Why Cryptocurrencies Aren’t Taking Over
Recent headlines are raving over China and India’s "nearly cashless society," while financial news seems to be revolving around Bitcoin stock and other cryptocurrencies. Since many people use debit or credit cards for many transactions these days, it isn't hard to believe all the hype surrounding digital currency. Many assume that cryptocurrencies are the next evolution in our tech-savvy society.
But are they really?
We've all heard the phrase, 'Cash is King.' It's no less true today, than decades ago. A report published by The Bank for International Settlements in December of 2016, shows that the physical currency in circulation for 17 major economies has been rising steadily since 2011.
Hard, cold cash is still the preferred method for many transactions, and this is why:
Cash is Universal. From large chains to mom and pop shops, street-side vendors, and various charity fundraisers, virtually everyone accepts cash. The value is universally understood, and the transaction is simple and easy. Most types of credit and debit cards are accepted at retails location. The number of businesses that accept Bitcoin is phenomenally smaller as most major U.S. retailers, including Wal-Mart and Amazon, refuse to accept the currency.
Cash is Quick. Using cash makes for an easy transaction. How many times have you been in line behind someone who couldn't figure out which direction to swipe their card, forgot their PIN number or couldn't locate an ink pen to sign a receipt? The delay may only be a few seconds, but having cash on hand certainly seems to be a time saver. Purchasing anything with cryptocurrency takes much longer – with transactions taking as long as an hour to complete.
Cash is Cheaper. Cash transactions carry no fee structure or secondary charges. When using credit or debit cards, the companies supporting and processing those transactions are making money with various fees, such as interest charges and in some cases overdraft fees. Vendors must pay for a license to accept a credit or debit card, and that fee is charged back to the customer with a slight uptick in price. Bitcoin and other cryptocurrencies carry a similar fee structure per transaction.
Cash is Anonymous. Cash tends to guarantee that most transactions are lost in blissful anonymity. On top of charging fees for all transactions, credit and debit card companies collect information about how and where consumers spend their money. Not only does this feel invasive, but it can lead to annoyances like spam emails and irritating shopping suggestions during internet searches. Despite the anonymity advertised, cryptocurrency transactions are recorded and monitored via the encrypted software necessary to their operation.
Despite the headlines and the hype about credit and debit cards, and cryptocurrencies, the truth is that ‘Cash is Still King.” And cryptocurrencies like Bitcoin have a long road ahead of them before they will be universally accepted by consumers and retailers.