Cash Money

Important distinction to make: cash as referring to liquid assets in general, or cash as physical object. Here we’ll be talking about the physical object, the banknote.

Cash is fungible, which means that it is interchangeable across uses, aka its “individual units are capable of mutual substitution.” For example, crude oil is also fungible, in that one barrel of oil equals any other barrel of oil. Each unit of a commodity is interchangeable with any other unit of the same commodity.

With the end of the gold standard in the United States (completed in 1971, the “Nixon Shock”), cash became entirely abstraction. US currency is now fiat money, meaning that it “derives its value from government regulation and law” and not any kind of convertibility to, say, gold.

Pros & Cons of digitizing money:

  • Cash is anonymous, private
  • Electronic payments are never (or rarely) anonymous, can be tracked, etc. Not private.
  • Certain social interactions are entirely cash-based: tipping, street performers, gifts, peer-to-peer money exchange.
  • But any kind of social tradition is certainly capable of being altered or updated with new technology. For example,

  • Cash makes it possible to hoard money, evade taxes.
  • Electronic money is more easily tracked and thus tax evasion is much harder.
  • Cash is “the currency of crime” and supports most if not all black markets.
  • We tend to have very emotional connections to cash. It, as an object, is very meaningful to us.
  • Safety — is identity theft an even bigger problem if everything is digital? On the other hand, ATMs were frightening at first — everything takes time to adjust.
To go completely cashless, we’d need to discontinue all existing paper money and coinage. This is a process that’s already begun to some degree (discontinuation of any high-value [above $100] US banknotes starting in the late 1960s) and is heavily debated with regards to the one-cent coin.
Discontinuing currency can streamline the whole currency production process, not to mention peoples’ interaction with their money, but it is also like an admission of inflation. The US is reluctant to announce to the world that their penny is essentially worthless, because belief in the stability and value of US currency is very important to the United States economy.
Most countries will periodically demonetize certain coins or banknotes for a variety of reasons (devaluation, counterfeiting, etc) but in the United States all coins and notes ever issued are considered legal tender.
One of the more popular ideas for the future of money involves currency integration (even more than we currently have now with the EU). The discontinuation of all national currencies in favor of regional blocks of currency.
Several countries are already dollarized, that is, they’ve adopted the US dollar as their currency, favoring its stability and value. Although this is not necessarily a cashless projection of the future, it would seem to make sense that the end of national currencies would bring with it the end of nationalistic pieces of paper. Wolman:

The road to cashlessness will be paved with the banknotes of dead national currencies.

Earlier in the book, a banknote designer had told him that  “The banknote is like heritage in your hand. It lets you read the culture  of the country.”

Proponents of cashless payments see small-denomination transactions (a dollar for a pack of gum, etc) as the “last mile” — people are the least willing to give up on this method of payment.


Wolman, David. The End of Money: Counterfeiters, Preachers, Techies, Dreamers – and the Coming Cashless Society. (Boston: Da Capo, 2012).

Ydstie, John and Renee Montagne, “Is a World Currency Realistic?” NPR News Morning Edition. 11 July 2007.

Wikipedia, “Fungibility,” “Fiat Money

2 Responses to “Cash Money”
  1. dem says:

    “The road to cashlessness will be paved with the banknotes of dead national currencies.”

    That line is a keeper! 🙂

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