Bitcoin Forum

Modern finance requires a lot of trust, and its digital future will demand still more. If, for example, electronic payments are to replace cash, people must be willing to believe that the bits of data traveling among phones, cards, terminals and blockchains actually represent something of value.

So, will people believe? Judging from their growing predilection for physical currency, maybe not.

At first glance, cash would appear to be on its way out.

Sweden has almost eliminated its use for payments. In America, home of the almighty dollar, almost a third of the population gets through a typical week without using a single banknote.

Businesses are experimenting with going cashless, hoping to speed up transactions, combat theft and create a safer environment for their employees.

Actually, though, physical currency is experiencing a resurgence.

People in many of the world’s most advanced nations — including the United States, the euro area and Japan — are holding more of it than ever.

In the U.S., for example, currency in circulation stood at an estimated $1.76 trillion as of late September, according to the Federal Reserve. That’s about 8.2% of gross domestic product, up from just 5.6% before the 2008 financial crisis and close to the highest level in at least 36 years.​

If people need less cash to pay for stuff, why do they want to hold so much of it? The answer, it seems, is that they’re turning to currency as a store of value.

Consider the kind of cash they favor: Increasingly, it’s large denominations such as $100 bills, which are the most convenient for stashing away big sums. Benjamin Franklin’s share of total U.S. currency in circulation reached 80% in 2018, up from 73% a decade earlier, Federal Reserve data show.

Since 2017, the $100 bill has surpassed the $1 note as the most widely circulated U.S. currency.

The trend in the developed world contrasts sharply with emerging economies such as China, Russia and India, where currency in circulation has been declining as a percent of GDP, according to the Bank for International Settlements.

Why are people in rich nations hoarding cash? No doubt, it has a lot to do with central banks’ efforts to keep interest rates low.

When safe investments such as deposits or government bonds yield little or less than nothing, people aren’t missing out by holding paper money. This illustrates why central banks can’t push rates too far below zero: Instead of spending the money or watching their savings shrink while sitting in the bank, people will just withdraw their cash and put it in the mattress.

That said, the surge in demand for currency has been too large for interest rates alone to explain. This presents something of a mystery.

Criminals, of course, are avid users of cash, but there’s no particular reason to think that their demand for it would have increased so much in the last decade. On the contrary, the advent of cryptocurrencies has provided them with a viable alternative.

One recent study, by a pair of economists in Asia, found a link to aging populations. It seems that older folks — perhaps because they’re less inclined to trust numbers on a screen — have a greater affinity for cash.

So when they make up a larger share of the population, overall currency holdings also go up. This might also help explain the contrast with emerging economies, where population aging is less of an issue (and where interest rates haven’t been as low as in the developed world).

The most troubling possibility is that people are losing faith in financial institutions more broadly.

The surge in cash began immediately after one of the worst financial crises ever — and has been concentrated in the affected countries.

Granted, one wouldn’t expect the effect to keep growing over time. But perhaps persistent scandals — such as those involving fake accounts, manipulative fees and the theft of personal data — have compounded the problem.

Trust might also have something to do with the opposite trend in emerging economies. To be willing to hoard cash, people must have a certain amount of confidence in a government’s ability to manage its legal tender.

In developing countries, this confidence is often lacking. Consider India’s 2016 “demonetization,” in which the government pulled large-denomination banknotes out of circulation and replaced them with new bills.

The move didn’t disrupt the shadow economy as intended, but it did undermine the currency: Cash holdings have yet to recover to their pre-reform level.

Cash accumulation can go only so far as a sign of trust in government. After all, governments in the developed world would typically like to see more electronic payments.

Getting rid of cash can have a lot of benefits: It can help deter crime, reduce tax evasion and give central banks more power to stimulate the economy. But people have to believe that electronic money will be safe from mismanagement, man-made disasters, hackers and even confiscation.

