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Knowledge Update

The Future of Money: Will Cash Vanish?

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“At the time of writing this article, there are approximately 10,000 cryptocurrencies used in the market”

Historically, since the dawn of time, man has invented and developed various forms of payment. To take a shortcut, reaching the currently used fiat currencies known as a banknote.

When the monetary system started, banknotes were supposed to be backed by physical commodities like gold or silver that makes them convertible to such precious metals, but fiat currencies are not convertible into gold or silver as they are not backed by such physical commodities but their value is derived from the supply and demand where the stability and power of the issuing government are taken into account rather than the commodity backing system. So, without the power of the issuing government, I can affirm that banknote is not worth the paper that is printed on. Keeping in mind that it is really dangerous if fiat money is printed in huge amounts as this will ultimately lead to hyperinflation.

Despite the different forms of digital payment that we have been using for more than three decades, cash and banknotes are still in use until now. But the question is, will cash disappear? Over time, the transformation of using different forms of payment has been through many stages, reaching the electronic payment processes such as credit and debit cards, like Master/Visa and other forms of payment processed online.

For the last decade or so, with the help of Blockchain technology, we have witnessed the launch of the first-ever application, which is “Bitcoin.” In my  opinion, Bitcoin and other crypto-assets are more like fiat currency, however, the major difference between them is that fiat currency is issued by a governmental institution, while crypto assets are issued by non-governmental institutions. That said, in both cases, the currency is not backed by either gold or silver. On top of this, I see a great advantage of the genuine cryptocurrency over the fiat currency, that once issued, you cannot print more of the same coin, because every “block” representing the coin is registered in the “chain” of transactions, hence the name “Blockchain,” and there is not even the slightest margin or chance of currency inflation. One more thing, that as banknotes should be backed by gold or silver, cryptocurrencies value is gained and backed by the services that they offer and the problems that they solve using technology.

At the time of writing this article, there are approximately 10,000 cryptocurrencies used in the market, and by the time you read this article, I am confident that the number will have drastically grown as the demand for using the cryptocurrencies is invading all the businesses and service providers. You have definitely heard of Bitcoin (at least in this article), Ethereum, Ripple, and others which all have been mentioned in the news every now and then.

The power of cryptocurrency, as Blockchain technology, comes from the technology used to record the transactions and save the coin value. Cryptocurrency means hidden, secret, or even concealed electronic money that no one can regenerate similarly or copy the contents for double-spending purpose, which reflects the level of security used to complete the payments and transactions between users. Unlike the cash that we carry around, cryptocurrencies exist electronically and circulated in the form of electronic payments from one user to another, which is known as Peer-to-Peer as there is no third party in between like a central bank or a governmental institution to manage the transaction system.

In the last five years, we have seen an increased demand in using cryptocurrencies and the vast amount of services and problems each coin is solving, and of course, with more to come in the near future.

One should not be shocked or dazzled, and this is my bold opinion, and remember that you are reading this here for the first time, that in the near future, we will witness the central banks of many countries start the transformation of their current conventional monetary systems to the digital monetary system one way or another for the ease of payments and money transactions. Also, the current banking system will never be the same, as we may witness banks start issuing their own cryptocurrencies that will be used for their clients’ transactions, which will result in a radical change in the current banking system as we know it.