How society buys and sells things has changed through the ages. Money in various coin forms has been around for thousands of years and was, up and till half a century ago, the only way to purchase goods.
However, since half a century ago, our ways of paying for goods have changed dramatically. The introduction of chequebooks, credit cards, debit cards, and mobile payments are just some of the examples of innovations in banking that have all given society options other than cash.
The growth of transaction that doesn’t involve cash has grown steadily over the last few years, and on a global scale. According to Statista, The number of non-cash transactions worldwide from 2013 to 2018 saw North American transactions grow from $130.3 billion to $170 billion. In Europe, the number of cashless transactions grew from $126.3 billion in 2013 to $192.2 billion in 2018.
Cash Still King?
Despite all the advancements in technology, cash has remained king. The pandemic brought a double-edged sword to a cashless society. The amount of currency in circulation soared last year at a rate not seen since World War II. Amid a massive influx of cash from fiscal and monetary authorities, the total amount of cash in circulation in the US soared to $2.07 trillion by the end of 2021. The 11.6% gain in 201 from the year earlier was the largest single-year percentage increase since 1945.
Amid harsh and uncertain times in a post-covid economic landscape, times of economic troubles have historically coincided with rises in the use of cash. On a side note, for those that can only see gloom and doom in the economy, when all that cash builds up, it tends to look for a place to go, which invariably leads to a boom in economic times.
So, here we are at the moment, Cash is the most popular payment method for face-to-face transactions and cheap, everyday purchases. It is still used in most transactions. Indeed, according to one survey by LendEDU, 13% of American consumers say they always have cash on hand, whilst 41.5% sometimes have cash on hand.
Signs of the cash still being king are in the sales of money counters. The money counter, essential to businesses for combating fraud, and providing accuracy and efficiency in business operations is seeing global growth. The currency counting machine market share is expected to rise by $62.11 million from 2019 to 2024, and the market’s growth momentum will accelerate at a CAGR of 4.12%.
The Rise of Crypto
However, the advancement of blockchain and the mass adoption of cryptocurrencies has advanced the notion that the world is now finally ready to become a cashless society. In 2020, the total number of crypto payments surpassed $700 billion. This represents 14% growth over the previous year.
There are currently 300 million people using crypto worldwide and that number grows every year. Crypto and blockchain technology, without doubt, offer a clear and defined route to a cashless society. The means are all set up. People can do just about all their everyday life using cryptocurrency, most notably Bitcoin, to buy food, groceries, clothes, and cars. Technology has advanced so much that you can just pop to your local shops and buy your milk and bread using Bitcoin and other cryptocurrencies.
However, there are barriers to crypto bringing on a completely cashless society. The cash-in-hand economy, prevalent across the globe, is not something that is ever going to go away soon. From the fields in the US to the restaurants in Italy, the cash economy remains strong.
Another issue is trust in crypto. Like it or loathe it, there are more people that do not trust crypto than there are that do trust crypto. In a BitStamp survey earlier this year, it was shown that 71% of investors see crypto as a “high trust” investment. This trust in crypto still lags traditional asset classes like real estate, with 82% of those surveyed indicating high trust, and stocks (80%).
The extreme volatility of crypto makes using crypto for everyday purchases and for longer-term investments an unpredictable task. Whilst times are good and Bitcoin and other cryptocurrencies are riding high, people sitting on large gains, can afford to be more frivolous and more open to purchasing everything from bread to Bugattis on Bitcoin. However, in times of ‘consolidation’ which is what we are seeing now, using up that Bitcoin that you know was three times its amount just six months ago, doesn’t seem such an attractive option.
Cashless One Day, But Not Yet
The long and short of it all is that whilst crypto is undoubtedly expediting the move to a global cashless society, we are still a long way to go before the need or desire for cash goes away. There are people who will prefer using cash, those that want the complete anonymity that cash offers and the brrr of the money counting machine will be heard for many a year, but eventually, and maybe not in at least two generations’ time, there will be no cash as we know it.
