I love thinking about my 1980s family holidays in Italy. Weeks spent on beaches, in ice cream shops, pizzerias and gaming arcades. Phone calls back home were strictly kept to three minutes as they were so ridiculously expensive. Everything was paid in cash. I remember how excited I felt when I was a Lira millionaire. It was exotic and precious.
As you can see, I have a very emotional attachment to cash. I like that I have much better control over how much I spend and that my children can use to learn how the financial system works. But I do not think that cash is very practical. I actually very rarely have cash with me. At a fun fair a few weekends ago, I had to hurry 10 minutes to a cashpoint and back so I could buy tokens for the rides, as the organisers did not accept cards. Without enormous pressure from various children, I would have walked on for sure.
I do not think cash is safe either. The number of people I personally know who have had cash stolen from them is in the dozens. Including myself. The number of people I know who had their bank card stolen and money taken from their account is – one. And their bank paid back the money within days as it could easily spot an unusual spending pattern. So if carrying cash is more risky, would it not make sense to get rid of it? It is exactly what Sweden does. But going completely cash-free is politically sensitive.
Cash does have its prize
Governments keep cash alive because it is a social method of making payments. It is accessible to everyone and it does not discriminate against anyone. It is the key payment method for the millions of people who do not have a bank account and are not able to use a card or mobile phone to make payments. When I was a teenager, my grandmother gave me the ‘secret handshake’. What made this gesture so meaningful was that there was an immediate tangible and therefore emotional result. Had she transferred money to my bank account it would have had a very different emotional effect on me. Yet, money is money, and the way it is being handled and passed on does not define its value.
What defines value though is cost. And cash is expensive. It needs to be designed, manufactured, transported, protected, counted and destroyed. Numbers that circulate indicate that the cost of cash is £130 per person per year. Many of us use price comparison websites to shave off a few pounds of our monthly mobile phone bills. If we add cost to the cash equation, it makes increasingly less sense to use it.
Cash – the only stalwart of privacy
A key argument for cash is the anonymity it provides. I am very much pro-privacy and try to avoid giving too much data about myself away. I do not, really, want anyone or any business to know how, where and when I spend my money, and to predict or even influence what I am going to do next. Yet I still prefer cards over cash. They are simply more secure and more convenient.
But for me, cards are transitional only. Once crypto-currencies evolve into a mainstream payments method and can be used for day to day financial transactions, the discussion around convenience vs security vs anonymity will become irrelevant. We will then be able to make payments in a private, anonymous and secure way. No more cards, no more cash needed. These currencies will likely be issued by national central banks, but neither private banks nor card providers can then control, dictate or profit from the way we choose to pay for goods and services.
When talking to our clients, most agree that this will take many years to get there, but the current state of payments is unsustainable and will drive adoption. The current situation is neither cashless-friendly nor cash-friendly. Most shops accept cards and sometimes only accept card payments, yet we still need cash machines to pay at festivals, market stalls or fun fairs. Having parallel payment infrastructures in place is neither efficient nor helpful.
The future is digital. It is not cash
Our lives have become digital. We WhatsApp our friends rather than calling them, and we send emails rather than writing letters by hand. Digital has not completely replaced the physical, and should never fully do so. But it is impacting the way we think, work and interact with each other. This is how we describe what it is our clients do when we speak to the media and other audiences: they create something new and “better” that has an impact on our lives.
Exchanging physical coins and notes is not contemporary anymore. In a few years, carrying around a small card made out of plastic will not be seen as contemporary either. Our digital lifestyles create massive shifts in our behaviours and these shifts will continue to affect the way we make payments. A recent example is the launch of Apple Pay in Germany – a country which traditionally has been cash friendly.
When it comes to cash, there is emotion on one side and practicality, convenience, security and anonymity on the other. We as human beings would not exist without our ability to have and share emotions. But if we see transactions, such as buying or selling products, as a rational way to deal with other human beings, then the way we fulfil these transactions should be rational too. Cash may not be gone yet. But it is only a matter of time before it will be a thing of the past, evoking pleasant memories.
Published 18 December 2018 on hkstrategies.com:
http://www.hkstrategies.com/united-kingdom/en-uk/going-going-gone-future-cash/
Showing posts with label bitcoin. Show all posts
Showing posts with label bitcoin. Show all posts
18 December 2018
10 January 2018
Blog post: Alice in Blockchains-Land: In it for the money
Regrets, I’ve had a few. Maybe too few to mention, but there are still a few: I started looking into Bitcoin at around 2011, when its value was around $2.
I found the concept fascinatingly anarchistic and considered buying 50 BTC, to see how it worked. I thought too long about where I could legally spend Bitcoin. As BTC’s value crept up to $30 and I still had not managed to work out how to use Bitcoin, I decided not to bother.
Despite the nagging feeling of having missed something huge, virtual and cryptocurrencies still fascinate me. I do not believe that cash or cards are contemporary means of payment anymore. Similarly, I do not believe that the payments industry is the only industry on the verge of a complete technology-driven make-over. It is the Blockchain – a decentralised ledger recording data transmissions – that will change all industries forever.
