National infrastructure is in a state of constant shift, as new technologies enable citizens and industries alike to access new conveniences. One of the most important innovations with regard to societal convenience has been the introduction of digital currency – which, some experts believe, could see us transitioning to a cashless society within our lifetime.
Digital Currency, Explained
Digital currency is a concept often misunderstood by the layperson, especially as new and complex technologies emerge that embody a futuristic notion of value and exchange – more on which later. Digital currency has a deceptively simple definition; it refers to any form of currency transferred or exchanged via digital means.
The general public has been engaging with digital currency since the proliferation of the magnetic-stripe debit card in the early 1970s. Today, electronic transfers and payments are commonplace to the point of banality, as many in the UK spend and earn without ever seeing a physical note.
Digital currency enables lightning-fast transfers and transactions, a property of particular use in forex markets – where large orders of currency can be executed instantly. As more and more citizens in the UK and around the world engage more directly with digital means of engaging with their money, the future of physical cash seems increasingly uncertain.
Blockchain, and Emerging Innovation
Meanwhile, continued innovation in the world of financial technology has delivered new prospects, in the form of decentralised digital ‘cryptocurrencies’. Where fiat currencies such as the pound and dollar are backed by states, cryptocurrencies are entirely generated and transferred outside of any one nation state – and thus impervious to the market conditions that set their price.
While cryptocurrencies are far from the stable source of value that fiat currencies, or even assets such as gold – on which the first cryptocurrency’s function was based –, they have become powerful speculative assets in and of themselves.
Is a Cashless Society Viable?
The instability of cryptocurrency, evidenced by volatile markets and unpredictable swings in value, renders them relatively useless for day-to-day expenditure. As such, many utopian ideas of decentralised currency entering the mainstream have been largely rubbished.
But digital payments continue to reign supreme, accounting for more annual payments and transactions every year since 2017. As such, it is easy to imagine a paradigm shift towards a completely cashless society. Many people are already living cashless – but is there any merit to the removal of cash altogether?
While appetite for digital currency is larger than ever, cash remains a fundamental provision for society. There are those that cannot access certain products or systems, for whom cash is vital for engaging with the services they need. Cash is a useful physical store of value, and viable to businesses for specific financial purposes.