Before the introduction of cash, the world had different ways of exchanging goods and services. Gold was the accepted medium of exchange before the invention of paper money in China. Since then, cash has become the prominent method of payment. However, its days could be numbered with the onset of cashless transactions. When will cash become obsolete?
The advancement of technology in payment systems has led some to question the use of cash. With millions of people around the world now using online payments, credit cards, and digital currencies, some wonder if cash has run its course. It’s even conceivable that cash could become obsolete in 10 years. Will skills associated with cash handling become obsolete too?
What Is Cash?
Cash is a physical form of currency used to purchase goods and services. It can come in the form of banknotes and coins and has existed since about 650 BCE. Before paper currency, coins were mass-produced and used in Lydia, which is now Turkey.
Until the introduction of coins, people exchanged goods and services through bartering and gold, which led to difficulties because of gold’s scarcity. Since the invention of cash, the world has come to accept it as the official means of exchange, with each country having its own currency and value. However, this may change soon, due to technological advances.
Will Cash Be Replaced by Future Technology?
Cash may soon be replaced by future technology. However, there is no way to predict how soon that will happen. The world is already using physical money a lot less with the invention of various payment options in recent years. These modern technologies may completely take over cash, but it’s hard to predict if cash will ever become completely obsolete.
There are many factors that will help determine the future of money. Things to consider include the role of commercial banks, tax revenue, and digital currencies. There are other reasons why cash could be replaced by future technology, including the simplicity and ease that come with the use of this payment technology.
The Popularity of Bank Cards
Bank cards continue to be a popular method of making an assortment of financial transactions. Carrying large amounts of cash around isn’t convenient for customers or businesses for many reasons, including security. Credit and debit cards make it easier to pay for products and services without worrying about carrying cash.
Credit cards are even more popular because they allow people to pay for things easily without having to possess the physical money upfront. Card payments are also more reliable. If you lose a card, you can cancel it and get it replaced. If you lose physical cash, it’s gone.
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Cryptocurrencies Are Gaining Credibility
Cryptocurrencies have existed for quite some time but only recently started gaining widespread acceptance. The relevance of this digital currency continues to increase for many reasons, including security, ease of use, speedy transactions, and convenience.
While it might take some time to gain full acceptance from the world, it is already having a major impact across industries. Major financial institutions like JP Morgan Chase and Wells Fargo are already building their own digital currencies, further increasing the value.
Online Payments Are Easy
A major reason why cash is losing relevance is the introduction of online payments. People can now easily shop online and pay for services through a few clicks on their phones, even without a credit or debit card. This can be attributed to the increasing use of online marketplaces that cater to digital transactions.
This makes buying products quicker and easier. When you can purchase any product and service you want from the convenience of your home without needing cash, you are bound to use cash less.
The COVID-19 pandemic has also incentivized contactless payments. Handling cash can transmit germs and viruses, and using it creates a risk that doesn’t exist with contactless payments.
Technologies and Trends That Could Make Cash Obsolete
Technology is taking over and it could be the main reason why cash ends up being worthless in the future. New technological advancements like digital payment services and ewallets allow users to spend without using cash. Some of these new technologies are mentioned below.
Bitcoin was the first cryptocurrency to be created in 2009. It started with little fanfare but started gaining popularity in 2011. Since then, it has only increased in popularity and has spawned other imitation cryptocurrencies powered by blockchain technology, such as Ethereum and Litecoin.
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The benefits of cryptocurrencies include reduced transaction fees, increased security, and the removal of a third party to facilitate transactions. Bank transfers typically require fees and can take multiple days to process.
Bank cards have been in use since 1967 and are now prevalent in every country as an accepted form of payment. There are different types of bank cards available such as credit cards, debit cards, and prepaid cards. They often have different functions but all serve the same purpose of facilitating non-cash payments.
Online payments have been used since the 1990s and this payment system has since been widely accepted by millions of people worldwide. There are several online platforms where you can order products or services with online payments.
The speed and convenience offered by online payments have minimized the need for cash. Businesses also benefit from these payments, as offering online payments allows customers to shop without leaving their homes.
The Rise of Ewallets
Ewallet stands for electronic wallet. It is an electronic card used for online transactions or mobile payments on phones and computers. It is also known as a digital wallet or contactless card and stores money like a debit or credit card. Ewallets typically need to be linked to a bank account. Ewallets make it possible for people to make payments with ease and speed.
When Will Cash Become Obsolete?
Cash will not become completely obsolete any time soon. This is because technology cannot wholly replace it in 10 years. While the world has trended away from cash usage, there is still a long way to go before physical cash is no longer needed.
Cash will continue to be used less over the next 10 years. Large corporations will keep utilizing modern technology for their financial needs including transactions, payroll services, and investments. Nonetheless, it’s hard to imagine a business that would refuse cash.
What This Means for Businesses
Prioritizing non-cash payment methods is beneficial for businesses. It offers them more flexibility and security and opens them up to a broader customer base. While cash transactions will likely always be accepted by brick-and-mortar businesses, digital payments will become even more prominent as more businesses shift towards ecommerce.
Lower Transaction Costs
Business transactions typically involve third parties like central banks, which charge transaction fees. Card-based transactions and digital payments always carry a transaction fee for the merchant. However, businesses can avoid this fee by using cryptocurrency.
Reduced Illegal Activities
Most illegal activities deal with cash because cash is untraceable. Cashless payments, on the other hand, can almost always be traced. This helps companies monitor their funds more efficiently while avoiding fraud and other illicit activities.
No More Cash Hassles
Handling cash can be risky and unsafe for both companies and customers. Using primarily cash increases risks and makes robberies more likely. When payments are made and recorded electronically, security risks are greatly reduced. The reduced use of cash also reduces financial crimes like money laundering.
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Improved Customer Access
Anyone with a bank account can make use of electronic payments and it allows customers to make purchases from the comfort of their homes. For cross-border transactions, cashless payments are essential. By utilizing electronic payments, companies can expand their customer base and grow their profits.
Faster Financial Processes
Online banking, cryptocurrency, and other digital currencies speed up the rate of transactions. Both businesses and customers can move money instantly. Credit card transactions typically take a few hours or a few days to clear but digital payments clear within seconds.
Does Cash Have a Future?
Cash has a future in the world, but its influence may decrease in the coming years. This is because other modern means for transactions are quickly becoming popular thanks to financial technology. Digital payments are faster, easier, and safer than cash.
It is for this reason that the future of money is being questioned. While it isn’t likely that cash will become completely obsolete in 10 years, it will likely be used less. According to Statista, the market size of mobile wallets in 2021 was over $5 million and is projected to grow to over $9 million by 2025.
According to TripleA, the estimated number of crypto owners in 2021 was over 300 million, with 18,000 businesses supporting the currency. These numbers show that cryptocurrency has staying power and may take prominence over cash in the future.
Will Cash Become Obsolete? FAQ
Cash may eventually go away in the far future, but it is difficult to determine if and when that will occur. Cash is backed by federal governments and central banks, while cryptocurrency remains illegal in many countries.
Cash could become obsolete in the distant future if a majority of the globe switches to digital currencies as the official form of payment. Digital financial services will certainly increase in the future, but the same cannot be guaranteed for cash services.
There is not currently a cashless country anywhere in the world, but some countries are looking to switch to primarily cashless payments in the future. It will likely be a long time before cash loses its status as the default currency for countries.
There may be a future for cash in the near future, but it will only continue to lose significance in years to come. However, many factors are at play, and the outcome cannot be fully predicted.
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