Imagine a new type of cash…

Unlike the kind you carry in your wallet, it exists only in digital form.

There’s no more need for ATMs. Tip jars are a thing of the past. Even vending machines are digital.

Every time you spend money, it’s through a digital app. And it’s recorded in a government database.

The feds collect and store details on every transaction you make. They also know exactly where you are in the world every time you buy something.

In today’s dispatch, I (Chris) will show you why this scenario is already becoming a reality around the world… and why it’s a disaster if you value your liberty.

Then tomorrow, we’ll look at why it’s coming to America… and what you can do about it.

We’re not the first to worry about financial privacy in a digital world…

A pioneering computer scientist called Paul Armer sounded the alarm on this back in the 1970s.

In the 1950s and 1960s, Armer headed the computer science departments at the RAND Corporation think tank and at Stanford University.

Then, in 1975, he issued a chilling warning about what would happen to our privacy if governments ditched physical cash and moved to a purely digital money system.

In an article titled “Computer Technology and Surveillance,” Armer said such a system would become a powerful surveillance tool for the state.

This wasn’t lost on the KGB….

In 1971, Russia’s secret police tasked a group of advisors to devise a plan.

KGB higher-ups wanted to figure out how to create a surveillance system that would keep track of everyone inside the U.S.S.R. without them knowing about it.

The computer scientists’ proposed solution was to get rid of physical cash and replace it with digital currency transactions. As Armer wrote…

That exercise… was only a two-day effort. I’m sure we could add some bells and whistles to increase its effectiveness somewhat. But the fact remains that this group decided that if you wanted to build an unobtrusive system for surveillance, you couldn’t do better than an EFTS [Electronic Funds Transfer System, the term Armer used to describe a purely digital currency system].

Why was that so appealing to the KGB?

Because when you’re always watched, you adopt a don’t-stick-your-neck-out attitude. This creates a docile population governments can easily control.

Armer’s warning has been mostly forgotten…

But governments haven’t given up on their dream of creating a surveillance state… And tracking our financial transactions is an important part of that.

As we’ve been showing you, that’s why governments around the world are waging a War on Cash.

They want to abolish banknotes and coins and replace them with purely digital currencies.

These will be based on the digital ledger – or “blockchain” – that underpins bitcoin and other cryptocurrencies. But instead of being decentralized like bitcoin and other private cryptocurrencies… they’ll be centralized and controlled by governments and their central banks.

Central banks in Canada, Britain, and Norway are already studying how to roll out crypto-fiat hybrids. And the Swedish government has set up a formal government inquiry into making the switch.

But China is leading the way…

China is the world’s second-largest economy. And it’s readying a crypto version of its currency, the renminbi.

As our tech investing expert Jeff Brown explained it to readers of our free tech investing newsletter, The Bleeding Edge

News has leaked that China wants to push out its state-backed digital currency much sooner than we thought. According to anonymous sources, it may happen as early as November.

This is the digital currency that will be issued through China’s central bank, the People’s Bank of China. It will work like a cryptocurrency. But unlike a cryptocurrency, it won’t be decentralized. Quite the opposite, in fact… It will be controlled by the Chinese government.

And Jeff says the rollout of crypto-fiat won’t end with China…

To me, this is a sign of things to come. Most countries are going to issue their own digital currency, phasing out paper currency in the process.

That way, governments will be able to see, and tax, every single transaction using a digital currency. Even those taking place outside of the country’s borders. It’s a central planner’s dream…

That’s a body blow if you value your privacy…

Each transaction on a blockchain leaves an indelible digital record. In the case of bitcoin, transactions are linked to a wallet ID – a long string of digits – not your name and address.

It’s part of what makes blockchain technology so appealing when used in a decentralized way. No one can mess with the record of transactions.

And because the transactions are pseudonymous, you have a lot more privacy than you do when you spend money on a debit or credit card.

But fiat-crypto hybrids will work differently. They won’t be decentralized. And they won’t be pseudonymous.

Instead, governments will record each transaction you make – and where and when you make it – next to your name, address, and Social Security number.

Every last detail of your financial life will be laid bare.

Colleague Teeka Tiwari was ahead of the curve on this…

As Cut regulars know, Teeka was one of the first in our industry to recommend cryptocurrencies to readers.

And even after last year’s brutal “Crypto Winter” bear market, his top open recommendations are up 1,897%… 2,260%… and even 6,973%.

At the end of last year, he told us that governments would try to compete with bitcoin by way of centralized, state-issued cryptocurrencies.

These will have many of the conveniences of a decentralized cryptocurrency. But they will be a disaster for your privacy. Here’s Teeka with more…

With a crypto-fiat, each transaction made in the economy will leave a digital record that the government will be able to see. Which is why fiat money is headed to a blockchain. Governments like to look at where all the money is. A blockchain they control is a way for them to do that.

A lot of people will ask, “Won’t this kill bitcoin and other cryptocurrencies?” But Teeka says it should make you even more bullish on more private alternatives such as bitcoin…

Private cryptocurrencies, as opposed to the government version, afford users greater anonymity. And you have scarcity with private cryptocurrencies, which you won’t have with crypto-fiat hybrids. This protects you from having your wealth inflated away by governments and central banks.

Bitcoin, for instance, has a hard cap of 21 million coins. You won’t have that guarantee with crypto-fiat currencies. There will still be a central bank that can fiddle with interest rates and balloon the money supply, causing inflation.

Regulators are thinking, “Oh, okay. We can kill the market for private cryptos by creating a crypto fiat.” But my call is that it will end up expanding the crypto market, not shrinking it.

That’s why, if you haven’t already, now is a good time to buy some bitcoin.

If Teeka is right, it’s going to get a lot more popular as folks around the world realize that governments are getting rid of physical cash… and replacing it with surveillance money.

Tomorrow, we’ll show you why what’s happening in China is a roadmap for other countries to follow.

And that includes the U.S.

As you’ll see, America’s elites understand that rolling out a purely digital dollar will give them even more power over the financial system.

Stay tuned…

Until tomorrow…


Chris Lowe
September 11, 2019
Lisbon, Portugal