A holy grail for transactions
Powering Bitcoin and many of its relatives, Blockchain has traditionally been associated with financial services, and cryptocurrencies in particular. This was the focus of CES 2017. But Blockchain is more. It makes data equally accessible for various parties. It makes records transparent and auditable, and cannot be altered – which means that transactions are safe and secure. And cheap. It is the holy grail for any transaction, combining convenience with security.
This is reflected at this year’s CES, where the discussion is in the broader context of consumer electronics. Transparent yet secure and cost-efficient transactions are crucial for many applications, including smartphones allowing users to use encrypted communication as well as to make and receive payments without having to pay fees. The Blockchain can also power ride applications between car owners and users without third party involvement. There will be authentication of medical records, a requirement for personalised healthcare which will take off this year. Several countries already record real estate contracts on blockchains. Recruiters use the Blockchain to verify candidates’ experience and qualifications.
No regrets, honestly…
Late last year, adding “Blockchain” to a company’s name seemed to be sufficient to dramatically increase a business’s value. Similar to Artificial Intelligence or the Internet of Things, we will see a flood of Blockchain-related companies and applications entering the market this year. Most of them will either fail spectacularly or go unnoticed. A few companies though will be able to find and launch applications that matter, will be able to monetise them and gradually advance Blockchain technology. It is a revolution, but a gentle and constant one.
So do I really regret not having bought Bitcoin for $2 per piece? I am actually not so sure anymore. Not being a gambler I probably would have sold them for $5 anyway. For me though, the better option is to look at companies that invest into Blockchain-powered businesses themselves. They are the ones that are likely to succeed, in the long-term.
Published 10 January 2018 on hkstrategies.com:
13 December 2013
Blog post: The Rise of Bitcoin
Back in March 2013, Bitcoin reached an
all-time trading high of more than £21. At that time, this was seen as a major
development for the alternative currency which was launched in 2009, largely
unnoticed outside the crypto-currency world. Since then, the situation has
changed dramatically. What was seen as hype in March has now developed into a
frenzy.
By the beginning of April, one Bitcoin
was already worth £150. And since a US Senate committee hearing in November
backed Bitcoin as a legitimate financial service, its value really took off:
following a peak of £755 on 5 December, it is currently trading at around £550.
Why has Bitcoin some attractive so
quickly? How exactly does Bitcoin work? And how do regulators see the currency?
Here are some facts which describe what Bitcoin is - and what it’s not.
Published 13 December 2013
on entrepreneurcountry.com, read the full article here: http://www.entrepreneurcountry.com/united-kingdom/item/the-rise-of-bitcoin
29 November 2013
Blog post: The week in the media: Trading & Technology
This week was good for Bitcoin as its value soared to an all-time high of more than $1,000 on Thursday. Its worth has doubled since a US Senate committee hearing earlier this month backed Bitcoin as a legitimate financial service. Launched in 2009, the alternative currency can be traded anonymously and freely worldwide and is increasingly seen as an efficient way of handling global money transfers. The increased valuation also means that Exante’s Bitcoin fund is the best performing hedge fund so far in 2013 with a return of 4,847%.
On Monday, five major US banks said they would fund a new electronic bond trading venue on Tradeweb, a company owned by Thomson Reuters and a consortium of banks. This is regarded as an attempt to improve liquidity in the $9tn market for US corporate debt while retaining their control over the way securities change hands.
Published 29 November 2013, read the full article here: http://www.mhpc.com/financial/the-week-in-the-media-trading-technology/
1 March 2013
Blog post: 7 things you thought you knew about Bitcoin (but that are wrong)
Bitcoin has made headlines again yesterday, reaching an all-time
trading high of more than £21. This is a significant
development for the fairly new alternative currency, which started at Zero in
2009. Bitcoins has slowly and quietly become a global phenomenon which is
featured prominently in the media, and has started to attract the special
attention of global regulators.
So how exactly does Bitcoin work? Here are seven myths which
describe what Bitcoin is, and – more importantly – what it not is.
Published 01 March 2013 on whiteboardmag.com, read the full
article here: http://www.whiteboardmag.com/7-things-you-thought-you-knew-about-bitcoin-but-that-are-wrong/
6 February 2013
Blog post: Amazon Coins proves that virtual currencies (real threat or not) are here to stay
Amazon’s announced today that it will launch Amazon Coins in May 2013. Clients will be able to purchase apps on Kindle Fire with Amazon’s proprietary virtual currency. Amazon Coins, which are planned to be launched in May, will be pegged to the US dollar and can be bought using existing Amazon accounts.It’s a move that breathes new life into virtual currencies. At last, as some may say who believe that an alternative money system will make commercial transactions easier and smoother.
Published 6 February 2013, read the full article here: http://www.whiteboardmag.com/amazon-coins-proves-that-virtual-currencies-real-threat-or-not-are-here-to-stay/
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