From the very moment man became a dweller of cities and the need for the exchange of goods and services arose, money has played a significant role in the socioeconomic life of man, to the extent that a famous passage in the Good Book says that money answers all things. From trade by barter which was characterized by the exchange of goods for goods and services for services, money has evolved significantly over the years.
With the emergence of the internet and the general advancement in technological innovations, paper money (if you like cash) is gradually giving way to electronic money. A major disadvantage of the paper money is the difficulty and risk associated with moving it around. But electronic money solves that problem since it can be moved from one place to the other with the click of a button without the sender needing to leave his physical space.
Electronic money also eliminates the cost of printing and storing paper money. As the society goes cashless, the central bank will save money from printing less paper notes while the banks will spend less to store it. The challenges resulting from the handling of paper money and the relative success of electronic money have prompted some economists to push for the extinction of paper money.
In this regard, the work of Kenneth Rogoff comes to mind. In The Curse of Cash, Rogoff argued that paper money encourages tax evasion and crime since transactions can occur without traces. Others are pushing for the extinction of cash because they believe that only a cashless economy meets the needs of a technologically advanced 21st century.
But the reality is that paper money is not going away soon and might still be around throughout the lifetime of the reader. One very good advantage of the paper money that is often taken for granted is privacy. Yes, privacy. While it is quite possible to spend a reasonable amount of paper money without leaving traces, one cannot do electronic payment without leaving tracks. It is easier for the government to monitor electronic money than it can ever do for paper money.
Also, paper money might be around for much longer because it financially includes the entire population. From the poorest person in the society to the least educated, paper money is not only easy to use but is available to everyone without the need for special gadgets or other electronic devices. Unlike electronic money, paper money can be spent in the remotest part of the world without the need for any special kind of exposure.
In conclusion, perhaps because most of those who push for the extinction of cash are city dwellers, the bottlenecks with the use of electronic money is usually downplayed. With electronic money, a bad network might tantamount to zero account balance as the spender becomes completely incapacitated. On the flip side, all that is needed for transactions to occur with paper money is the presence of a willing spender and a wallet that is not empty. Why will anyone want that to go away soon?
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