The Cashless Society

Experts have said it for years but it’s never happened.  Everyone has talked about a cashless society for as long as I can remember.  We are starting to see it come true, but it’s not cryptocurrency that is leading it.  It’s crime.  Crime is changing the way we pay.

People robbing small businesses are driving those businesses to give up cash.

Governments also are driving the trend.  You might recall last year that government officials in both the US and EU talked about giving up big bills like the $100.  Economist Larry Summers is for it.  There was pushback and society isn’t ready to give it up yet.  But, people are using things like Apple Pay, Parking Apps, Square, Venmo and other software applications designed for mobile phones to pay.  Certainly, we ought to be thinking about giving up things like the penny.

Fiat currency will rule among consumers for some time to come.  There are huge educational hurdles for them to get over when it comes to alternative cryptocurrency.  There is risk in holding it.  Fantastic plastic credit cards make fiat currency look like crypto to the consumer.  Consumers don’t realize that higher prices are being passed on to them because of all the back end processing fees.  Someday, a business will turn that into a competitive advantage but we aren’t there yet.

Personally, I rarely carry a lot of cash.  Back in the days when we were on the trading floor everyone carried a ton of it.  We’d fold it up in a trading card and put a rubber band around it.  At home card games still take cash!    Of course, if you are in Vegas you can buy chips with credit.

The other hurdles for crypto are that it’s not secure in the minds of the general population.  I was having a conversation with another investor the other day and our conversation drifted to Bitcoin.  He said that he had friends who’d had wallets hacked and they lost all their Bitcoin-with no way to get it back.  I understand if you held cash in a drawer at home and lost it, the same thing happens but cash is already established.

For cryptocurrency to gain massive adoption at scale, they will have to target businesses to business transactions.  The other day I had to wire money and my bank charged me $25.  If you are a business and you are wiring a lot, those charges add up.