonardo da Vinci to Wolman himself. “If cash is a representation of an abstraction, of a social construct,” says Wolman, “then digital money is an abstraction of an abstraction, inevitably diluting that sense of connection even further.”

By going cashless, we might ultimately gain economic efficiency, and more space on our kitchen tables; but, Wolman also realizes, something less tangible will be irretrievably lost in the process.


The rise of virtual currency may spell the end of the clunky nickel, the slim dime and, soonest of all, the tenacious penny (which a 2007 Desjardins study estimated costs Canada about $130 million annually to produce, store and move). But before those last jingly jangles echo from your pockets, take a look back at some bright—and less bright—moments in the history of change. (Melissa Edwards)