Currently, we the people, use paper money and digital currency. Some people use only one or the other. Regardless of which side they are on, the two excites in society today. They both are used daily. The question is, will digital currency be a reliable replacement for paper money? I do not believe digital currency is a reliable replacement for paper money.
The digital currency could be many things, in many ways. It is not just credit cards or debit cards only. There can be so many others, such as, token points for a certain app, that uses it, that can be transformed into digital money. Digital currency is very flexible. As for paper money for some people it is a hassle because some may not have any physical money on them, so they may have to go all the way to the bank wait in a long line just to get some cash out from their bank. With digital currency however, there can be much more fraud on the persons account. More people (hackers) stealing from others through technology. According to Janda, Michael. “Aside from these inherent contradictions, the BIS also warns that cryptocurrencies remain more vulnerable to fraud and even potential debasement than currencies managed by responsible central banks. as with any part of the financial sector, the cryptocurrency space is frequently the target of outright fraud. This is particularly the case with initial coin offerings (ICOs), where investors put conventional money into the launch of new cryptocurrencies.” Even people that are minors may even be able to have computers as their power of way to steal digital currency from others.
There is also more value into paper money compared to tokens that can be transformed into digital currency. When asked to the public if digital currency will replace paper money, even the people that love the token, cryptocurrencies, and digital currency, say that it is unrealistic and that it should not happen anytime soon. According to LaPonsie, Maryalene. “When asked if cash will disappear anytime soon, even fans of cryptocurrencies and cashless systems say that’s not likely. ‘No, that’s not realistic for the next 50 years,’ Drake says. While he remains confident in the viability of cryptocurrencies, ‘It will never replace cash in this century,’ he says.” Many people also believe that there will be issues with the government if we go into paperless money. And that it will affect the government and the feds. In the same article of LaPonsie, Maryalene she sates “If and when consumers embrace cryptocurrencies, Nigro predicts the government will get involved. ‘I think eventually we’ll see some sort of digital currency issued by the federal government,’ he says.” For digital currency there can also be issues with the storage, there needs to be stored and transmitted information to be checked and millions of transactions a day, for many people storage on phones and computers may come to be unreliable as sometimes the memory card that is put in them may become destroyed or damaged.
“The second problem is the amount of data that needs to be both stored and transmitted to verify the blockchains in distributed ledger handling millions of transactions a day. “With every transaction adding a few hundred bytes, the ledger grows substantially over time. For example, at the time of writing, the bitcoin blockchain was growing at around 50 GB per year and stood at roughly 170 GB,” the report noted. To handle the volume of transactions that go through major global payment networks like Visa, Mastercard or PayPal, you would quickly need banks of servers to store the data. But the problem worsens when you consider that this information must be shared each time a new transaction has to be added to the chain.” (Janda, Michael) Many Federal Reserve’s disagree that digital currency will replace paper money. According to Shen, Lucinda, she states that New York federal reserves Williams, John laid a case on why cryptocurrencies, or any sort of digital currency cannot replace paper money. “the current San Francisco Fed President John Williams laid out a case for why cryptocurrencies, the most prominent of which is Bitcoin, cannot replace paper money. Like others who question Bitcoin’s usefulness as a currency, Williams noted that cryptocurrencies are volatile, making it difficult to pay the correct price for an item. Secondly, while the world’s central banks try to stabilize the economy at times by either increasing or decreasing the amount of cash circulating, Bitcoin has a fixed supply: 20 million. “Cryptocurrency doesn’t pass the basic test of what a currency should be,” he said, as reported by CNBC.”
Which makes sense on why digital currency would be hard to replace paper money. I understand both sides. There are always pros and cons to each side. If digital currency were to replace paper money. There just would be many problems. It cannot be a reliable replacement. The way it is in society today, is what I think is the best way. Because you can choose which side you want to use, and it is open to many options. Out of the two sides, with digital currency replacing paper money would have the most cons. Compared of it not replacing paper money. If digital currency does replace paper money, there will indeed be many issues with this. It is not a reliable replacement for paper money. The way it is now is good. How people have the option to go with paper money for digital currency, their choice. IF just one is chosen, either to have digital or paper only then there would be a lot of conflict between people. Plus, not to mention the government having issues as well with digital currency. That alone is a major and high purpose on why it is not a reliable replacement of paper money.
In conclusion, nothing is a real good reliable replacement for paper money. Paper money has been around for more than 500 years. The best idea is to keep the way it is today, where people have the choice to choose whether they want to use cash or digital currency.
Work cited
- Janda, Michael. “Cryptocurrencies like bitcoin cannot replace money, says Bank for International Settlements.” ABD News, 18 Jun 2018, https://www.abc.net.au/news/2018-06-18/cryptocurrencies-cannot-replace-money-bis/9879448.
- LaPonise, Maryalene. “Will We Say Goodbye to Cash in 2018?” U.S. News & World Report, 4 Jan 2018, https://money.usnews.com/money/personal-finance/banking-and-credit/articles/2018-01-04/will-we-say-goodbye-to-cash-in-2018.
- Shen, Lucinda. “Cryptocurrencies Like Bitcoin Can’t Replace the Dollar, Says New York Fed Chief Nominee.” Fortune, 21 April 2018, http://fortune.com/2018/04/20/bitcoin-new-york-fed-central-bank-jack-dorsey/.
