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This article is published in print format in the amazing Burning Issue Magazine created by legendary moneyburner Jonathan Harris. To pick up a copy of the full 160-page magazine go here
To burn digital money requires an act of arson. You must undertake a mission to an industrial park to burn down the fortified datacentre of a large bank like Barclays. But even if you achieved that, they would have backups, and to fully burn the digital money supply you’d have to destroy all bank and central bank datacentres. Our everyday digital pounds, dollars and euros do not reside in your computer or on your phone. They reside as records imprinted on huge bank-controlled computer arrays, and your laptop or smartphone is just there to interact with those central hubs.
We can burn cash because we have personal autonomy over it. We can hold it in one hand whilst striking a lighter flame in the other. Digital money, by contrast, is not directly held by us. It is held by those who control the account databases that keep score of it for us.
In the series Mr Robot, the hacker hero Eliot wishes
to destroy the digital records of student debt held by EvilCorp. In accounting
terms he is attacking the asset side of a bank’s balance sheet – destroying the
digital records of what people owe the bank – but the same process could be
applied to the data records of bank liabilities, the promises they issue to
people, the ‘money’ we see in our bank accounts.
The average person, however, does
not possess the skills to bring down entire datacentres through elaborate
hacking operations. So are there other ways to destroy your digital money?
Method 1: Render your account unusable?
One method may be to renounce
your bank account somehow, or render it unusable. To attempt this type of
action requires you to wilfully destroy all your personal records of your
account number and PIN code, and to make sure that you forget them. You may
think that this stops you or anybody else from being able to access the money,
thereby effectively retiring it from circulation.
An analogous experiment was tried
in 2014 when Geraldine Juárez tried to burn bitcoins by burning the hard drive
that held the private keys that would enable her to control an account on the
Bitcoin network. Bitcoin, like digital bank money, is a ledger money system.
The ‘coins’ do not reside on your phone or laptop. They are recorded on a public
database. By burning her private key, she was attempting the cryptocurrency
equivalent of burning a bank PIN code. It didn’t technically destroy the data
record of her tokens, but it stops her or anyone else being able to use them.
With normal banks, however, there
is a little snag. In the UK, abandoned or dormant bank accounts can be
reclaimed by government under the Dormant Bank and Building Societies Act of 2008.
Banks are required to transfer money from dormant accounts to the account of
the Big Lottery Fund, which uses the money for social projects.
Method 2: Repaying debt or withdrawing cash?
If I was being a smart-ass I
could note that another way to destroy digital fiat is to repay debt, or else
to redeem my bank deposits for cash at an ATM. The digital bank money you see
in your account is created either when people deposit cash into banks, or when
banks issue credit. Both of those actions manifest in digital records of money
being recorded into accounts, and – by definition – the opposite process of
withdrawing cash or repaying credit extinguishes those records.
That doesn’t feel satisfactory
though. I’m not really ‘burning’ digital money by lowering the amount recorded in
bank accounts. I want to actually
burn it, with flames and heat.
Method 3: Burn your own bank!
So here’s one final suggestion.
Start your own financial institution. Get a few friends around, turn on your
computer, and open an excel spreadsheet. Write their names down in one column.
Get each friend to give you £20 in cash. As they hand it to you, put it in a
box and then record how much they have given next to their name on the
spreadsheet. Now get them to sign a legal agreement which states that they have
transferred ownership of the cash to you, but that you have simultaneously promised
them the cash back, and officially recorded that promise as a digital record on
the spreadsheet.
You now own the cash and they now
own a digital IOU promise issued by you, recorded in accounts for them. Now take
the box of cash out of their view and throw it onto a fire. This destroys the
reserves backing the IOUs you issued, but they need not know this. They may
indeed still transfer their IOUs between themselves, not realising or caring that
the reserves don’t exist. Now take the computer and dump it onto a fire in
front of them. This burns the records of your digital promises. The legal
agreement notes that the spreadsheet held the legal record of their money. The
spreadsheet no longer exists. Congratulations, you have burned digital money!
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