Cashless future
Tags: Future, Payments, Banking Technology, Cryptocurrency, Cashaa

Hi everyone! I’m continuing to go back to the history and discovering new things. In my previous article, I took some example from history and I learned how it can teach us and show a way, which can lead to success. This time I want to spend some time to discuss money and its various forms from shell money to cryptocurrency. What I found surprised me and what we considered as a cashless payment appeared very long time ago. I was once again convinced that history repeats itself. So, without spending time let’s take a look at some example from history.

The money is constantly changing throughout the history of human beings. In the beginning, there was only one way of exchange. This was a direct exchange of one commodity for another. Since it was not effective and at least uncomfortable, just imagine how difficult it was to exchange knives for example to tomatoes. So people began to look for another way of exchange in order to simplify the commodity turnover. People in ancient China used shells and pearls as money in the 18th and 16th centuries BC. Generally, shell money was a very popular currency in the world. The shell money is a medium of exchange similar to coin money and other forms of commodity money. In western Africa, this method of exchange existed until the middle of the 19th century AD. It’s about 200 years ago. There are very few people who know that the first cashless payments were made 2000 years ago on the Pacific island called Yap. The inhabitants of the Yap island carried out calculations through huge stone disks with a hole in the middle. Usually, these stones weighed about 4 tons. The inhabitants were not able to transfer these “coins” to each other obviously because of their huge size and weight. Interesting thing people of Yap island sent each other notes on the right of ownership and thus the “coins” did not move from one place to another. Doesn’t this remind you of electronic payments or cryptocurrency? Yes, there is a little bit different between them, but the concept still the same.

Stone money

Coins were introduced as a method of payment around the 6th or 5th century BC and they spread all over the world very quickly. The first paper money appeared in China in the 6th century AD. With the invention of paper and printing on its account, this country was almost destined to produce the first paper money. Just imagine it took more than 2400 years to get people from shell money to paper money. However, not all countries used paper money till the 19th century as you can see above. The most interesting thing here is that the money which we use today is called “banknotes”. Therefore, we can consider that the money we use refers to the banks. A note from a bank. Initially, the function of the bank was simply the storage of coins. Not printing them. You put the coins in the bank and received a note that you have coins in the bank. And this tells us that banknotes were a method of cashless payments in the past. Wait, what? Remember that exclusively coins were considered as a cash at that time? Then amazing things happened.

These notes from banks that show you how many coins do you own became real money. It was a turning point. The first time, when people started accepted notes as a real money was in China in the 6th century AD.

Nowadays, people get tired of banknotes, because we always looking for new ways to pay for goods and services without cash. In 1949 businessman Frank X. McNamara was dining with customers in a restaurant and suddenly he realized that he had left his wallet in another suit. Of course, he was embarrassed by this situation and he had to call his wife to able to pay the bills. After that, he decides to issue a “Diners Club” card, which allows the owner of this card to dine without paying bills with cash. One year later in 1950, McNamara returned to that restaurant and paid with a card. The McNamara’s idea developed very quickly and after 10 years over 1.3 million people had owned “Diners Club” card. So, it was the beginning of plastic cards, which today almost everyone uses it on daily basis. About 70 years ago a simple idea was a cause of “revolutionary breakthrough” in the financial world and then in 1960, the first plastic card was issued.

We are living in an amazing time, isn’t it? We do not want to carry a lot of paper money, so we put them in the bank. A bank gives us an electronic note (for example a plastic card) which can be cashed out in ATMs. But does not it remind you of transition from coins to paper money in China in the 6th century AD?

We just launched the next stage of the transformation of money. A long time ago, we started the transition from barter exchange to coins in ancient times around the 6th century BC. Then we started the process of transition from coins to paper money about 1200 years ago. It was bank notes which originally show about the amount of money in the bank. Notice that these were bank notes, not money. Then 800 years later we came up with a new idea. It was the new format of note — electronic note, which is credit and debit cards and etc. A familiar scheme isn’t it? We simply transfer to each other electronic notes of the notes of the coins that existed a long time ago. Yes, seems crazy. But it is what it is. All these electronic notes make possible to create a cashless society. Recently, we often start to see articles and videos about a cashless society. A cashless society is essentially the same transition from coins to paper money, that happened 1400 years ago. Nowadays, we have cryptocurrencies, which is the next stage of transition money.

All money in the world we have now is about 90 trillion dollars, including all the money in bank accounts. Only 8% of them are the cash money and all the rest is electronic notes about the amount of money. Why not remove the remaining 8% and just use an electronic version of money? You think it is madness? Well, actually all the facts tell us it is more likely going to happen. According to demographers research, 27 % of the global population or about 2 billion people are the Millennial generation. It is easier to attract them to the idea of a cashless society. Because they are the world’s most important for consumer spending growth, sourcing of employees, and overall economic prospects. They will become even more important as previous generations retire and move into a life stage of lower consumption.

In 10 years the average size of the transaction fee has fallen by about 2 times. We can easily use cards for small purchases. According to the research, the amount of cash withdrawal is decreasing every year. These explain why people increasingly trusted the cards.