The recent health scare surrounding the COVID-19 outbreak seems to have accelerated the move toward a cashless society, with cashless payment spiking in concert with viral cases.
Yet, our findings in a Genesis Mining study called “Perceptions and Understanding of Money 2020” indicate that a significant majority of Americans are not psyched about parting with their paper money on a permanent basis.
To be more specific, we found that 60% of respondents are opposed to the idea of paper money being replaced with “digital-only money.” This could be a “devil-you-know” versus a “devil-you-don’t-know” situation where familiarity with paper money is the driving force behind the wariness of giving it up. This is understandable, but if resisting change were humans’ driving principle, then progress of any kind would be impossible.
It is possible that better acquaintance with the advantages of digital transactions could change the minds of those willing to have their minds changed.
It is also possible that the movement toward a cashless society is a non-Democratic issue — that is, it could be inevitable, depending on who wishes to see a cashless society emerge. Embracing the benefits of digital money could ease our transition into a new financial frontier.
COVID-19 has accelerated the cashless revolution
The U.S. news outlet Axios cites several figures and facts indicating that increased health-consciousness amid the global pandemic has accelerated the migration toward a cashless society. Its findings include that:
- People in various nations are wary of physical money, which they see as a potential conduit for viral transmission.
- 63% of consumers report using cash less often than they did before the pandemic.
- Payment for goods and services through apps and websites, rather than with physical money, has increased.
Of course, we must consider the fact that quarantine measures have prevented many from accessing ATMs, paying for goods and services in person, or engaging in activities where they might normally use cash. In some sense, the increase in cashless payments has not been completely reflective of voluntary consumer attitudes. It may, however, be habit-forming.
The idea that your dollars and coins are dirtier than you would like to consider is — unlike the coronavirus — not novel. A 2017 study found that a collection of bills circulating around New York City contained various bacteria and viruses.
Many people’s aversion to unnecessary risk has been illustrated by widespread willingness to wear masks, quarantine and take other health-conscious precautions. Foregoing physical money in favor of primarily-digital payments could be increasingly viewed as yet another way to protect oneself from possible viral infection.
The benefits of going cashless
Even before “COVID-19” became a universally-recognized term, advocates for digital payments were touting the perks of completely or largely-cashless societies. We’ve already touched on the potential health benefits of eschewing dirty cash for cleaner forms of payment.
In addition to health benefits, the advantages of cashlessness — among others — may include:
- A greater difficulty for muggers and thieves to rob you of your physical money.
- A greater ability to trace illegal activity that could be more easily perpetrated by laundering cash through businesses, banks and other means without a trace.
- Commerce-related perks, which Visa notes include faster transactions (on average), less hassle for customers who would otherwise have to procure, store, count and dole out cash, and the fact that customers are statistically more likely to spend more at a business using a card rather than cash.
- Ease of currency exchange.
Some forms of digital payments may also provide greater security. Security standards used to protect cryptocurrency wallets are being adopted for other purposes, as Big Four audit firm Deloitte noted, and the further adoption of such practices could further bolster asset protection in a cashless society.
The move toward cashlessness falls in line with the general shift toward global uniformity, for better or worse. Some note that uniformity itself is not necessarily a net positive — one of several critiques of emerging cashless societies.
Critiques of going cashless
It would be unfair to pose the prospective benefits of going cashless without mentioning known drawbacks and still-unfounded critiques of the cashless concept.
For one, there is the notion that moving all nations and individual cultures toward a universal standard of exchange is akin to whitewashing. There is something to be said about coming home from a vacation with a paper bill or coin that you had never before seen or held as a keepsake of your trip. Losing the uniqueness of different currencies is a fair concern, to be certain. But is it a greater loss than the potential benefits of cashlessness?
The answer to that question may vary, depending on your values and beliefs. Other critiques of taking societies cashless include:
- The elimination of cash will be followed by the imposition of ubiquitous transaction fees for businesses and consumers, which, without the alternative option to pay with cash, may be unavoidable and costly over time.
- Cashlessness represents a greater trend toward limited choice and autonomy.
- A reduction in cash services will eliminate a substantial swath of jobs that revolve around cash processing, issuance and management.
- Less cash and more easily-traceable digital transactions mean less privacy.
These are not illegitimate concerns, and there is a debate to be had. Alleviating these concerns with robust security measures and good faith will be necessary to make a fully cashless society work as it should.
With proper oversight and security, the move toward cashless payment mechanisms could provide numerous benefits, and cryptocurrency-level security may be an integral feature of the move toward cashlessness.
There are certainly kinks to be worked out and concerns to be addressed, but the age of COVID-19 has further reinforced that a shift toward all-cashless payments may be not only beneficial but more necessary than many previously realized.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Marco Streng is the CEO and a co-founder of Genesis Group and Genesis Mining — one of the largest crypto mining companies in the world. Prior to co-founding Genesis in 2013 and becoming an impassioned advocate for blockchain technology and cryptocurrencies, Marco studied mathematics at the Ludwig-Maximilian University of Munich.