So far, neither the denizens nor the overseers of the financial system have done a great job of earning that trust.

https://www.latimes.com/business/story/2019-10-27/cash-is-more-popular-than-ever

If people need less cash to pay for stuff, why do they want to hold so much of it? The answer, it seems, is that they’re turning to currency as a store of value.

All of which highlights a dire need for: paper cryptocurrency.

But people have to believe that electronic money will be safe from mismanagement, man-made disasters, hackers and even confiscation.

The question of what the best store of value is, has gained in popularity lately.

It appears the solution some have adopted is: paper money is the best store of value!

The trend of holding paper money has traditionally been more common in nations like japan but appears to be spreading to the united states. It won't be long before the media publishes news stories about unfortunates storing paper bills under their mattresses only for their cash to be devoured by termites, ants or assorted insects. To "nudge" consumers away from that horrible, nasty, evil paper currency, towards a digital cash future.

All of which highlights a dire need for: paper cryptocurrency.

Cash as a store of value?  I suppose if you were to hold it for less than a year it wouldn't lose *that* much value, but inflation will still work its black magic and eat away at that cash's purchasing power.  That doesn't sound like a great store of value to me.  

All of which highlights a dire need for: paper cryptocurrency.

....


The question of what the best store of value is, has gained in popularity lately.

It appears the solution some have adopted is: paper money is the best store of value!

The trend of holding paper money has traditionally been more common in nations like japan but appears to be spreading to the united states. It won't be long before the media publishes news stories about unfortunates storing paper bills under their mattresses only for their cash to be devoured by termites, ants or assorted insects. To "nudge" consumers away from that horrible, nasty, evil paper currency, towards a digital cash future.

All of which highlights a dire need for: paper cryptocurrency.

I do think that not everyone has the capacity to accept and send money in digital means. For example, people who don't have smartphones cannot do that, especially in third world countries. There are of course solutions to that but if I was in the shoes of those people, I wouldn't want to learn a new mean of transacting or cashless means to my daily life. It would become harder for the people who don't have anything to be part of this revolutionizing era that we have now. Almost everything has become digital and no one is going to help the poor with it. There could be solutions but it's not permanent.

• Giving smartphones to them
  • But then, they would have to work on the mobile data usage.
• Paper cryptocurrency (like you suggested)
  • How will they be able to verify it on the blockchain?
  • How would people know it's legitimate?

I'm talking about the poor because they are the ones who are going to be hit on this, big time and I do not think most of the wealthy people would be willing to help them. This could be one of the reasons too why people are starting to increase their desire for the love of Cash. It has always been the means and keeping it as a stored value.

• There is no mobile data requirement
• Tangible

I'm not against with regards to the cashless society. I want it to be always the means, especially being part of the Bitcointalk Family, it's just that sometimes, we have to think about the ones who are less fortunate than us instead of always ourselves. Trusting the government is one thing, being able to be fair and transparent with all the transactions is another.

Paper cryptocurrency sounds more of a joke to me than a serious suggestion or proposal. A paperless society has been advocated since decades ago. This is both an advocacy that calls for the protection of trees or nature in general and the advancement of technology. Paper money is inefficient, inconvenient, and not dependable at all. It could be lost, misplaced, torn, destroyed by water, and so many other reasons for it to be less than efficient compared to its digital version.

If people need less cash to pay for stuff, why do they want to hold so much of it? The answer, it seems, is that they’re turning to currency as a store of value.

I don't personally think the issue here is really with people lacking the devices or internet access to use mobile or card payments, it's much a different issue.

A lot of people still prefer to use cash compared to easier mobile payments, there is actually a lot of benifits to using cash compared to card, especially since it's a lot harder to track and it's pretty popular to use as a storage tool due to just how untraceable it is.

I Don't like the fact that Libra is centralized but it may be the only hope for the entire world to be educated about crypto.

I've always wonder how would I explain the concept of Block-chain and Bitcoin to my grandparents or the younger generation without putting them to sleep.

Especially when everyone loves accepting cash (no fees or fraud).

