The rise of digital currency
As we are all well aware the rise of digital currency has been very swift in the 21st century and the use of cash has been steadily decreasing especially since the recent coronavirus pandemic. In 2021 only 11% of transactions in stores were made using cash which is in contrast to 27% in 2019 this highlights the continuing trend of cashless transactions throughout the UK. The use of contactless payments and digital payments through a personal phone is also on the increase due to the new wave of convenience payment methods and the increase of online shopping.
The technological management of money
The advancement of technology has helped the management of money in recent years due to the ease of access people have to their finances through online banking and other online money management services. This has made the need for high street banks a thing of the past. Opening a bank account, making transactions, obtaining a loan and managing accounts are now all things that now can be done through a digital device and has made the use of banks futile. This has led to over 325 high street banks closing in the past year. This has led to exclusively online banks like Chase and Starling bank capitalising on the void created in this new market.
However this may not be the case all over the world as in the US they still rely heavily on the use of cash as still 6 in 10 Americans still use cash in a typical week. There is also disparity among the use of cash in households with different income, as studies show people who earn higher incomes are less likely to use cash than people with lower incomes. This could be due to the heavy tipping etiquette in America as tips are required to offset the low wages of people working in certain industries in the US. Although the use of cash in the US is still very prominent they are also switching to the use of digital transactions as 41% of Americans do not use cash in transactions in 2022 compare to only 24% in 2015.
The effect of coronavirus
The effect of COVID-19 pandemic on the transaction methods people used was significant. In some stores the use of cash was prohibited to try to minimise the spread of the virus and this left some households in difficulty as there are still some people in the UK very reliant on cash. Many jobs in the UK are still cash in hand which made managing cash very difficult for payments that required contactless payments; this is one of the reasons why banks are still very necessary until all income is attained through digital means. The pandemic did show that the use of contactless and digital payments have hidden benefits even in such an unprecedented time.
The rise of cryptocurrency
The increase in popularity of Cryptocurrency use across the world has come into the forefront in recent years. Cryptocurrency is a digital currency which is an alternative form of currency using encrypted algorithms. It has become popular in recent years and many cryptocurrencies like Bitcoin has created massive returns for people almost overnight. Although cryptocurrencies are becoming very popular they are very unpredictable and most people are very naive when it comes to investing in cryptocurrencies without understanding the complicated implications involved. However cryptocurrency is becoming extremely popular and many experts believe that this form of currency will become the future of economics. For example Tesla was one of the first companies to accept bitcoin as a method of payment when purchasing one of their products so this is something to bear in mind for the future generations. This is another reason why cash is on the way out.
Overall, It seems that cash may finally be becoming the thing of the past as the increase of digital money management and many other forms of payment are more convenient and easier to manage. Also with the continuing rise of crypto currencies and other things like NFTs its seems like this trend is highly unlikely to change. However I believe this will be a slower process than people imagine as there are still many industries which rely heavily on cash and there are many demographical and geographical implications to contend with.