Money makes the world go round, but we don’t often stop to think about why our money is the way it is, or whether we can imagine different forms of money. From cowrie shells to credit cards, coins to cryptocurrency, money is more than just a means of exchange—it tells us a lot about our society, our values, and our interconnections with one another.

In this episode of the UCI School of Social Sciences Experts On series, Bill Maurer, dean of social sciences, professor of anthropology and law, and director of the Institute for Money, Technology and Financial Inclusion at UC Irvine, discusses the many ways people spend, save and interact with systems of value throughout history and across cultures.

 

 

“An area that I’m often asked to provide expert insight on involves the future of cash, or cashlessness, in a fintech-driven world,” he says. “And people often ask me, when will cash disappear? I always say that I hope it never does!”

The idea of moving away from cash is mostly driven by two factors: fiscal concerns over revenue collection, and industry interest in capturing more and more data about people’s lives, he says.

“If you’re a state tax authority, eliminating physical currency means that transactions have to pass through a bank or other institution. Despite secrecy rules and privacy regulations, if they have due cause, officials can still peer into people’s financial affairs.”

For the Big Four platform companies and smaller digital services, going cashless offers a view into users’ offline spending.

“If you use cash at a physical till, there’s no data capture; but if you tap and pay with your watch or phone, platform companies all of a sudden now know a lot about what you’re doing in the physical world,” he says. “That’s a treasure trove of personalized information to use in targeted marketing, risk assessment and pricing for things like loans, as well as for predictive models to identify trends.”

For the 15 to 30 percent of people in the U.S. who are unbanked – meaning they have no bank account or have difficulty maintaining a minimum balance, cycle in and out of formal banking services, or rely on check-cashing services - smartphones have opened up access to financial services that can help build credit and wealth. And yet as access has become more pervasive, so, too, have new fintech services, apps and other fringe services that target this financially vulnerable population who disproportionately come from racialized and marginalized communities.

“Every day people receive algorithmically-driven targeted ads on their smartphones and other devices which, in the financial sphere, include loan offers or credit-score boosting services. Services marketed often include outright scams or disinformation designed to prey upon unsuspecting consumers with thin or no credit files due to their lack of banking history.”

These practices sow distrust that perpetuates the racial wealth gap as these consumers pay higher fees for basic services or exclude themselves entirely from the system. And it’s a social problem, one that requires a social scientific solution, he says.

Maurer is currently leading a National Science Foundation-funded study to understand misinformation and disinformation about money, banking, and finance among racialized and marginalized communities in the U.S. The research team includes academic and industry experts from finance, anthropology, economics, philosophy, informatics and political science. Together, they’re working to launch a community-driven forum - Community Credit Discovery - for monitoring ads for predatory products while also providing community members a voice in product design with credit unions.

“For now, we’ve limited our scope regionally to Southern California, and are working with 3 credit unions and some community-based organizations serving underserved communities,” he says. “Our ultimate goal is to model how community orgs and credit unions can work together to provide alternatives to payday lending and other harmful financial practices.”

So where does cryptocurrency fall in this discussion? Maurer has been following Bitcoin and other forms of cryptocurrency from infancy to their seemingly mainstream adoption with the Staples Center in LA now bearing the name of Crypto.com and multiple cryptocurrencies launching daily.

“I’ve studied and taught courses on the blockchain and have focused on the social, regulatory and consumer impacts and issues associated with digital currency. And my takeaway is that without clear guidance from regulators in the U.S. and worldwide, highly volatile cryptocurrencies are never going to be more than a niche investment for people willing to take risks -- and the risks are big!” he says. “Also at issue is the sustainability question, and not just for crypto but for pretty much everything we're coming to depend upon in our machine-learning, AI-driven, internet of things world. Addressing the enormous energy consumption of cryptocurrencies has to be part of the legal and policy discussion as part of a broader look at the energy required for all computationally intensive processes.”

The comes full to the topic of cash and the question of whether we’ll ever be a cashless society, he says.

“Ironically, with every new digital or mobile payment innovation, we’ve seen cash demand go up. Apps linked to bank accounts make it easy to buy something or split a restaurant bill, so many people who use these apps also withdraw cash from ATMs as their ‘savings’ because they can lock it in a drawer and eliminate the temptation to spend it.”

“The coin has been around for thousands of years, and it’s one of the oldest pieces of technology we’ve got. We’ve also seen that paper money becomes absolutely essential to community resiliency during times of crisis like when there’s a natural or manmade disaster,” he says. “Cash and coins always work - even when the lights go out, even in a war zone. There’s a public interest in preserving cash. I don’t see it dying anytime soon.”