With the rise of the coronavirus pandemic, the cashless economy is getting stronger by day. Even though cashless transactions were there before the pandemic, the situation is now different.
The US and the UK have the highest number of cashless transactions. This is because of the convenience that comes with it. With cashless transactions, it is easier to schedule and manage transactions, while at the same time authenticate any transactions. Cashless transactions will help the economy to grow in a way as it will limit the flow of black money.
Coronavirus and its contribution to a cashless economy
Covid-19 has affected many sectors of the economy, one of the hard-hit areas being the finance sector. It has influenced how transactions are done.
One of the ways the virus spreads is when it sticks to a surface. On most surfaces, the virus can survive for up to 48 hours. When it comes to paper notes, however, the virus can survive for up to 17 days. To contain the virus, WHO and public health experts have warned the public against using paper notes. Polymer notes are a bit better as they can contain the virus for up to 24 hours. This has led to the rise of cashless transactions. The public is advised to sanitize their hands after any cash transactions. There are many countries such as China, that are taking the measures to quarantine all banknotes in the market for up to 14 days to clean it from the virus.
There are several options when it comes to doing cashless transactions. One of the options is the use of cards. The problem with that is that the card surface is still at risk to contract the virus. That means that other digital options such as mobile devices are the better options, as they are completely cashless, and there is less contact. Apps such as Venmo and Zelle may grow in popularity in the days to come.
Even after the pandemic, people will be more cautious about the hygiene of paper money, which will promote the growth of the cashless economy.
Is a cashless economy about the money?
Even though a cashless economy may come across to be more about the money, it is not really about the money. Yes, a cashless economy will mean less handling of cash which is also hygienic, but it has many other positive effects. Some of the benefits of a cashless economy include:
Less money laundering
Money governments have put up measures to deal with money laundering. By going cashless, it will be easier to curb the issue. That will lead to less cash related crimes, and thus growth of the economy.
Going cashless is more efficient. It can help to save you money and time. You can easily shop from wherever you are with convenience. It will be easier to do accounting, as it does not have to be done manually. Companies will save the costs it incurs in handling cash.
Easy access to data
It will be easier for companies and governments to access data, which will help them in planning, especially when it comes to policies.
More spending powers
By going cashless, people are more likely to spend more than they would do with cash. More spending has an impact on economic growth.
Truth is more people are now concerned about their privacy than a few years ago. With a cashless economy, there is more privacy of the consumer. That can help prevent problems such as price discrimination.
The relation between the cashless economy and crypto industry
With the rise in the number of cashless transactions, the crypto industry will also be affected. The truth is in the current generation, people are looking for efficiency, cheaper transactions, privacy, and transparency. That bridges the gap between a cashless economy and the crypto industry.
With the pandemic, many are concerned about a burst of the bubble for the crypto world. It is, however, important to note that the crypto industry is not about the value of the cryptocurrencies. It is about disrupting the current system through decentralization. That means that the blockchain technology is more important.
Even with the current recession that has led to the drop of cryptocurrencies, blockchain remains intact. Blockchain is here to stay and has been used by many industries as a solution to the problems they face especially in regards to privacy. China has the highest number of blockchain applications and has even been used in managing COVID-19.
Some economists still believe that cryptocurrencies are inflation-free. It is only that they have to go through the phase they are going through to achieve that resilience. According to history, even the safest haven assets had to go through that same phase.
There is, therefore, a high likelihood that the growth in cashless transactions will have a positive impact on the crypto industry. Apart from the application of the blockchain, more people will be willing to explore cryptocurrencies. Once people switch to a digital economy, there will be more interest in the crypto industry because people are always on the lookout for better options.
Many stores accept cryptocurrencies. With the growth of a cashless economy, more and more stores will accept them.
The current payment systems such as Venmo have a high chance of embracing blockchain technology for more efficiency. Truth is, there will be increased competition, and to beat competition one will be obliged to ensure efficient systems, and that can be achieved through blockchain.
COVID-19 is likely to set a trend that will linger for some time. Once even those who have not tried cashless transactions try it, they are likely to get hooked. Most people prefer what they are familiar with, and this is the best time to grow familiarity. A cashless economy is for the good of the economy Afterall.