When Cash Will Vanish & How To Prepare
Yes I actually documented this.
The last time I used physical cash was in January 2020 when I awkwardly forgot I had to give the valet driver a $12 tip.
Yes, $12, not including the parking fee. This is New York not Louisiana.
The point is, the fact I had to search for cash, a tangible, physical, dirty, smelly, sticky, universal piece of paper in 2020 was foreign to me as a Gen Zer.
These days, my digital wallet on my phone is all I rely on, besides my physical debit and credit card which I rarely use in-person since I tend to shop online.
This made me wonder if cash will become obsolete in a few years?
I distinctively remember rattling and shaking my first piggy bank in 1st grade attempting to pull out any crinkly bills and dusty tinted coins inside. Only the coins would fall out. The bills stayed stuck, damp, crinkled and ripped in there forever until I decided to smash the poor piggy onto the ground to crack it open. Eventually, I ended up depositing the cash at the ATM.
Do piggy banks even exist anymore?
Ever since that day, I’ve always had awkward and time-consuming situations with cash. From the valet to cash register at the toy fair, cash is a special signifier in my life but not something I want back. It taught me a lot about how to deal with money and lead to my interest in personal finance, something I couldn’t rely the education system for. I may not be here if it wasn’t for piggy.
Cash is a physical tactile currency. It provides confidentiality in transactions and is proven to help a consumer spend less and pay attention/be more mindful about what they are spending.
After all, with cash, what’s in your wallet, is all you got! Without any card, there’s no borrowing, unless you have a generous friend.
As humans, we’ve always traded with physical currency. From gold to pebbles, shoes to bills, cash was the only thing we had prior to digital payments and now we are at the stage where laziness has gotten the best of us.
Swiping cards, taping our phones and typing in a PIN is a daily activity that we have gotten used to now. Even taking out physical cash seems to be sketchy and dangerous these days because we ask ourselves, why would someone have it? Money laundering with no record? Can they really afford it?
Central banks these days are experimenting with digital currencies. A positive that comes to mind with digital currencies is Bitcoin which was founded 10 years ago. Although it isn’t mainstream and mostly used to invest on the market, not used to pay for staple goods just yet, it has laid the groundwork for private companies and enterprises to issue non-traditional currencies. Central banks to social media sites are introducing digital currencies to limit circulation and wasted time spent on transactions.
Cash is a pain, takes up space, expands our wallets and is limited in quality when carrying it around. Particularly in wealthy nations of the U.S. and Europe, digital wallets are mainstream and have gained popularity as cash fades away. The pandemic has certainly accelerated digital payments and issuers from Stripe to PayPal have capitalized on card not present opportunities to help make payments more convenient, transparent and quick with our short attention spans and limited counting capabilities.
Even China, Japan and Sweden have begun trials of central bank digital currency. Even here in the U.S. the Fed is thinking of its own digital currency.
So what does this speculation and digitization really entail?
Firstly, security enhancements will dramatically increase. These days with our data, our most precious asset is stored online all over the place, there must be a bigger emphasis on security.
Ironically although the focus on security systems, data storage, encryption, and fraud protection have strengthened over the years, there’s been an influx in hacks, robocalls, breaches and fraud in the largest U.S. companies ranging from the Colonial Pipeline to JBS Meat Distributor this past year.
On the topic of security, on the dark web through blockchain, the technology BitCoin, dogecoin and other digital coins trade on behalf of, it’s much harder to rely on anonymous cash transactions such as money laundering, drug dealing, and terrorism. These ‘off the books’ accrual accounting statements would be more visible which is good since these practices are all illegal!
Another benefit of going digital is for the poor and ‘unbanked.’ Believe it or not it is hard to get a credit card if you have limited funds, no residency and just to keep up with hefty fees can be challenging. Instead, a digital dollar allows everyone, no matter how much they may have, to be able to access a payment system for banking services. This non-interest-bearing account with a fee-free linked account attached to an app would be the best step towards digital payments especially since 97% of American adults have a cellphone.
Lastly, a central-bank digital currency can stimulate consumption, investment and be good for the economy. People don’t have to go to ATMs to dish out money anymore. It can cut interest rates and make cheap credit available online. Not relying on the printing of the dollar would not discriminate against anyone from consumption.
How To Prepare
First of all, get rid of that chunky wallet and rely on your phone! This will benefit the overall economy, financial world, and society in the foreseeable future. The digital dollar and card is something we all should expect to use more of in the coming years.
Especially at this time still recovering out of the pandemic, one way to support your local communities and small businesses is by shopping local! It not only helps them get back on their feet after attempting to survive the pandemic but by uses digital payment options from Apple Pay to Stripe, allows businesses to cut transaction costs in half and have less hassle handling physical change.
One last thing to note.
Cash is not clean. Stick to digital instead. You’ll thank me later.