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July 11, 2015

 

What You Need to Know About the Future of Currency

By Laura Secorun Palet

 

Want to help build a better society? Burn all your cash. Take those precious bills out of your wallet right now and set them on fire. Go ahead, we’ll wait.

OK, OK — we’re not exactly calling for the destruction of physical currency so much as its dissipation, its obsolescence. Getting rid of cash might sound like an extreme measure, but that’s precisely where Denmark seems headed: The world’s happiest country is considering letting retailers dump their cash registers for good. And it turns out that going cashless could not only help boost the economy, but also could thwart all sorts of nefarious activities.

Here’s the thing: Criminals hate money trails. They go to extraordinary lengths to cover them up, from creating faux ledgers to account for under-the-table payments to building fronts for shadowy business. But digital currency is all about money trails. Going all digital, as Denmark is contemplating, would effectively beam sunlight into the economy’s shadiest corners, from the sale of stolen goods and drugs to human trafficking. Corruption too: You’d have to resort to secure, time-stamped PayPal transfers for your bribes. And obviously, going cashless would herald a steep decline in corner shop robberies. There’s little point in risking prison over an empty till, as one unfortunate would-be bank robber discovered in Stockholm in 2013, according to newspaper reports.

Digital storage of currency is actually less risky than stuffing a mattress with it.

Privacy is a concern, of course. The notion of some entity — whether a retailer, bank or government — being able to access our payment records has a dark, Big Brother tinge to it. There’s “a huge loss of personal freedom,” worries Peter Tillmann, an economics scholar at Germany’s Justus Liebig University. “The government, the spouse, the industry — all informed about your every transaction. Do we want that?” Maybe we do, actually; maybe it’s a fair price to pay for transparency and reduced crime. After all, we seem to be OK with exchanging our privacy for the ability to share vacation pictures and cat videos … why not for social safety’s sake?

There is also, of course, the issue of security and fraud. Already, hackers assail credit card numbers and digital records on a daily basis. Would digital currency systems stand up to them? It’s a fair question, but cybersecurity expert Rob Pritchard says that digital storage of currency is actually less risky than stuffing a mattress with it. Just as with bank accounts and credit cards, “you’ll have protection even if your card details are stolen or the bank is robbed,” he says.

It may take us a while to go cash-free like Denmark, where about 90 percent of payments are already made with credit cards or e-wallets. (An analysis by MasterCard Advisors estimates that only 45 percent of payments in the U.S. are cashless.) And who knows? Kenya may beat many wealthy nations to a cashless society, thanks to the widespread usage of mobile payment services. We probably will get there, though, so you might be wise to save those dollar bills. They may be valuable antiques someday.Time to cash out? Give us your two cents’ worth.