Last Updated on October 23, 2021
Will Money Disappear
Will Money Ever Go Away? Many tech optimists believe so, but as Miguel Casal investigates, the reality is more nuanced.
Will Paper Money Ever Go Away
The death of cash is a popular topic. People have been predicting the demise of actual money for almost 60 years. With the popularity of credit cards, contactless payments, and cryptocurrencies like Bitcoin, the death toll has only risen. Money seems less important. We don’t carry it around anymore, and most of us probably couldn’t tell you how much money we have or owe our friends. But I’ve got news for the tech pundits – cash is not going anywhere anytime soon.
But first, let’s see why they think that paper money is ready to fall out of favor with consumers everywhere. One reason that people believe that digital currencies are becoming more popular is that they are easy to transfer from person A to person B without having to be re-input into a new system. Another school of thought says that fiat currencies are old-fashioned because their values can fluctuate so wildly depending on what happens in the world economy. For instance, if China devalues its currency once again, the USD could fluctuate with it. This is seen as a negative in today’s economy where most people like to keep their money in one currency and not experience such volatility.
But, there are lots of reasons why cash still holds sway over electronic payments – for now. Let’s take a closer look at some of them.
Will Money Ever Go Away? Cash Is Still King in Many Countries
Let’s start with the simple fact that in many countries around the world, credit cards and other digital forms of payment are either not accepted or don’t work very well. For example, only 52% of Mexico has credit card access according to one study. An even larger majority (81%) have no access to ATMs outside of major cities. The same is true in much of Africa, the Middle East, and South America. That’s a lot of people who might have to resort to using cash for all their purchases.
Cash Has Strong Security Features
One thing that cash has over things like credit cards is security. For example, you can’t take money out of your bank account without having your ID card with you. Just swipe your ID card at an ATM machine, punch in some passwords or PIN numbers, and voila – you’ve got your money! You can even set withdrawal amounts if necessary (although most banks allow you to withdraw up to a certain amount). Credit cards are not nearly as secure because they don’t require any special information from their users. Most digital accounts only require users to know their usernames and passwords which can be guessed by computers and hackers alike. If you lose your wallet then you probably won’t get your cashback unless it’s insured with a bank or credit company. You almost certainly won’t be getting your phone or tablet back either because most thieves would rather sell them right away instead of trying to steal the money in them (which they can’t do).
Cash Is Portable
If you live off the power grid and use a generator for electricity, you could do all your shopping with a pocketful of paper money or even gold and silver. You wouldn’t have access to electronic forms of payment at all so cash would be the only way to pay for things like gasoline and food if generators were down for an extended period of time. But this also works in reverse – if you forget your wallet, then you can take out cash at an ATM to buy food or gasoline until you remembered where you put your wallet. This is much harder to do with digital systems which require either special access cards (like door openers) or cell phones and tablets hooked up to the internet via 3G or LTE connections.
Cash Is Universal
In today’s world, there are few places where you might not be able to use cash for transactions. The most extreme might be when you’re on an extended hike in the woods and all you have with you is your wallet. Or maybe your electronic system fails when you’re out of cell phone range and far from a town or city. In these cases, it’s nice to know that at least some stores will accept cash for purchases even if they don’t take credit cards or digital money through a bank account. Even some banks which make a lot of their profits by lending money will let people withdraw money from an ATM without any fees attached (although there are usually limits).
Physical money may appear to be on its way out, but if you examine the evidence – and the fascinating psychological relationship we have with notes and coins – you’ll discover that it’s a little early to declare cash’s demise.
Cash Is Anonymous
Let’s face it – even if we don’t like to admit it, we all want some degree of anonymity when doing our shopping. We don’t want everyone else in line behind us at the grocery store knowing how much meat and cheese we’re buying, nor do we want our neighbors to know how much money is in our wallets.
The problem with credit cards is that they are totally exposed to other people’s eyes while you’re using them which can lead to some very embarrassing moments. On the other hand, cash doesn’t have any information about its owner displayed on it at all – no names, account numbers, or anything else. This makes cash a great option for those who want anonymity in their financial dealings.
For a long time, money has been associated with paper currency because it is untraceable, portable, widely accepted, and trustworthy. Cash is essentially untraceable; it’s simple to transport; it’s commonly accepted, and it’s dependable. If the electricity goes out or there is a fault in the online commercial system that keeps the world
Cash is the best way to do it if someone wants to buy something without being traced back to her. If someone wants to be sure that their chosen payment method will be accepted, cash is the way to go. Even with technological advancements, some of the features of money cannot currently be copied by bits.
There is no other payment system as quick, dependable, and private. Bitcoin is anonymous, yet it is currently volatile and inconvenient. Credit and debit cards are widely accepted, but they link your transactions to your personal information immediately. Peer-to-peer payment systems like Paypal or Venmo necessitate applications and accounts, which are still easily traced.
Cash Is Reliable
One reason why many people don’t trust the banking system is that they think that electronic money might be taken away from them at any moment. They think this because it has happened in the past when countries like Greece started running out of money so they pulled their citizens’ euros out of bank accounts devalued their currency by about 30%. This led to bank runs across the country as citizens tried to withdraw all their euros before they lost any more of their value.
In a way, it’s like if your table at the casino paid you in Monopoly money because it was running low on real currency – wouldn’t you feel ripped off? Well, that’s how people felt when Greece did this and they have been trying to get back at least some of their funds ever since then.
There is no guarantee that something similar won’t happen again in another country so cash still provides a layer of protection against such things even if modern digital systems are much better guarded against such problems these days.
There’s also the question of worldwide trustworthiness. Cash has value outside of the United States, just as it does within it. In fact, two-thirds of all cash deposits in dollars are held overseas. People keep money on hand for unforeseen occurrences, to maintain a safety net, and to ensure that whatever happens, their stack of cash will still be there.
Despite the fact that technology is working on constructing a system that has everything that cash has, it isn’t yet complete. This is why, when you consider the worldwide statistics on cash usage, paper and coin aren’t doing all that badly.