Since money was already largely non-corporeal, existing as entries in bank accounts and ready to spend with plastic cards, the next logical step would be to move the whole thing online and dispense with paper and coins and their costly and burdensome infrastructure of banks, regulators and printing presses. The emergence of such currencies would, in this optimistic scenario, consign relics like the dollar and the Fed to history’s circular file and usher in an era of trust, stability, and growth similar to what occurred under the classical gold standard.
But the digital liberation of money turned out to be easier said than done, as the first wave of cyber-currencies came and went without much of an impact. eCash, for instance, was an encrypted, anonymous payment system that allowed anyone anywhere to send and receive instant payments. But it relied on the existing banking infrastructure, and because “anonymous” meant “money laundering” to the police, it faced extreme pushback from authorities who viewed such currencies as primarily empowering drug dealers – and from banks that saw no point in encouraging the competition. Only one small bank ever accepted eCash, and the currency died a quiet death a few years after its introduction.