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The Demise of Paper Currency

Business Technology | December 16, 2011

Will digital currency one-day replace paper money? It may sound like something out of science fiction, but it may not be as far-fetched as it sounds. Consider that consumers already rely heavily today on credit cards and internet based services as Paypal to pay their bills. They swipe credit cards at the fuel pump when filling their cars. They order movies online through Paypal. They even pay for their burgers and fries with gift cards pre-loaded with currency. When you look at it this way, we’re really not that far off from ditching paper and coins for digital dollars.

The Bitcoin revolution?

Some consumers have been using an actual digital currency since 2009, Bitcoin. Bitcoin is a peer-to-peer digital currency that users across the globe can use to buy products and services. The open-source program behind Bitcoin is regarded as impossible to hack, so that relieves many security concerns.

Bitcoin isn’t truly a worldwide digital currency and is not legal tender, so most retailers will not take it. It’s possible that if someone were to produce a competing digital currency, Bitcoin could become worthless.

The digital currency model

There are many advantages to ditching paper money. You can’t lose it, you don’t have to worry about having exact change, and there is no need to replace damaged currency, which saves time, energy, and funds.

Digital currency is also more secure. Should you be mugged and carrying a fair amount of cash, it is very unlikely you’ll ever get that money back. If your credit card is stolen, however, you can quickly call your credit card company, cancel the card and recoup most if not all of any fraudulent charges to the account.

Holdouts

It’s unlikely the change to an all-digital currency world will be met without a few strong objectors. There are still consumer luddites today that have never opened a line of credit with a credit card company, never used the banking system, and prefer to handle all purchases with cash. The future is always in flux and it will be interesting to see how both sides of the debate form their stance on the issue.


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