Is the U Card a “smart card?” Not yet. But with the evolution toward a cashless society through the use of smart cards, the U Card will serve as an identification card and allow the owner to purchase goods and services, using encrypted microchip-cards that store electronic cash. With the security of your own password, plastic cards can become a sort of pocket ATM. Then again, every electronic transfer can be traced. Tracing electronic funds transfer raises serious issues of privacy and security. Hackers, employee fraud and error will be a bigger problem as society continues towards digital cash. Every lock has a key. Every encrypted code can be decrypted.
Congress is at least trying to grapple with these issues, but they seem likely to err on the side of decreased privacy and increased state authority. The government would like to control the development of encryption so that law enforcement agencies will always have a master key. Civil rights, economic competitiveness, law enforcement, national security and free speech are all at stake. However, with a court-issued warrant, communications can be legally intercepted just as private homes may be entered and searched. Encryption codes themselves could be subject to police seizure, under current application of the Fourth Amendment. Congress would expand the vulnerability of electronic data — including smart card information — to state intrusion. In any event, encryption and decryption are vital in maintaining the confidentiality of information and the privacy of citizens.
In a cashless society, some kinds of crime will be reduced. Without cash, wallets and purses will be less attractive to muggers. Banks would be buildings without vaults or cash drawers, if they even continue to exist at all. But restaurants will still be victims of occasional non-paying customers — smart cards won’t eliminate the dine and dash. Drugs can still be stolen, or entice users into theft. But without currency, black markets must either use traceable electronic cash or barter. So a cashless society will not bring an end to violence, but it will undoubtedly reduce some of its causes. Insurance rates designed to guard against theft could decline. But none of this will stop the theft of cars or jewelry. As long as something has value, it can be exchanged.
Software, though, will be a more lucrative target for theft than ever — especially if that software runs encryption systems. Muggers will no longer demand “your money or your life,” but passwords and codes will be at a premium. Already, some cities report criminals torturing victims to extract ATM passwords. Someday, that could be about the only thing left to steal.
Criminals will always find ways to break new encryption codes. Smart cards promise convenience, but that might not be worth the loss of privacy. The unscrupulous use of private records and personal financial information is becoming an increasing danger. Fears of being tracked in detail are very real. Anything electronic can be traced by the government, marketers, cops and other assorted snoops. Smart card technology should have the goal of providing the benefits of electronic payment with the privacy of physical cash. The role of digital cash is likely to supplement — rather than replace — currency in many years to come.