Andrew is a freelance technology journalist, marketer, & dog parent.
One day we will stumble across a £20 note in the back of an old drawer and think back to a time where this now tarnished piece of paper once represented a value that constituted the backbone of our world's economy.
These are trying times for humanity, and with the use of cash actively discouraged during the pandemic, it's a more popular opinion within the crypto world that the move towards cashless societies’ looking increasingly likely.
COVID-19's changing the way the world sees and uses money. It has accelerated the move to digital and contactless payments, driving forward the already steady decline in the use of cash and the number of ATM cash withdrawals over time. Throughout this pandemic, retailers that have historically been cash-only updated their card systems and embraced digital payments.
Co-Founder of Ethereum and CEO of IOHK, Charles Hoskinson, has noticed a death knell toll for cash payments over the last few years, believing that COVID-19 could be the final nail in the coffin. He foresees that the values of decentralised digital payments and banking will overthrow those pertaining to what we now consider to be traditional.
"With a decentralised infrastructure in place, people would have 24-hr remote access to vital products and services. These services could be accessed from any location, regardless of potential transport disruptions or banks. Decentralised banking would also allow for quicker and cheaper international transactions. People working abroad, for instance, would be able to send money to family in other countries without [the] fear of delays or inflated transfer fees."
As of the 28th of May, Samsung Blockchain Wallet allows users in the U.S. and Canada to trade cryptocurrencies, thanks to a partnership with crypto exchange Gemini.
Julian Sawyer, Co-Founder of Starling Bank and Gemini's Managing Director for Europe, said, "As we look to the future of crypto payments, it's important that we apply blockchain technology in places where it will have the most potential to revolutionise existing pain points.
Look at the remittance, cross-border payments, and foreign exchange payments areas, for example. These are all very inefficient processes that will greatly benefit from a decentralised system.
In many of these applications, the end-user may not even realise that the underlying technology is [the] blockchain - they will simply choose the newer solution if it’s faster, cheaper, and more convenient."
What poses to be the most exciting prospect of decentralised banking is that it would allow us to finally 'bank the unbanked.'
"Where 1.7 billion people globally don't have access to a bank account, a large proportion of this population does have a cell phone." Hoskinson continued. "Using third-generation blockchains, we can extend financial services to these individuals who have previously been excluded from the financial system. Secure blockchain wallets can be accessed online or via cell-phones, and can grant users access to essential services without the middleman involved, democratising finance on a global scale."
University research facilities at Hoskinson' new company, IOHK, have, in fact, already created third-generation blockchains ultimately capable of processing over a million transactions a second, no matter the transaction size. Such advances, when rolled out, could mean that transaction fees could be eliminated and funds transferred almost instantaneously.
CEO of split-second crypto and fiat trading app, TAP Global, Arsen Torosian, is confident that a cashless society would have more of a positive impact in the long run, due to what we have already learned throughout this pandemic. "It's important to consider the downsides to using fiat as we emerge from this pandemic.
Physical cash is a great way to transmit diseases and has often proved costly for businesses to process. Many now don't even accept it! However, there will remain an element of society that lives only using physical cash. We can't leave them behind."
Torosian believes that challenger banks have an important role in ensuring that those who transition between physical and digital realms are efficiently accommodated. His pessimistic outlook toward the movement is also quite apparent.
"There will have to be a grand overhaul whilst building some sort of safety net/banking option when moving these people over to a fully cashless society. It’s the duty of challenger banks to make the shift as inviting, easy, and safe as possible. Ultimately, a cashless society is inevitable."
James Bennett, CEO of leading blockchain analytics company, ByteTree, has observed the fundamental place of crypto. "Crypto will always have a place as long as there’s distrust in government-issued currencies (or fiat currencies).
Purchase volumes in crypto-asset, such as bitcoin, have shown to increase with political instability. This has been seen through Venezuela's on-going hyperinflation, Iran's heavily sanctioned economy, and Hong Kong, as its citizens battle to retain sovereignty from China. P2P bitcoin volumes have increased by around 15% worldwide over the last 30 days."
There’s an inevitable need for digital currencies, and a real coming of age for blockchain technology shows that a move to decentralised banking could be on the cards much sooner than some think. Ultimately, humans are creatures of habit.
It's uncertain whether we will see banks decentralised and a fully digital means of living in our lifetimes as it would require significant cultural change.
Bennett added, "I believe physical cash is predominantly used for two reasons. It can be trusted (it's hard currency), and it allows consumers to maintain a level of privacy.
With the rapid innovation of digital payments and challenger banks, alongside the increasing coverage of smartphone users across the world, users can gain access to both a trusted service as well as private transactions - with certain crypto-assets."