By: Richard Giedroyc
It’s a nightmare scenario for coin collectors – coins being replaced by smart cards, a cashless electronic currency system, or by a cyber cash monetary system.
Well, I hate to be the one to point it out, but Denmark is already encouraging smart cards, Sweden is favoring a totally cashless electronic currency system, and Canada is now contemplating a virtual currency it calls MintChip. Welcome to the 21st century!
Are coins about to go the way of the Dodo bird? Will the only coins being issued in the future be non-circulating legal tender commemoratives? Are we about to become locked into a system of electronic money that will also mean electronic surveillance of all our transactions?
Hopefully not, but there is no question that there are new substitutes for physical money (coins and bank notes) already in place, with yet more on the horizon. Will some of the latest new substitutes push coins over a proverbial numismatic cliff?
The future of coins as money has been challenged before. Go back about 120 years and no one trusted paper bank notes. While coins were specie, that is, they contained precious metal equal in value to the face value of each coin, bank notes couldn’t be trusted. Bank notes were fiat money, a bank financial instrument theoretically backed by gold or silver but often unsecured by anything.
This changed once the issuance of paper money became centralized by the U.S. government. Today, checks are generally accepted although some still bounce. Some of the more recent innovations that also compete against our coined money are credit cards, debit cards, smart cards, electronic payment systems, and now virtual currency.
Anyone interested in numismatics, coins, or both should be aware the concept of a cashless society is not whimsical. It is organized and active. The Copenhagen Business School Handelshojskolen held the First International Cashless Society Roundtable April 18-19 in that Danish city. Cash in the future, new payment options as disruptive technologies, the potential social consequences of a cashless society, the digitization of money, changes in the payment ecosystem, emerging payment business models, the role of money and payments in society, privacy issues, and more were to be addressed. I hope to be able to get copies of the papers presented at this roundtable. They should provide interesting reading.
According to an ICSR statement preceding the April roundtable, “With advances in information technology a number of new payment solutions has emerged, including premium SMS payments, M-PESA, Pay Pal, Google Wallet, and Bit Coin, Flatter, and Square Up. Many of these innovations offer advantages in terms of cost, security, and convenience. They also pose a number of challenges and risks related to, at least, technical standards, data security, legal issues, and consumer behavior. Overall, these innovations are changing people’s perception and experience of money and paying.”
The ICSR statement continues, “The development of a cashless society affects our life. It will have an impact on the actors in the payment ecosystem, leading to a number of both anticipated as well as unanticipated consequences on individual, organizational, and society level. These consequences are of critical importance and need to be explored.”
The world is changing rapidly. We all know that. This time it is really hitting home, with coins as physical money being re-considered in a world increasingly dominated by cyber and electronic technology. Is there still going to be a place for physical money in this futuristic world? My personal opinion in “yes,” not just because I have an interest in coins and in numismatics, but because on a practical level I can see a future use for physical as well as for digital money.
Richard Giedroyc of Sidney, Ohio, is a regular columnist in World Coin News, sister newspaper to Numismatic News. To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send email to email@example.com.