Having to transact electronically leaves virtual fingerprints on nefarious activities, so while buskers and those collecting for charity will find alternatives, criminals will have a much tougher time.
Furthermore, the flow-on effects from the drug trade are significant. A great deal of crime is committed to gain cash for drugs, and violence within the underworld over drugs is a serious community concern.
Arguably, the most significant crime reduction initiative we could undertake would be to move into a cashless society.
Of course, businesses and consumers in the black economy will adapt, and look to find a technological solution of their own, and it might be that they've already found one. One particularly obvious alternative is cryptocurrency, such as bitcoin.
Cryptocurrency was founded on the idea of democratising the online movement of currency by allowing people to transfer money to each other without the need for a middleman, granting people access to financial tools regardless of their position. These lofty goals have largely failed to eventuate, and cryptocurrency has become just another commodity for speculators, but in the world of crime it has great utility free from regulations and seemingly outside of the usual avenues of legal investigations.
Reports of cryptocurrency's untraceability are somewhat exaggerated, however. Tracing crypto transactions is more difficult than it would be if those transactions were done through an EFTPOS card, sure, and particularly so if those involved have taken steps to stay anonymous, but it can be done. The FBI recovered more than half of the bitcoin ransom paid to the group that hacked the Colonial Pipeline in the USA, for example, by following the records of transactions entered into the blockchain. Blockchain transaction records are foundational to the way that cryptocurrency functions, and although they don't have names attached to them, they offer a permanent history of where each coin has gone that can then be matched to individuals using more traditional investigative methods. Crypto exchanges, where cryptocurrency can be converted into regular currency, create an even clearer paper trail.
While crypto isn't yet fully integrated into the rules and regulations that govern the financial sector, but that looks set to change soon enough. The IRD released guidance on taxing income from crypto assets last year, and many governments are moving toward mandating that crypto exchanges record and divulge data on the transactions that their citizens make. It may be easy to get around these rules at first, but as more countries and trade agreements start to enact them, the loopholes will likely close.
Certain day-to-day crimes would become crimped in significant ways but it's not all plain sailing toward a society without cash.
While most people will be far safer without cash – there's nothing tangible to lose or get stolen, except a card that can be cancel or have the charges rolled back on. The main problem lies with a predominantly older population who are used to using cash, and will struggle to learn to learn to use cashless systems safely. Older people are already disproportionately targeted for fraud, and those that haven't already moved to managing their money digitally because they lack the skills are likely to be those who are particularly vulnerable to fraud and other exploitation. The abolition of cheques last year gave an insight into these problems.
So while a cashless society may cause problems, for many people it's ostensibly already here. More than half of New Zealanders don't routinely carry cash and for those increasing number of people the disappearance of physical currency would be a breeze, but for many in the criminal underworld it will likely create significant headaches.
• Dr Jarrod Gilbert is a sociologist at the University of Canterbury and the Director of Independent Research Solutions.
