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Duality of Japan
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Think about how digital movies and games are routinely locked and blocked. Do you want the government to be able to do that to all of your liquid cash?
I get your point, but if your government is already screwing up the economy - hoarding physical cash is no better. See African countries and India's 2016 cash crisis: massive queues at the bank for worthless paper.
It's not about hoarding cash. It's about privacy and surveillance. Cash is the only truly anonymous means of payment.