For a Fintech startup, working to drive the adoption of crypto, our insistence on the importance of cash may seem peculiar. But we’ve been commenting on the War on Cash, derisking, and the plight of bankless communities for some years now. We continue to believe that cash is important as a carrier of value, and means of empowerment.
While we live in a digital age, most things around us are still very physical. Money is no exception; cash remains the most common means of payment, and its circulation globally is growing.
Just recently, an interesting whitepaper on the importance of cash was published by Cash Matters, and it’s worth looking into.
For at least 60 years, as the report points out, there has been an expectation that cash would disappear, but so far cash has remained an important part of people’s everyday lives, and for good reason.
The physical nature of cash is such that no matter how many people use it at the same time, there is no ‘system overload’. It is a form of public money. As soon as it changes hands from issuer to user, control over it is likewise transferred completely. It cannot be confiscated with the click of a button or frozen from afar. Although there may be costs associated with the production of cash, a cash transfer in person is essentially free of charge.
In addition to being a public good, it also constitutes an infrastructure. It serves as a store of value, fosters stability, and it enables people to create private spaces where government oversight is limited.
Another lesson we can learn from the persistence of cash is that the payment space is - and should be - rich in options. Whether people want to pay via bank transfer, WeChat, on a peer-to-peer basis, using Bitcoin, or with paper money; the freedom to choose should be there.
Also, because cash is physical there are certain things you can do with it which cannot be done with electronic alternatives. For example, you can hide it under your mattress, fold it up, discreetly tip the doorman at the hotel when you shake his hand, find it on the street, and basically make payments that cannot be tracked.
