With so much unknown about the coronavirus during its earliest stages, there was a lot of misinformation circling around. But while we know a little more about the virus now, many of the earliest impressions made upon us have stuck. One victim of that is a commodity that many people have come to rely on throughout history: cash.
When the coronavirus first started picking up steam, there were reports that use of cash could help spread the virus. According to that way of thought, the virus could settle on bills, and would then transfer from person to person through the use of cash. Before we knew it, businesses around the world began refusing cash payments, preferring credit cards or contactless payments.
Even cryptocurrencies benefited, as online commerce increased and more payments were made with cryptocurrencies. But now there’s a real possibility that changes in cash usage may be permanent.
A recent publication by the Bank for International Settlements (BIS) looked at the change in cash usage and the effect that might have on digital payments and central bank digital currencies. As one of the primary methods of payment in many countries, cash plays an important role in society. And as a product of central banks, and one that is very profitable, doing away with cash will change the business models for many central banks. Those banks in countries whose cash usage begins to plummet will have to quickly find a replacement for cash, or risk falling by the wayside.
The big question that arises is, if digital payments fill the void left by a fall in cash payments, which digital currencies will prosper? Will existing private cryptocurrencies such as Bitcoin, Litecoin, Ethereum, XRP, and others take advantage of cash’s demise to assert themselves as legitimate currencies? Or will central banks flex their muscles, assert their monopoly privileges, and seek to drive private cryptocurrencies out of the marketplace so that central bank digital currencies can flourish? The answer to that question will be a very important one for the future of cryptocurrencies, for cryptocurrency investors, and for consumers.