As the article you have linked states, paper currency is predominantly favored by the elderly. They don't trust banks, but it's not for the reason we don't trust banks. We know that banks are centralized, self serving, privacy invading leeches who print money out of nothing to line their own pockets whilst ripping off their clients. The elderly generally don't trust banks because so much of banking is done online now. They don't believe the numbers on the screen because they don't understand technology or computers, and so they opt for the medium they have used for the majority of their lives - physical cash. The younger generation are the opposite. I couldn't tell you the last time I bought something for actual cash. I have a few bills in my wallet just in case, but I've carried the same bills around for months. All my fiat spending is done via card. Cash may see the odd surge here and there because of the banking crisis, but by and large, it is on the way out.

I found this line interesting. You can never be sure that your fiat stored in banks is going to be safe from either mismanagement or confiscation. Once you hand your money over to a bank, you have no control how they invest or lend it out to others, and they also maintain the power to freeze your assets if they don't like something you are doing. Only being your own bank with bitcoin can provide this safety.

   I wholeheartedly agree that the world may not be ready for a cryptocurrency as a store of value. Cash is way easier to handle for the common Joe's of society. The only way that I can see people running to cryptocurrency is for a major institution to introduce it to the public. I Don't like the fact that Libra is centralized but it may be the only hope for the entire world to be educated about crypto. I've always wonder how would I explain the concept of Block-chain and Bitcoin to my grandparents or the younger generation without putting them to sleep.
  Many people won't touch cryptocurrency period unless it has an institutional stamp of approval on it. The people that I do see adopting are the impoverished who have nothing to lose and tech enthusiasts. Libra could be that answer that get peoples feet in the water. Whether they decide to take the plunge is up to them, but at least their feet will be wet.

   I wholeheartedly agree that the world may not be ready for a cryptocurrency as a store of value. Cash is way easier to handle for the common Joe's of society. The only way that I can see people running to cryptocurrency is for a major institution to introduce it to the public. I Don't like the fact that Libra is centralized but it may be the only hope for the entire world to be educated about crypto. I've always wonder how would I explain the concept of Block-chain and Bitcoin to my grandparents or the younger generation without putting them to sleep.
  Many people won't touch cryptocurrency period unless it has an institutional stamp of approval on it. The people that I do see adopting are the impoverished who have nothing to lose and tech enthusiasts. Libra could be that answer that get peoples feet in the water. Whether they decide to take the plunge is up to them, but at least their feet will be wet.

Cash as a store of value?  I suppose if you were to hold it for less than a year it wouldn't lose *that* much value, but inflation will still work its black magic and eat away at that cash's purchasing power.  That doesn't sound like a great store of value to me

The question of what the best store of value is, has gained in popularity lately.
It appears the solution some have adopted is: paper money is the best store of value!
All of which highlights a dire need for: paper cryptocurrency.

The best store of value is still the fiat currency and having a saving account in a bank is the safest option until your country has some serious economic crisis, storing these paper money and that too at home is not the smartest move and majority who does that may have made those through illegal purposes and hence not able to deposit in banks as you need to provide the source of income, paper cryptocurrency is also not a smart move but we might see that in the future but i am not going to use that for obvious reasons.

The trend of holding paper money has traditionally been more common in nations like japan but appears to be spreading to the united states. It won't be long before the media publishes news stories about unfortunates storing paper bills under their mattresses only for their cash to be devoured by termites, ants or assorted insects. To "nudge" consumers away from that horrible, nasty, evil paper currency, towards a digital cash future.
All of which highlights a dire need for: paper cryptocurrency.

It appears the solution some have adopted is: paper money is the best store of value!

The trend of holding paper money has traditionally been more common in nations like japan but appears to be spreading to the united states. It won't be long before the media publishes news stories about unfortunates storing paper bills under their mattresses only for their cash to be devoured by termites, ants or assorted insects. To "nudge" consumers away from that horrible, nasty, evil paper currency, towards a digital cash future.

