Cryptofinance has a huge number of high-impact killer apps, from censorship resistant value exchange (Bitcoin and its blockchain) to business automation (Monetas and its digital contracting technology). These technologies, and Monetas technology in particular, will have a significant impact on the most fundamental tool of exchange: physical cash and coin. Here are the four big reasons why cash is going the way of the dodo right now:
Cash creation is costly
Today a central bank will order, print/mint and deliver physical cash and coin to the banks in its network. This involves a lot of resources: cotton or polymers, ink, gasoline, trucks/lorries, armed guards, warehouses, manual and office labor, and probably much more. The process takes weeks or longer, and you might be paying $0.40 just to create a $50 note.
Book printing used to be almost as complicated and expensive, until e-books came along. And just like the cost to print an e-book, the cost to mint a digital note drops the production cost to near zero. With Monetas technology, a central bank uses an “issuing device”, a small hardware device, to create digital legal tender and deliver it directly to the banks in the central bank’s network.
Cash is a barrier to financial inclusion
Physical cash and coin just doesn’t fit with the model of complete and instant connectivity that the world has grown to know and love. With Monetas technology, your mobile phone or any web browser lets you send money to a friend, receive your paycheck directly, pay for groceries or lunch, or buy insurance. Any barriers to the global financial system that existed due to geography or social status have disappeared.
Cash is a constraint on monetary policy
If a central bank wants to experiment with negative interest rates or “helicopter money”, physical cash is a problem. Issuing digital notes provides more policy options and greater control. A central bank can react faster in a crisis and ensure the money is delivered to the parts of the economy that need it most.
Cash is corruption
If you want to eliminate or at least reduce corruption, you need a way to make sure that money flows in the way that you expect it to. With physical cash and coin this is impossible, but with digital cash this is simple. With Monetas technology, you can create digital vouchers that can only be spent in certain places or under certain conditions. In a natural disaster, digital vouchers might be distributed and redeemed for food, water, or shelter. Education vouchers can only be spent on school supplies or for tuition.
Disclaimer: Blog posts reflect the views of the respective authors, and do not necessarily represent the official view of Monetas.