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Is Cash Disappearing? The Vanishing Act of Change

by Your Friendly CryptoManJuly 3rd, 2023

Too Long; Didn't Read

Change, those small coins jingling in our pockets, was once an integral part of everyday transactions. As technology continues to reshape the financial landscape, one cannot help but wonder if change, much like its predecessor, cash, is gradually disappearing. This article aims to examine the relevance of change in today's society and explore the idea that people may be phasing out cash.

featured image - Is Cash Disappearing? The Vanishing Act of Change

Change, those small coins jingling in our pockets, was once an integral part of everyday transactions. However, as technology continues to reshape the financial landscape, one cannot help but wonder if change, much like its predecessor, cash, is gradually disappearing.

This article aims to examine the relevance of change in today's society and explore the idea that people may be phasing out cash in a similar fashion, driven by technological advancements in the financial sector, including DeFi (Decentralized Finance) and other digital payment systems.

To support this argument, we will present compelling statistics and figures that shed light on changing consumer preferences.

The Cash Decline

In an increasingly digital world, the role of physical change in transactions has significantly diminished. Here are some factors contributing to the decline:

Costly and Inconvenient: From carrying pockets full of coins to the time-consuming process of counting and exchanging them, using change has become an inconvenience. Handling small denominations and accumulating loose coins often outweigh the perceived benefits.

Cashless Trends: The availability of digital payment methods like mobile wallets, contactless cards, and online banking, has provided convenience and efficiency. These alternatives gained widespread acceptance, leading to a decline in cash usage.

Retailers Discouraging Change: Many businesses, especially larger retailers, have moved towards rounding transactions to the nearest dollar or offering electronic payment options only. This shift discourages the use of change and nudges consumers towards digital payment alternatives.

Digital Wallet Adoption and Decentralized Alternatives

As the financial sector undergoes rapid technological transformation, digital payment systems and DeFi have gained traction, further diminishing the need for cash. Let’s talk about a few changes that lead us to this conclusion:

Digital Payment Adoption: According to Statista, the number of mobile payment users worldwide is projected to surpass 1.3 billion by 2023. This shift towards digital payments indicates a growing preference for the convenience, speed, and security offered by other payment alternatives.

Contactless card payments increased by 40% globally in 2020, with over 2 billion contactless transactions made every month, according to Mastercard.

Additionally, in 2020, mobile payment transactions in the United States reached $465 billion, a significant increase from $69 billion in 2015, as reported by eMarketer.

DeFi Revolution: Decentralized Finance, or DeFi, is revolutionizing traditional financial systems by leveraging blockchain technology. DeFi platforms enable individuals to access financial services, such as lending, borrowing, and earning interest, without intermediaries.

The global DeFi market size is projected to reach USD 232.20 Billion by 2030, emphasizing the growing significance of this sector, especially when taking a look at the teams working in the sector.

Broxus (the primary developer of Everscale, previously known as Free TON) was active in southeast Asia. Now they’ve joined other developers in Abu Dhabi, growing the infrastructure there.

It’s worth noting that the UAE is extremely accepting of the technology, showing a willingness to adopt the technology on a government level.

They’ve just launched their ADGM-licensed Venom blockchain, so they’ve joined the Decentralized Race.

Changing Attitudes Toward Cash: A survey conducted by Mastercard found that 70% of respondents across 15 countries preferred to use digital payment methods over cash.

The COVID-19 pandemic further accelerated the transition away from cash, with hygiene concerns driving consumers to embrace touchless transactions.

With the population becoming increasingly aware of viral transmission and public health, cash has gained a bad reputation limiting its utility for many individuals. In the United States, cash payments lost popularity.

40% of all transactions in 2012 were made in cash. In 2020, that figure dropped to 26%.

Cash Statistics

To support the notion that people are phasing out cash in a manner similar to the decline of change, let's consider some relevant statistics:

Contactless payment has been steadily rising in popularity while cash payments are on a steady decline, as illustrated in the figure above.

If we split payment methods based on age demographics, we can see a pattern. Ages 25-44 are where contactless payments are used, which in the future, will transfer these numbers to higher age groups (55-65+). This could be the beginning of the end for cash altogether.

Cashless Economy?

The decline of change in our daily transactions serves as a microcosm for the broader trend of decreasing cash usage. As digital payment systems and DeFi continue to evolve, consumers are embracing the convenience and efficiency offered by technology-driven alternatives.

Statistics clearly indicate the rising preference for digital payments over cash transactions. While cash may not entirely disappear, its prominence will likely continue to diminish as technological advancements shape the financial sector.

As we bid farewell to change, we stand at the cusp of a cashless future, where digital payment solutions and decentralized finance are set to reshape the way we transact.

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