11 April 2018

    James Francis

    #FutureMoney: The end of cash?

    Is the end coming for those notes and coins in your pocket?

    Is cash dying? Will any of us even need wallets in 2030? The first coins in history were minted thousands of years ago: since then, cash has been king and having a few bob in your pocket has always felt great.

    But new technologies are changing that. When internet banking first came into being, the banks actually resisted it. But they eventually accepted the change - today most of banks’ business happens online and banking apps are the new way of doing business.

    ‘There is no question that the revolution we saw in people moving from physical to online banking is now happening even more rapidly towards mobile banking,’ leading technology analyst Arthur Goldstuck told Vodacom now!. ‘So for the past twelve years we’ve had massive use of cellphone banking, such as FNB banking. But in the last five years the rise of banking apps has been revolutionary.’

    This trend couldn’t be more obvious in the World Wide Worx Social Media Landscape 2018 report, where Capitec’s banking app appeared among the top ten free Android apps in South Africa. Everyone is using apps to do their banking and money is becoming more virtual.

    So, if this is happening today, what will the picture be like ten years from now?


    Cryptocurrencies are the single most important thing to happen to money. This is not as apparent now, because those currencies are still fads. When you buy bitcoin or Ethereum, you’re still buying a commodity that you have to exchange for money. It’s not currency - not yet. But cryptocurrencies make a lot of sense. They are more universal, easier to move around and not tied to many bank processes. That means cryptocurrencies are a lot cheaper to handle than other forms of money transfers. Right now different cryptocurrencies are doing battle to see which is the best - this is why the value of bitcoin and co. fluctuates so wildly. But in ten years, we’ll all have a bit of cryptocurrency jingling in our virtual pockets.

    Read more about crytocurrency in our article Betting on bitcoin.

    Bank Zero: A bank without branches

    Apps have overtaken physical visits to branches and online as the preferred way to do business with banks. So is the next step to just get rid of the bank’s buildings themselves? Bank Zero, a new South African startup led by former FNB CEO Michael Jordaan, believes so. Launching at the end of 2018, the bank will exist entirely online - no branches at all. This promises much lower fees, though we might miss complaining to an actual person. Sometimes you just want to vent, right?

    Back to bartering

    Before cash existed, the world functioned somewhat differently. People would make deals based on future products in exchange for products right now. For example, a farmer would get clothes from a tailor, with the agreement of giving some of their harvest to the tailor once the crops have grown. Temples were instrumental in this as they kept the records of who owed what.

    While the world isn’t going to return to that system, bartering has become more popular again, especially on social media. For example, the Darwin Beer Economy group in Australia is a Facebook group where members trade alcohol for services. Some new websites are also experimenting with the idea and there are already designated zones in US cities where people can safely meet to trade and swap goods they arranged online.

    No money at all

    If you want to go to really far side of this discussion, there is a possibility that one day we may not need money at all. Money is a way to put a value to something. If you have an apple and I offer you R3 for it, that apple is worth R3. If someone else offers you R5, that apple is worth R5. But what if producing the apple is so cheap that you can give it away for free? Some believe this will happen as automation and artificial intelligence grows. Such systems might be so efficient that they can produce goods at very low costs - so low that the costs can be absorbed by society. It’s a very exotic idea and has a few problems. But this is not as ridiculous at it seems. We might one day live in a world where fiscal wealth does not matter at all.

    James Francis