VIDEO-The Growing Perils of the Cashless Future

Of course, it's not just companies that want to make a buck. A recent episode of "The Good Wife" showed how a fictional (we hope) NSA might operate. The agency had been listening to the "good wife's" phone conversations at the office as well as her estranged husband, the governor. Therefore, the governor had an aide post a "for sale" notice at a local mosque for an incredible deal on a pre-owned car — the number to call was that of the local head of the NSA. Dozens of men with Arabic names called the man at his office, and he was fired.

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Privacy experts suspect that if the NSA is capable of recording information about people's phone calls, it is certainly monitoring electronic purchases. "That is a civil liberties concern," says Scott Shay, chairman of Signature Bank. "When governments have information they are sometimes tempted to use it, and sometimes they attempt to use it in ways that are not fully vetted by due process."

Since electronic payments can be traced, authorities may be able to curtail or even eliminate crime, including everything from prostitution to terrorism. But constant government monitoring could turn everyone into a potential suspect, creating distrust between government and citizens that could lead to "vast consequences," economist Domagoj Sajter of the University of Osijek in Croatia wrote in a research paper published in March 2013 titled "Privacy, Identity, and the Perils of the Cashless Society."

Individuals and organizations may be unwilling to promote unpopular or unconventional ideas if they know their transactions are being monitored. "Ultimately, this would lead to a weaker form of democracy, in which certain voices could not be heard and lobbied for."

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It is possible that the government could monitor electronic purchases in an attempt to police crime, says David Stearns, a historian and sociologist specializing in electronic payments at the University of Washington. From a technological standpoint, the feat would be relatively easy. But whether it will happen remains uncertain, he says.

Even it does happen, criminals would simply use a different currency, be it digital or physical, he added. For instance, in times of hyperinflation in the past, people bartered with cigarettes. "The idea that it will eliminate all fraud and crime is a little optimistic."

Stearns sees a cash-limited society as far more likely than a cashless society.

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"There are a number of cultural rites that we use cash for today," he says, citing small donations, tips, religious contributions, and gifts. "It's a lot more meaningful for grandma to send a crisp $20 bill than a piece of plastic. If we went to a cashless society, that's what we'd have to figure out."

—By Michael Kling of The Fiscal Times