14 November 2016

FUTURE TRENDS - The Slow Death of Cash

Cash is probably dying.

Slowly, perhaps very slowly, but it is almost certainly headed the way of the payphone and electronic currency is taking its place.

Although responses to this idea vary, and some are concerned about the risks associated with a cashless society, there are some good arguments that the death of cash is a good thing for both global and national economies.

Cash is slow and cumbersome, and notoriously difficult to keep safe.

It can be stolen, counterfeited, lost. It is both the object of crime – in the US there were 4,000 bank robberies in 2015 – and the enabler of crime

Electronic currency is safer, faster, and less expensive to maintain.

Although many people are concerned about hackers, cryptocurrency such as bitcoin offers the blockchain, a system that ensures every transaction is legitimate and is tracked in an open, transparent, online ledger system.

Blockchain’s educational website makes the argument that blockchains “provide an opportunity to build a global infrastructure untethered from the stability or permission of governments and institutions.”

Although that might sound like a utopia to some, it raises serious concerns about issues like taxation, and the social services and infrastructure maintenance that depends on tax revenue.

Although Blockchain Revolution, by Dan and Alex Tapscott does not address tax specifically, the book does include a chapter on how bitcoin and blockchains have the potential to revolutionize government by introducing true transparency and agency over how money, votes, and even property move between individuals and organizations.

They see the potential in bitcoin and blockchains to change everything from banking to government to the very foundations of capitalism and the corporate entity.

Does it sound confusing?

That’s because it is. The shift to electronic currency is one that has been happening globally for years.

This is a change in how money is accessed, but not a fundamental shift in how money is conceptualized.

There’s a debit card in every wallet, and most banks now accept cheques via smartphone photo, but money is still money. The value of e-money is still tied directly to the amount of fiat currency (any legal tender issued by a central authority and backed by regulation) that it represents.

Cryptocurrency, such as bitcoin, is fundamentally different.

It is disconnected from governmental and banking authorities, and is only beginning to edge up to the legislative and regulatory realities that will make it viable for the average person.

It will take time for cryptocurrency to reach a broad audience, and even longer for it to replace either cash or electronic currency.

One element at play is humans’ psychological attachment to physical money.

It’s been around for thousands of years, and the very untraceability that makes cash the focus of criminal activity also makes it valuable to anyone who wants to make a purchase that is not digitally linked to their identity.

However, despite the challenges facing digital currency in either crypto- or e-money forms, digital transactions are here to stay.

Kenya has the world’s leading mobile-money system, M-Pesa, which is used by more than 17 million Kenyans. The system relies entirely on mobile phones, and has made transferring money easier, faster, and safer, and bypasses banks entirely. 

However it happens, and at whatever pace, it’s clear that money is going digital and even if cash doesn’t disappear in the next decade, its place in people’s lives will be shifting.

By Tiffany Sostar
Tiffany is a writer, editor, academic, and animal lover who came late to her appreciation of pets. At 18, a rescue pup named Tasha saved her from a depression and she hasn't looked back. She has worked as the canine behaviour program coordinator for the Calgary Humane Society, and was a dog trainer specializing in working with fearful and reactive dogs for many years. She doesn't have any pets right now, but makes up for it by giving her petsitting clients (and any dogs she comes across on her frequent coffee shop adventures) extra snuggles.

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