The Decline of Cash and Rise of the Intangible DollarAdam Gardiner
Between credit cards, debit cards, electronic payments, and more, virtual currency is taking over. But even so, good old fashioned cash will always be accepted for anything and everything, right? Well, not always. We may be irrevocably moving towards a cashless society. But what does that means for all of us?
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Cash Not Accepted
Sweden’s economy relies almost entirely on credit cards or mobile phone payments. Physical cash makes up a mere 2% of all payments made in the country, and around 20% of transactions in brick and mortar retail establishments. An increasing number of Swedish citizens never carry cash anymore, since it’s simply not needed.
In fact most retail stores don’t even want cash. They’re legally allowed to refuse notes and coins if they want to, and an increasing number do. Most vending machines also only take credit cards, as do a lot of street vendors, and even some churches and banks.
The U.S. isn’t quite at that level yet, but we’re getting there. There are some establishments that won’t take it anymore. Instead, the new trend is towards mobile payment apps. Starbucks has its own mobile wallet, which allows you to pay for your coffee on your phone, and around 20% of Starbucks transactions employ it. Other retail stores are introducing their own apps. In addition some payment apps, such as PayPal, are good in a variety of different places.
Problems with a Cashless Society
It would seem on the surface that this move towards credit cards and mobile payment apps is merely the latest trend, and not anything to worry about. But there are a number of negative consequences to this decline of physical currency.
First of all, with electronic transactions, there’s no privacy. Everything you buy leaves a paper trail leading directly back to you. Advertisers are more than happy to use the records of your purchases to send you targeted ads. This already happens with the purchases you make online. Mobile payment apps make it possible to spam you in the stores as well.
Additionally, not everyone is equipped for a cashless society. Particularly for lower income families, cash is a staple. Around one in thirteen households in this country have no bank accounts or credit cards at all, and can’t afford to be refused service because all they have is cash.
The biggest problem, though, is that the less tangible currency becomes, the less stable it becomes as well. Instead of paper money and coins, currency is all just a bunch of 1s and 0s. Moreover, as this summer’s bitcoin heist proved, when your currency is entirely virtual, it’s subject to hacking and cyber attack. In a cashless society, your savings and your investments can disappear in the blink of an eye, before you even realize anything’s wrong.
The best way to combat this is to put a healthy portion of your investments into something physical, with intrinsic value: something like gold or silver. As physical assets, gold and silver coins won’t destabilize like virtual currency or even paper money. They’re not vulnerable to hacking, either, and their prices tend to remain stable in times of economic difficulty. If you want to protect yourself and your retirement fund against the dangers of a cashless society, then an investment in physical gold and silver is the best way to do it.