The concept of a cashless society may seem like it’s in the distant future, but if you think about it, we are almost there now.
How often do you go to an ATM? Would you even know where the closest one was these days? Many ATMs and bank branches have disappeared in recent times and those that are left are out of order 90% of the time.
The last time you got cash out was probably to pay a tradie. For everything else, you’re tapping cards, phones, watches and even rings to pay for your morning coffee.
Some people have embraced the move to a cashless society so openly that they are talking about implanting microchips in their fingers as the next logical step, but others are not so sure and are comforted by having the back-up option of physical cash. Here are some pros and cons.
One of the great benefits of paper money was that we no longer had to carry around chests of gold and silver. Likewise, debit cards meant carrying all our money in a small rectangle of plastic. Now, people only need to take their phone or watch with them and leave their wallets at home altogether. Apps can provide digital wallets where many different cards can be brought up by tapping and swiping away.
If you’re out to dinner, you can split bills on the spot or pay via text. You can pay people instantly on other sides of the country and even the world.
While members of older generations might be suspicious of digital payments, imagining being scammed by someone lurking in the dark corners of the internet, your money is protected by more layers of security than ever. If you have a digital wallet on your phone for example, a thief will need to figure out how to unlock your phone before even trying to find and use your cards.
Compare that to physical cards, where they could go on a tap and go spree before you even realised your wallet was missing.
Banks now monitor your spending habits, so if you do get skimmed or fall victim to a scam, your institution can flag and even put temporary stops on rogue transactions until they get to the bottom of the situation. If someone drains your account, the bank can often replace the money for you.
But then there’s the downside
The above monitoring of your habits is the perfect segue into the cons of the digital currency world. Every transaction you now make will be traceable by financial institutions, the government and whoever else those parties decide to share your data with. Those bodies can then make decisions about your life based on the data you create without consulting you first.
If you hand cash to a tradie, or to a friend, there are only two of you involved in that transaction. But if you tap and go, there’s you, the bank, the business you are paying and the company (eftpos for example) that makes the technology that facilitates the payment. All those entities get a slice of your money and your data. And who knows where else that data goes?
No more mattress accounts
A cashless society would mean you have nothing physical to show for your earnings. Your bank balance will be a number on a screen and nothing more.
Right now, your money is already represented by a number on a screen, but you have the opportunity to withdraw your cash and stick it under your mattress. It’s yours and it can’t be taken off you by the bank or government, unless they break into your house. A cashless society would put an end to that. Numbers on screens can be subtracted from easily enough and manipulated in various other ways.
Decentralised and centralised
Despite its fluctuations and future uncertainty, there’s a reason Bitcoin is popular. It’s decentralised, which means it can’t be manipulated or controlled by central banks or governments. People want to own Bitcoin so that they have wealth – or currency to trade for assets and goods – that can’t be interfered with.
Meanwhile the RBA in Australia has flagged that it is investigating the best way to roll out a digital version of Australian currency. But don’t be fooled. Unlike Bitcoin or other forms of crypto, an Australian digital only currency would be centralised and able to be controlled and manipulated by the RBA and the government.
As b Invested clients already know, the best way to have ownership over your wealth is to acquire good physical assets; things like property, or gold and silver. Their values may rise and fall, but they can’t disappear overnight like shares or numbers on a screen.
If the currency as we know it fails and is replaced by something else, who knows what will happen to however much of it you might have had. If you have assets, they will still have value in the new digital only world.