We’re heading toward a cash-free society
Using cash is a pain. Yeah, being able to convert the tips you made slinging drinks into food and shelter is pretty cool. But being charged $3.50 at the bar’s ATM just to get your own money should be considered a human rights violation.
If you’re well-travelled, you’ve noticed a ton of signs pointing to the end of our cash-based economy. Buses in London won’t take your coins anymore, and in Sweden, it’s completely legal for shops to refuse coins and bills.
Things aren’t far off in Canada. In 2015, only 25 percent of Canadian transactions were made using cash, in large part due to the surge in popularity of cards, bitcoin, and other digital currencies, and independent POS systems like Square. Even Canadian Tire money is launching its own digital program.
So, are we heading to a cash-free society?
“Absolutely,” says Kyle Kemper, executive director of the Blockchain Association of Canada. “We have all these fintech options using the existing cash system, and then we have the bitcoin side of things, which is entirely cash-less, global in nature, 100 percent inclusive, and very secure. It’s just a matter of time.”
Kemper may be a little biased when it comes to blockchain technology and digital currency, which is currently facing debate around its need for regulation, so let’s weigh the pros and cons of ditching your money clip:
Ease of Use and Accessibility
Cash is simple to use. You give the pizza guy $20, he gives you a pizza. It’s a good system. So why complicate things? In terms of accessibility, cash is by far the easiest way of paying. Anyone can give or receive it, no ID, accounts, or technology required.
Lewis Waring, 28, is a musician who teaches private lessons for cash. He opts to be paid in cash — even when clients offer cheques — mostly for this convenience factor. “A cheque needs to be cashed, a debit transaction must be authorized, a credit transaction must be paid off at some future time,” explains Waring. “For me, the benefit of cash is ease and control over the process.”
On the other hand, ensuring you always have cash on hand is annoying. The bus only takes exact change, and that twee coffee place around the corner should know that you’d totally patronize them (and not Starbucks) if they just offered Interac. Maybe we should make digital-only payment mandatory.
Now, let’s consider your mom and her level of familiarity with the app store. Digital currency might not be quite as straightforward for people over 50. “User experience is one of the major barriers facing digital currency,” admits Kemper. ‘It works, and it’s pretty darn good, but there’s a technical threshold to getting used to it.”
Finally, there’s the financial accessibility issue. It’s easy to flick your phone to pay for a macchiato — but you still have to be able to afford that phone. Kemper argues that digital currency systems are more friendly to low-income users than traditional ones, since people don’t need to have a minimum amount of savings to access services. And when it comes to affording the technology required to go digital, Kemper isn’t concerned. “They aren’t installing landlines in developing parts of the world,” he says. “They’ve just jumped straight to cell phones, and it will be the same with the jump to digital currencies.”
Winner: Until we get more comfortable with the technology (or we solve poverty), I think it’s a tie.
If you’ve ever wondered why your credit card balance comes as a shock each month, just chalk it up to neuroscience.
The insula is the part of our brain that handles bad news. Typically, it’s triggered when we hand over our cash, prompting second thoughts about whether we really needed to spend $35 on a single brunch. But when we use a plastic card or a cell phone, our brains don’t seems to register the financial hit in the same way. We hardly notice that we’ve just blown a week’s salary on new kicks and concert tickets.
This experience isn’t totally true for everyone. If the majority of the money you earn is in cash, you’ve got a much larger wad in your wallet to work with, and it probably won’t feel as finite. “I definitely treat cash differently than I do with a card,” says Joel Oakley, a 33-year-old bar manager in Toronto who earns a lot of his income in cash. “Cash means less to me because of the small denominations. When you spend 20 or 40 bucks, you don’t see right away the effect it has on your finances overall. You just give someone some paper and they give you some things.”
Winner: Cash, for most people.
Cash is easy to lose, and there’s literally nothing you can do about it. But if technology like Apple Pay—which lets you use your iPhone and fingerprint to pay—was only around in 2010, then when my wallet got stolen in Budapest I wouldn’t have been out 300 euro (and been forced to shack up with a skeevy hostel worker who smoked a pipe and wore onesies).
….Anyway, back to digital currency. Bitcoin is the first, and most well known, example of “blockchain” technology, a decentralized cryptographic system that allows users to exchange currency peer-to-peer, without a middleman. Since the blocks are open-source and continuously validated, users can be confident that their transactions are authentic and will be honoured on the other end.
But if your transaction lives on the internet, couldn’t it be hacked? In the Intrepid Review, Collin Thompson explains it like this: “If someone wanted to hack into a particular block in a blockchain, [they’d] not only need to hack into that specific block, but all of the proceeding blocks going back the entire history of that blockchain. And they would need to do it on every ledger in the network, which could be millions, simultaneously.”
So blockchain money is practically impossible to counterfeit, though digital currency isn’t impossible to lose. On the individual, psychological level though, it’s hard for some to shake the feeling that cash in your wallet is safer than code on the internet. “Exchanging goods and services without cash just seems dangerous to me,” says Waring. “There’s always a chance that the payment could bounce and you might be without recourse. Cash feels more tangible.”
Winner: Digital, at least for compulsive money-droppers like
There’s still a ways to go before we fully transition into a cash-free economy, though it does offer a lot of promise. So go ahead and dabble in digital currencies, but you’ll still need to hold onto your laundry quarters.