Smart Banknotes Will Be The Cash Of The Future

The Future Of Money

Smart Banknotes Will Be The Cash Of The Future

By Ignacio Mas  Executive director and co-founder of the Digital Frontiers Institute

Must we pit digital money in a battle against hard cash? Must we really swear our full loyalty to one or the other?

What if a banknote could function as a sort of digital prepaid card, on which you could electronically load value using your mobile phone—except that unlike a card, it could also be accepted at the corner shop in the same way banknotes are passed around today?

In our minds, money assumes different physical states: a stash of money feels rock-solid, then it speeds up and becomes liquid, and, ultimately, heats up and vaporizes away. Such physical-state metaphors about our money are deeply entrenched in our language; they are how we think about money.

So it seems fitting that money can now sustain actual changes of state. It flows between atomic coins and notes as well as digital entries in computerized ledgers. Both the physical and digital have their advantages.

Hard cash is fantastic: Everyone can accept it through mere visual and tactile inspection, and it has no memory. Digital cash is fantastic for different reasons: You can zip it anywhere instantly, and it leaves a trail. Which is “better” depends on the circumstances, such as the distance between the transacting parties and their preference for anonymity or traceability.

The new should replace the old only if it is better in every way—but for all its whizbang promises, digital money isn’t. The problem is that these two types of money are hard to reconcile. Unlike metaphoric money that can change from a solid to a liquid to a gas, a banknote stubbornly holds its form. We can convert digital money into hard cash and back again by taking a trip to the ATM, but this takes time, effort, and accessibility.

And for that, we blame cash. Why? Digital money is the new upstart, after all—shouldn’t we blame it for not working well with the system that came before it? Why is it cash that should have to change?

To continue reading, please go to the original article here:

https://projects.qz.com/is/what-happens-next-2/1389715/future-of-money/