Digital Wallets, Bitcoin and Cryptocurrency: Old Habits Die Hard

Hmmm, are we on the fast track to a truly cashless society?

I have heard the term bandied about for some time now. Honestly, I have not paid a lot of attention to the idea because I did not believe it was something I had to worry about in my lifetime. But it appears that might have been short-sight thinking.

What exactly does cashless mean? It depicts an economic state in which physical banknotes or coins go the way of the Dodo bird. The transfer of digital information – an electronic representation of money – between transacting parties becomes the norm.

An article I read indicated that cash transactions now account for only 30% of all purchases. An expert in the field has predicted that cash transactions will drop to 10% of all purchases by 2030. I am not planning to cash out (if you will pardon the pun) before that date so it seems I will live to see the world at least on the verge of cashless.

I suppose I should not be so surprised. Here in Canada we are already regular users of Interac – a non-profit network that connects financial institutions to facilitate exchanging electronic financial transactions. Interac has 83 members and in excess of 59,000 ATMs. And, of course, PayPal, one of the world’s largest Internet payment companies, has been around since 1998.

But Interac and PayPal are only the leading edge of an increasing number of cashless financial transaction methods. The digital wallet movement, financial transactions by electronic devices, is a juggernaut thanks in part to the adoption of this technology into smartphones.

Since these systems authenticate the holder’s credentials, their applications are almost endless. For example, they could potentially verify the age of a buyer who wants to purchase alcohol. Booze and easy money – there’s a great combination.

And then there is this initiative called Bitcoin which I have been trying to wrap my mind around for some time. It is a form of digital currency created and held electronically. Bitcoins are apparently produced by people and businesses, running computers all around the world, using software that solves mathematical problems.

The thing that mystifies me about Bitcoin is that it operates independent of a central bank and no one controls it. It is part of a category of money known as cryptocurrency because it involves encryption techniques. How that works in practice is beyond me.

I have never stopped to do the math on how much of my purchases are cashless. I use Interac and my credit card on a regular basis while somehow managing to delude myself into believing I am not participating in the cashless movement. But in truth, my cashless transactions are easily in excess of 50% of my total purchases.

I have not been able to decide if the fast approaching cashless society is a good thing or a bad thing. I do know that the old “money doesn’t grow on trees” metaphor is taking on a whole new meaning in the era of digital transactions.

I am still in that generation that cannot walk around without at least some real money in my pocket. Old habits die hard for us aging baby boomers.

~ Michael Robert Dyet is the author of “Until the Deep Water Stills – An Internet-enhanced Novel” – double winner in the Reader Views Literary Awards 2009. Visit Michael’s website at www.mdyetmetaphor.com or the novel online companion at www.mdyetmetaphor.com/blog .

~ Subscribe to “Michael’s Metaphors of Life Journal aka Things That Make Me Go Hmmm” at its’ internet home www.mdyetmetaphor.com/blog2 . Instructions for subscribing are provided in the “Subscribe to this Blog: How To” instructions page in the right sidebar. If you’re reading this post on another social networking site, come back regularly to my page for postings once a week.