The question of what the best store of value is, has gained in popularity lately. It appears the solution some have adopted is: paper money is the best store of value! The trend of holding paper money has traditionally been more common in nations like japan but appears to be spreading to the united states. It won't be long before the media publishes news stories about unfortunates storing paper bills under their mattresses only for their cash to be devoured by termites, ants or assorted insects. To "nudge" consumers away from that horrible, nasty, evil paper currency, towards a digital cash future.
All of which highlights a dire need for: paper cryptocurrency.

the transition requires a long process and infrastructure support and the government active role.  without it, the cryptocurrency will collapse in competition with paper money. paper money is currently an idol for all types of transactions because it is free of transaction fees.
if want to compete, transaction costs should be zero. this is why paper money will always be popular and continue to be stored for all time

Making your fiat savings stagnant is the worst scenario at all, because it doesn't gain any huge fluctuations while you choose to store it in your bank account

That depends on your purpose

Cash is good for making emergency expenses, so if you keep a certain percentage of your wealth in a stable currency as cash for a "rainy day" (say, in the US dollars), it can be a worthy store of value after all, even despite a small loss of purchasing power over years. In other words, you can easily make up for that loss of purchasing power by adding something to that stash of cash as your wealth grows in years and value

As the article you have linked states, paper currency is predominantly favored by the elderly. They don't trust banks, but it's not for the reason we don't trust banks.

You really underestimating what can be achieved with Blockchain/Cryptocurrency.
it's very possible to bring millions of people to cryptocurrency in a short time. I believe some know this can be easily done but have some pity for governments. Any great developer who does not care could easily attract millions of people in a short time without breaking the law. 

and for total control of any society..

Paper money or fiat money can be getting more interest by a lot of people based on the cited statistics but these people can be wrong all because that fiat money is very much subjected to inflation, so at the end the store of value they are looking for may not be there at all. I would not argue that between a digital asset which we can't see, touch and examine and a fiat money which is, of course, tangible many people may choose the fiat one but this is because they do not know better. People who are educated with cryptocurrency already have a different mindset. Now, this means that there are still many people that cryptocurrency has not reached...and this is opening a bigger market for it to play and conquer. However, let me be clear that I do not believe that we need to eliminate the fiat money just because we are involved with cryptocurrency because the two can actually coexist peacefully and be complimenting each other.

It's rarely consideration for the small credit card fee or potential fraud which makes people more eager to accept cash and offer a discount on its use. It's almost always the ability to avoid declaring the trade for tax purposes.

Cash as a store of value?  I suppose if you were to hold it for less than a year it wouldn't lose *that* much value, but inflation will still work its black magic and eat away at that cash's purchasing power. That doesn't sound like a great store of value to me.  

in general cashless society is good for global government. easy to see all financial flows for export, import, purchases, taxes.
and for total control of any society.. but cash can allow you to be unnoticed ( for a time )
I think that current situation when both systems are in work - is perfect!

Me?  I like cash in my wallet just in case.  I live in an area where the power can go out from time to time, and stores have had their credit card machines down for hours in the past.  It's just smart to have some currency in your physical wallet.

Has anyone considered WHY cash is gaining popularity? Maybe if people actually worked on what was the reason then you would realize that it is a reason that helps bitcoin in general. It is actually gaining popularity because people are getting sick of banks, they are trying to find ways that is not bank related and cash is the best way

Same here. I absolutely love the convenience that my debit card offers me where I can just tap my card on their hardware terminal to complete the payment in a second or two, but it relies on various factors to function.

I just feel more safe whenever I have my physical money though. I have cards, debits and others but I usually don't use them whenever I am shopping for about a little. Or maybe I am just used to pay my bills in physical money. It is convenient to have my money in card but I am just using it online or if the service offer has to payed with card otherwise, I use my physical money. That is why may be cash is quite popular than digital currency?

Physical precious metals would be better than cash, but they are quite hard to get for average people. So, cash makes a lot of sense compared to other methods.