THE BLOG

Is Hard Cash Heading For Extinction?

28/07/2017 13:09 BST | Updated 28/07/2017 13:09 BST
Siegfried Layda via Getty Images

Five years ago when I was jobless, penniless and living off my girlfriend's wages, I was offered the chance to work for a new tech startup in exchange for bitcoin. I kindly declined. At the time I had no idea what bitcoin was or how/if I could spend it. I decided not to give up my creative dreams and continue making my way as a struggling writer and filmmaker.

I'd almost forgotten about that strange job offer until a few days ago when I came across the story of a very lucky Norwegian man named Kristoffer Koch. Koch had invested 150 kroner (roughly £22) in 5,000 bitcoins in 2009 and forgot about them shortly afterwards. Three years later he logged in to his account and discovered that's he was almost a millionaire, amassing $886,000. He subsequently withdrew a fifth of his earnings and purchased a flat in central Oslo.

In April 2013 the value of bitcoin peaked at $266 before crashing due to the seizure of the Silk Road online drugs marketplace. Had Koch withdrawn his money then he would have gained millionaire status ($1,330,000). During the following years the value of bitcoin fluctuated; however, it has always remained a savvy investment for those early backers. And while it's still unstable, analysts state that even at its highest point, it has been no way near its cap. Some experts even believe that the value of an individual bitcoin could reach $100,000 within the next ten years! -- although this is highly unlikely. To put that into perspective, Koch's initial $22 investment would be worth $500,000,000...

We've all had at least one of those "what if I..." moments in our lives, a choice that could have changed our path for good, leading to an extremely prosperous future. Ever since I read the story of Koch I've wondered just how much I could be worth now if I took a chance and said yes to working for that little tech starup. Now, whenever I browse the web for the latest cryptocurrency news, I'm reminded that the value of Ethereum is going up... again, I wonder...

But there are still many crypto-critics out there, those who don't believe digital currencies will ever overtake hard cash. For my own sanity I'd like to believe them -- I really don't want another "what if I" moment! But on the surface it seems as though physical money has been dying for a long time. And with bitcoin proving all the critics wrong, perhaps we're closer to a full-blown cash extinction than we think.

The Countries Leading the Cashless Race

Living in Sweden over the last five years I've seen the rapid decline of "hard cash" first hand. During the last three months alone there has been two occasions when I've withdrawn money from an ATM, and then been told, "We don't accept cash" when trying to use it at the checkout, once in a clothing store, another in a restaurant. I was even more taken aback a few weeks ago when I gave a Swedish friend a 100 kroner note, only to have him carefully examine it and say "I haven't seen this note before" despite the new prints being released almost a year ago. Over here, not having the app Swish is akin to living off the grid. I've since, with some reluctance, made the transition.

While the Swedes are leading the cashless race, the Danish are also making great strides towards having a cashless society, last year announcing that they're getting rid of obligations for stores to accept cash payments. Now over half the population use MobilePay on a day-to-day basis. Even the Americans aren't far behind. Wells Fargo, Chase and Citibank have already started installing fingerprint ATM machines, and it won't be long until card readers boast the same tech -- yet another stepping stone.

The Retailers Leading the Cashless Race

Earlier this year, Coin Geek conducted an experiment where they sent financial directors of 20 top online retail brands a request to accept bitcoin. While most of them answered "No", AirBnb and Laurence Tosi took up the offer, with the former stating that they're soon to add a "Bitcoin Accepted Here" logo to their website. Although this may not seem like a massive stride forward, these are two brands that wouldn't have taken the offer seriously one year ago. Additionally, many other big retail chains, such as Starbucks, Subway, Dell, Expedia, Overstock and Microsoft, are already on board with bitcoin.

Amazon have also been the first major retailer to brake the checkout-less barrier by opening a store in Seattle where customers scan their phones at the door and use the Amazon Go application to complete purchases -- sensors fitted around the store track what customers pick up and put back. Other retail chains are tipped to follow the example in the not-so-distant future.

Many people are scared of this new technology. They fear it could cause financial turmoil and lead to irresponsible spending. Others debunk the critics, stating that the widespread accessibility will allow consumers to manage their finances in real time, which will encourage them to be more responsible. Like it or not, cash is a ticking time bomb. Whether bitcoin or another cryptocurrency overtakes all physical currency (although highly unlikely!), there's no denying that the end is nigh. As hard cash becomes less and less functional the process of extinction will get quicker and quicker; and then all it would take is one major technological breakthrough, such as an app, for us all to simply say "to hell with it."