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There is a push for cashless society these days. Banks and financial institutions want to get rid of banknotes and coins and to make all transactions electronic. There are many advantages of eliminating cash.
No need to transport large amounts of cash. Cash is often the only thing worth stealing for burglars in smaller retail shops.
Electronic payment apps are typically very fast and reliable to use. This may make a big difference in restaurants that deal with a high volume of customers. The advantages to bottom line are absolutely clear if a large percentage of customers pay electronically.
This does not seem to be a significant issue these days because all larger denomination coins are checked for authenticity in most supermarkets and other stores.
This is probably the main reasons why central banks are strongly advocating central bank currencies, which are additional payment rails for fiat under central bank control. The lack of physical cash makes it easier to implement monetary policy.
The elimination of larger denomination notes helps accomplish this. The lack of use of physical cash forces criminals to jump more and higher hoops to be able to launder their proceeds from criminal activity.
Everyone in crypto understands this but it may not be as obvious to most people. But consider an example where a business loses access to their accounts for any reason of not their own fault, which has happened to people using on PayPal, for example. Things could get much worse quickly owing to non-payment of debt and ending up on blacklists.
Electronic payment systems can be hacked, which can do a lot of damage because any electronic payment rail with heavy usage must be fairly centralized to be able to handle the load.
Centralized payment systems are honeypots for hackers wanting to steal private information for criminal purposes.
It is really easy to overspend when cash is in a non-physical form. Tangible cash inside one's wallet dimishing is easier to pay attention to.
War could bring society to a complete halt by making it impossible for anyone to pay for anything vital unless physical cash existed as a backup. One rare but serious threat is coronal mass ejections from the sun that are capable of taking down large scale power grids. In 1989, six million people lost power in Quebec when a CME event took down the entire provincial power grid. The destruction of high-voltage transformers could lead to a crisis lasting several months because there aren't many places in the world where they're even made.
If money can be perfectly traced, everyone's spending habits will be completely transparent to whoever has access to a central point of control. First of all, that point of control will be an extremely lucrative honey pot for criminals in the best case scenario. In the worst case scenario, the complete traceability of monetary transactions makes it really easy to implement a social credit system ripe for abuse by government overreach. Even in the best case, such systems suffer from the fact that life is much more ambiguous than any rule-based system can possibly anticipate, paving the way for unintended negative consequences. Also, the loss of privacy is philosophically repugnant.
With the perfect traceability of money, its fungibility is lost. What fungibility means is that one unit of money is perfectly equal to another unit of it. If money can be traced, it will be easy to add an arbitrary amount of metadata to all money transactions. Money stops being money. Any balance in an account turns from a neutral medium of exchange into an asset that may come with baggage the user may be completely unaware of and that may put him/her in serious legal hot water down the road.
