Credit cards, contactless payment facilities, cryptocurrencies and now digital currencies… All things considered, it is evident that our adventure with hard cash which has lasted for thousands of years will never be the same again…
It was as if we would always need it. Though cash has been a part of our lives for ages, it has increasingly been losing its functionality. It may not entirely disappear; however, its prominence in our lives will not be as it used to be…
In fact, credit cards have already driven cash away from our lives to a certain extent. Cryptocurrencies have now become a precursor of farewell. It is in fact the governments that have initiated the final countdown with their turn to digital currencies.
Although there have been countless parameters till now, the introduction of prepaid cards and credit cards to our lives has brought about the beginning of the end.
Found in almost every wallet today, the first bank card was introduced in 1946. It was in 1949 when the forerunner of credit cards was designed for travel and entertainment.
With the introduction of online banking, the bells started to ring quite loudly for cash. The reason was that online transactions were undoubtedly more advantageous in terms of payment and fund transfer. One of the most crucial points here would be “contactless payment”. It was impossible for cash to keep up with this pace.
It worked flawlessly.
The real turning point was in 2008. A person or group named Satoshi Nakamoto appeared and issued the white paper of Bitcoin. Blockchain technology had much more to offer than the existing economic instruments: Bitcoin was decentralized. Prices would be determined solely based on supply and demand. In addition, any retroactive manipulation was impossible. No authority could offer this before. Moreover, transfers were more cost-efficient and practical. No conventional financial system could achieve this. In addition, its maintenance was so much easier. No investment instrument, not even gold, could ensure this.
Bitcoin appeared in 2009 and it has worked flawlessly since then. Alternative cryptocurrencies have been presented one after another. Today, the overall market value of all cryptocurrencies exceeds $340 billion.
The strategies of governments have changed accordingly.
Accounting for a significant volume around the world, cryptocurrencies have achieved such a volume that governments can no longer overlook them. This has brought about two outcomes:
- Leading governments began to regulate cryptocurrency markets.
- Certain opportunities provided by cryptocurrencies caused governments to turn to digital currency.
Several countries from Switzerland to Malta, Germany, and Japan have set out to regulate cryptocurrency markets. There has been an increasing tendency to cryptocurrencies in leading countries because it is possible to audit whether or not intermediary firms take necessary security measures to protect user data and assets, users’ rights are protected, and trading platforms have set their rights and responsibilities clearly.
On the other hand, countries such as China and the USA have taken significant steps to introduce digital currencies to the market. China began using digital yuan as a trial. Just a few weeks ago, the Ministry of Commerce of China announced that they would soon start digital currency trials in Tianjin and Hebei in addition to Beijing.
Similarly, the USA is strongly determined about digital USD. Just recently, Lael Brainard, a member of the U.S. Federal Reserve’s Board of Governors, announced that they continued their efforts on the subject and that they received support from several institutions such as MIT.
Daily news coverage reveals almost every day that the EU countries also take steps in this direction. Germany, Italy, and the Netherlands have already rolled up their sleeves to introduce the digital Euro.
Turkey has also continued to take further steps. For instance, the Annual Presidential Program of 2020 included “the development of alternative currencies and payment systems that will be recognized in the international trade system”.
Governments have realized that cash needs to assume a new form. Thus, they want both to get rid of the cost of printing money and close the gap between fiat money and cryptocurrencies in terms of transaction speed and practicality. Thus, the paradigm is beginning to change for the big leagues, too.
Does cash have a place in the “new normal”?
Without a doubt, the Covid-19 pandemic is another development to speed up the process within this period. In addition to the declined trust in conventional markets, hygiene measures alone have caused a tendency to leave cash behind.
Increased online shopping is one of the indicators of this change. After all, it is a fact that cash could harbor viruses.
The statistics from many other countries also prove this shift. Let’s content ourselves with Australia for now: Every year, Australia used to release 15 million coins into the market in the first half; however, this was not the case in 2020 due to lack of demand. Moreover, money withdrawal in March and April decreased by 40% in the country.
What about Turkey?
One of the effects of the pandemic can be observed in the data collected by the Interbank Card Center. On May 22nd, around 7 million contactless payment transactions were carried out in Turkey. This was a record. The total number of card payments exceeded 26 million on the same day.
With all these developments, the question “to what extent does cash have a place in the new normal?” comes up more frequently than ever.
Credit cards, contactless payment, cryptocurrencies and now digital currencies have weakened the dominance of cash.
Indeed, we are talking about an instrument which is difficult to keep, slow in transfer, open to influence, and risky in terms of hygiene.
It appears that cash will stay in our lives for a while, but the time to bid farewell is around the corner.
Bu içerik en son 26 October 2022 tarihinde güncellenmiştir.