The Future of Cash

DisneyDisney dollars are redeemable at many Disney facilities.

Microbling? iJack? The synonymic arsenal that is bread, cake, cheddar, moola and dough might have to make room for a whole new generation of short hands for the green stuff as the world pushes deeper into digital.

Clearly, cash is ceding at least some of its aura of indispensability to the smartphone, and to mobile devices and technology platforms of various stripes and hues in general, as the limit of what can conceivably be a convertible store of value is growing.

In relatively recent times, Goofy, Donald Duck and Mickey Mouse have seniority here. Disney Dollars, first issued in the late 1980s, are based on a dollar-for-dollar base, and are still widely accepted at the Walt Disney Co.’s DIS +0.39% archipelago of resorts and theme parks.

Other early forms of local currencies include Ithaca Hours, the Totnes pound in England and Denmark’s Artmoney. Time Dollars are a unit of exchange where value is measured in duration.

More recently, until it scrapped it earlier this summer, Facebook Inc. FB -7.64% had its ‘Credits’ money system.

In the developing world, cell phone minutes have become a form of currency in places like Kenya, where calling time instead of money is often traded.

Bitcoin is an experimental attempt to facilitate transactions using peer-to-peer technology. Its radicalism is confirmed by the Keyser Söze-like anonymity of its creator.

In Sweden, there are reports of houses of worship installing card readers so as to make donations easier.

Under certain scenarios, frequent-flier miles and retailers’ rewards programs are being used as forms of remuneration.

Companies and start-ups, too, from the big-ticket banks to PayPal Inc., to Square to Mint to Adaptu, are re-imagining personal financial tools for the 21st-century citizen.

They all starkly share a single missing ingredient: chicken feed, cabbage, dinero, scratch, mazuma. Physical cash.

“The example I often use is Sir Isaac Newton,” said David Birch, a leading British technologist, electronic-money consultant to major financial institutions and an advocate for digital wampum. “When Newton was made Master of the Mint in England in 1699 the currency was in a terrible state. If you had said to people in the 1690s: ‘Hey, how is money going to change in the future,’ they would have said, well, basically, ‘silver coins will get better.’ Or ‘someone will invent a machine for assaying more of them or for carrying more of them on a horse.’”

Today, cash is also at something of a crossroads. “We have pushed cash to the periphery of our everyday financial lives,” said David Wolman, a contributing editor to Wired magazine and the author of the recent book The End of Money. “Yet when you talk about killing cash, or even just wonder about its place in both the economy and the human psyche, people go bananas,” he added.

Wolman should know. As part of his quest to find out more about the role cash plays in the modern age, he “shunned cash” for the best part of a year, traveling around the world in order to diagnose “the usefulness of physical money” in diverse settings: amid Delhi’s poor, to rogues states like North Korea and to alternative-currency evangelists operating on the margins of the law.

“The vast majority of people in the developed world have already said Yes to the electronic money proposition” even if they don’t know it, Wolman said. “Most money nowadays only exists in the form of 0s and 1s on faraway servers.”

Still, Eden Zoller, an analyst at Ovum, said that cash isn’t going to disappear any time soon. “Mobile payments are still fairly nascent services, and we’ve got nowhere near where the use of digital-payment services is habitual and daily, which is where it needs to be if it’s going to cross that tipping point where people leave their purses behind and money home,” she said.

Jeff Jarvis, a prominent commentator on the media and frequent speaker on topics related to technology, said: ” I see a world where you trade data for data. I will give you this data and in return I get something back. Is trust a currency, for example? I don’t predict the death of currency, but it is an arena that is ripe for disruption. We’ve been hearing about the ‘cashless society’ for years, just like the ‘paperless office.’”

Written by Kim Hjelmgaard and published at Market Watch July 24, 2012.

FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U. S. C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www. law. cornell. edu/uscode/17/107. shtml

This entry was posted in Viewpoint. Bookmark the permalink.