Is society becoming cashless? A look into whether cash is declining, and its replacement
The question of whether we are heading towards a cashless society seems to be becoming clearer, as various statistics support the question. A completely cashless society may seem like a futuristic idea for the most world. However, the world – especially during a time a deadly virus may contaminate cash – is rushing towards a society without cash faster than ever.
Is cash really on the decline?
Although statistics prove that cashless methods such as debit cards are prominent, the use of cash remains prominent. However, each country has different favoured methods of payments.
The statistics already prove that the majority of Brits use cashless payments. A study from Merchant Machine reports that 91% of British people own a debit card. Besides, 21% of Britons are willing to go completely cashless. Moreover, a study from Diebold Nixdorf conclu
ded that within the week of the 13th and 20th of May, 61% of British people aged 55 and over used cash. However, cash payments declined as the age range decreased, which suggests that cash seems to be favoured depending on generation. 56% of Brits aged between 35-54 used cash, and 46% of those aged 18-35 used cash within the same week. Although still in use, cash use is declining with age.
Despite Sweden being the first nation to introduce banknotes, Sweden aims to be the first country to end cash and become the first cashless country in the world. According to Sweden’s central bank, the proportion of Swedes that use cash has fallen from 39% to 9% in ten years. Also, Eurostat conveys that 82% of the Swedish population makes purchases online, making Sweden the top of every European country.
China – a country that has over 1 billion people – is also another nation that is leading the way to a cashless society. Finextra estimates that mobile payments in the country already account for four out of every five payments. Moreover, the People’s Bank of China has been developing a digital yuan, a central bank digital currency that aims to replace cash in circulation.
The central American country has revealed plans to introduce the cryptocurrency Bitcoin as legal tender. With El Salvador not having its own currency and only using the US dollar, the President explained on Twitter that “, 70% of El Salvador’s population doesn’t have a bank account and work in the informal economy”. By adopting Bitcoin as legal tender, the cryptocurrency “will bring financial inclusion, investment, tourism, innovation and economic development for our country”.
What does this suggest?
Clearly, digital currencies are becoming more prominent in each part of the globe. Worldplay claims that 44.5 percent of online transactions worldwide are from digital and mobile wallet payments. Moreover, with countries like El Salvador adopting cryptocurrency Bitcoin as national legal tender – and China suppressing Bitcoin but creating their own centralised cryptocurrency ‘Cyber Yuan – it is evident that digital currencies and crypto-currencies are more common than we think they are.
Cryptocurrencies, and the impact they could have in our future.
What are cryptocurrencies?
Dubbed as “bank-free internet money” cryptocurrencies are decentralised online currencies. Dr. Douglas Arner, a professor from the University of Hong Kong that specialises in economic and financial law, regulation, and development, explains decentralised currencies as “currencies that not one person controls. This is different from Fiat currencies – such as the Great British Pound, the European Euro, the Japanese Yen, or the American Dollar – because they are all centralised; meaning they are stored in banks and controlled by governments. The professor conveys that Bitcoin – the most popular cryptocurrency -was created “in response to the global financial crisis in 2008”.
“Bitcoin was created following the global financial crisis in 2008, as a reaction to government-controlled money. Bitcoin was created since no government controls the currency, just a computer”.
“Instead of trusting money, trust technology”.
Cryptocurrencies are created, distributed, traded, and stored through a decentralized ledger system, known as a blockchain.
What is blockchain?
The best description of blockchain is how online data is structured and shared. Blockchain is split into two categories: data storage system and cryptography system.
Data storage system
In order to store any data, a storage system is needed. As cryptocurrency uses data instead of gold or paper, data storage is required.
A cryptographic system a way of hiding data, meaning that only certain people can see it.
Blockchain is different from the typical database, as it stores data in blocks that are then chained together. The blockchain is recorded with cryptographic signatures called hash. Once new data is entered and filled into a block, it is chained chronologically onto the previous complete blocks.
The most common use so for blockchain is a ledger (a collection) for a transaction.
Relating back to the financial crisis in 2008, many people including professor Douglas Arner suggest that cryptocurrencies are “safer” than normal currencies. This is because certain cryptocurrencies are decentralised by governments.
“With [certain] cryptocurrencies, you know the government is not involved. In that sense, it is more trustworthy”.
However, with recent news stating that China is condemning Bitcoin, the value of Bitcoin has dramatically decreased and still fluctuates to this day.