The Future Of Money
The future of money is a strange thing. How many times have you gone to a store and thought, "Wow this shirt would look great on me" only to find out that it cost twice as much as you had in your bank account? You then immediately decide against buying
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The future of money is a strange thing. How many times have you gone to a store and thought, "Wow this shirt would look great on me" only to find out that it cost twice as much as you had in your bank account? You then immediately decide against buying it because the money is not present with you physically.
In the distant future where banks no longer exist, perhaps they will instead be replaced by virtualized institutions such as PayPal or Google Wallet which allow you to purchase things from anywhere in the world using your mobile phone. In these cases, physical currency won't even be necessary anymore since everything can be done through digital means - there's no need for coins and bills when people can just use their phones instead.
But in this future where there is no longer physical currency in existence, what would happen to the stockpile of money sitting in people's bank accounts? Would it become worthless? Would everyone lose their jobs due to lack of funds? Or are the things that are currently preventing us from converting over to a completely digital system - such as 'bills' and 'coins' - what will keep society moving into the distant future?
We cannot be certain about our future, but what we can do is speculate on how it will play out. In some ways, the parameters for this future already exist within our present society. For example one of those aforementioned virtualised institutions mentioned above, PayPal, has been around since 1998. In this seventeen-year span, PayPal has amassed over 100 million users and processed a staggering $211 billion to date (PayPal, 2015).
For further proof that the concept of an all digital economy is not just theory, but practice, look at the recent success of Apple Pay. Apple Pay is essentially an app on your iPhone that allows you to do everything you would normally do with physical money - except it acts as an electronic wallet rather than having bills or coins in your pocket. It's simple: Say you want to buy something at Starbucks for $4.00; Instead of taking out all those cards from your wallet and swiping them through the machine one by one, simply open your iPhone and say, "Hey Siri; pay Starbucks $4.00". Your iPhone then automatically takes the money from your preloaded Apple Pay wallet and sends it to the cash register. It's so simple to use - in fact, you don't even need to touch your phone at all!
A few months after Apple announced its new product, Google & Samsung followed closely behind with their own versions of an electronic payment system: Android Pay and Samsung Pay respectively (Chaison & Krishna, 2015).
However despite this overwhelming evidence that digital technology is becoming widely accepted by society as a whole - not just companies- there are still some major concerns people have pertaining to this idea of replacing physical currency altogether.
Firstly, people are concerned about the security of this information. When you swipe your physical credit card through a machine at a store, there's always that momentary feeling "Did I just get charged $100 for a pack of gum?" when in actuality it was likely something much smaller. It's not quite so simple with electronic wallets though; if security is breached and an unauthorized transaction takes place on your credit card account, you can report it to your bank and they will refund you immediately because they have access to all the necessary records. With electronic wallets however, that doesn't exist since transactions can be done anonymously without any sort of official business contract between two parties (Wall & Cairns, 2015).
Secondly, people are concerned about the amount of control they would have over their money. How do you know that your electronic wallet won't run out? And what makes it so different than carrying around actual cash in your pockets? People also question whether or not digital currency can act as a reliable medium for exchange since it isn't enforced by any form of government regulation (Wall & Cairns, 2015).
Before we get into these concerns, let's take a moment to reflect on where our own culture was at this same stage not too long ago. It wasn't until just recently that credit cards became popularized in society; before then there were 'bank' cards which served the same purpos, yet provided no actual credit. This is because debit cards weren't introduced to the market until 1977, and it wasn't until 1982 that they were widely accepted among major retailers (Wall & Cairns, 2015).
The transition from cash to credit cards wasn't an easy one, nor was it quick. It took about fifty years for the market to adapt to this new way of paying for items, and during that time there were many people who believed digital currency would never become anything more than just another failed business idea (Wall & Cairns, 2015).
We tend to think that because something is new or hasn't been done before, surely it will fail...but not always. There are so many examples in our history of technological advancements taking decades to be fully adopted by society; look no further than the telephone or television. For example, Alexander Graham Bell received his patent for the telephone on February 14th in 1876, yet it wasn't until 1881 that it became something that people were actually using (Wall & Cairns, 2015). The telephone was invented in the 1860's and by 1888 there was over 150,000 phones in America, and almost every household had one.
You've probably noticed this pattern with these new technologies: we often wait so long to adopt them even though they go on to be widely successful. Why is that? Well for starters, technology takes a lot of time to get just right. It may start off as nothing more than an idea somebody has written on a napkin; despite how genius their idea might seem at first, there are likely going to be numerous setbacks along the way that will cause it to fail. For example, Steve Jobs and Steve Wozniak had an idea for a business and worked hard to get the first computer out on the market; however they didn't make much profit because "it was too expensive" (Grossman, 2013).
The cell phone industry provides another good example of people being slow to adopt new technology. People were very hesitant about switching from landlines to cell phones because there wasn't much benefit at first aside from the mobility aspect; you could take your phone with you while continuing to remain in contact with other people. When smartphones were introduced into the cell phone market however, things changed drastically: now people were able to be connected all day no matter where they were. By 2012, there were more active cell phones than people in the United States (Grossman, 2013).
As time goes on, technology is becoming more and more accessible to everyone; what used to be considered a luxury is now something that most people own. The same will happen with digital currency; it may not ever replace cash completely but instead become one of many modes of payment available. After all, who would have thought 20 years ago that we'd use our phones as pocket sized computers?
On top of this, let's consider how fast things are moving these days. We already live in an age where everything can be done online without even having to leave your home; you can get your groceries delivered to your house, order food without leaving your couch, or even do all of your shopping on Ebay while sitting in the comfort of your own bed! We're already halfway to becoming an entirely digital society.
It's safe to say that it won't be long until cash is phased out completely; I mean, why would anybody want to carry around large amounts of cash when they could keep their funds in a digital wallet? As stated by Adam Gurri, "cash is good for about two things: hiding money from the tax man and conspicuous consumption" (Gurri, 2013).
Some people may disagree with this statement but that doesn't make it any less true; there are multiple reasons we might need to use cash and they can all be considered illegal. For example, drug dealers and prostitutes often need to use cash because credit card companies won't risk getting involved with their unlawful activities (Santora, 2015).
It's once again worth mentioning that everything is becoming digitized; instead of carrying around $20 bills, why not just keep your money in a digital wallet? Why would you want to carry around large amounts of cash when your cell phone could easily function as a digital wallet? There are even services like Apple Pay which allow people to purchase items using only their mobile devices; this is particularly beneficial for those who don't own debit or credit and struggle with online shopping (Kafka, 2015).
The future is digital and it's already well on its way; as we continue to digitize every aspect of life including currency, the few benefits provided by cash will be rendered obsolete. I predict that in less than a century we'll see cash phased out completely; people will make purchases using their cell phones or other such devices as digital wallets (Santora, 2015).
It should also be noted that this isn't the only industry that is seeing drastic changes due to technological advancements either; further examples include self-driving cars and automated drones for package delivery. These technologies are all coming into play because of modern inventions and they each provide huge improvements over what was available before them. As technology continues to improve, so too will the people who rely on it.
