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Cash vs Electronic money

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SouthLand
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#1

Posted 16 August 2016 - 09:12 PM

Every day, new ideas are born so citizens from many countries in the world, can pay using different methods in the electronic transactions field. You can pay with credit card, smartphone, wristband, contact-less credit cards and so on. Some people in the banking/financial sector have expressed their wish that Cash disappears and all transactions are made using electronic money. At the same, many people are trusting less and less the banks. Some people even don't save their money in bank accounts but other places like a safe in their home.

 

 

So what do you guys think? Should Cash and Electronic money go by the hand? Should Electronic money be the predominant force?


Svip
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#2

Posted 16 August 2016 - 09:42 PM Edited by Svip, 16 August 2016 - 09:43 PM.

Cash will never be completely abandoned. While the most money today is being transferred electronically, because we are talking company to company payments, a large portion of consumer transactions remain in cash.

If any central bank were to abandon cash, a substitute would rise in its place, that that central bank would then lose control over. Essentially, having cash gives central banks - and thus government - control over a non-insignificant portion of transactions.

The first problem with electronic money is that it is proprietary. While there are plenty of open standards, there are also plenty of secrets. Effectively, we cannot for certain know our money is there. Indeed, if electronic cash was the monopoly, banks and credit card companies would lose a large incentive for ensuring their services were better than cash. And that can only be bad for consumers.

But the main problem is tracking. Electronic transactions have logs. Logs that can be directly attached to the card's owner. While at present, hiding purchases with cash transactions is mainly an activity to avoid one's spouse gathering where one has been, it may soon become a thing to hide from your banks, your insurance companies and whatnot.

Imagine - which is not that ridiculously a scenario - that your transaction logs were opened up for others than you to look in. Even with details. The data exists, so it's just a matter of allowing them access. The financial industry will argue that the purpose is to be able to give you better offers in their stores where you are a frequent customer and will thus benefit the customer. Even to the point of offering specific offers for you regarding products you frequently purchases.

What if an insurance company had access to the same kind of information? Knowing what sort of medicine you buy should be none of their business, but in this scenario they could easily have access to it. And based on that information, they would likely be inclined to deny you insurance.

Electronic transactions are great, but cash's lack of tracking is its largest selling point. And once the people start to see the problem with a surveillance society, not maintained by governments, but by private companies, they too will see the advantages of cash in larger and larger numbers.
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SouthLand
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#3

Posted 17 August 2016 - 12:01 AM

Electronic money is more practical and works great if you run a business and you have to make transactions to providers, customers and so on. Also, it's great to have access online to your business accounts where you can control your money movements.

 

However. For the average citizen (like me), I don't trust banks. Like i like to say; Money is only 100% under your control if it's in your pocket. I have all my money saved elsewhere and, only use my bank accounts when i want to buy something, i go to the bank and put the exact amount into my account.


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#4

Posted 17 August 2016 - 12:09 AM

When sh*t hits the fan, you won't be able to eat your money, so putting it under your mattress is bit nonsensical.  Paper money is only as good as its perceived value, which is usually backed by the full faith and credit of said nation.


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#5

Posted 17 August 2016 - 12:24 AM

Our society truly is evolving, no longer do you have to carry papers around which prove you deserve to eat, just swipe a card! We can go further, stick that little pay-pass chip in your arm and where you stand in this arbitrary numbers game will be as much a part of you as your DNA.

 

But why stop there? We can get rid of money altogether, just graph different colour stars on our heads. A gold star means you get a giant mansion, your own plane and party yatch, a silver star means you get a flat, are always fed and can watch cable TV. A bronze star means you have to sleep outside and break rocks for a living. The silver stars have to be earned and can be taken away, but the gold stars you're born with, in order to reward hard work or w/e

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#6

Posted 17 August 2016 - 12:54 AM

let's just use ramen noodles or cigarettes or w/e as currency like in jail

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#7

Posted 17 August 2016 - 01:13 AM

The floating system understandably scares a lot of people, but it's very much "real".

 

Spoiler

 

The entire world economy hinges on the credibility of the US economy and the dollar.  Sure, there's a lot of kick-back for the US in maintaining the status quo, especially with regards to its military and the aid it provides to allied nations, but it will eventually have to come to an end if the US can't manage its current trade deficits.  At one point, it looked like the Euro would eventually take its place, but even with that, there's a price to be paid with both the stability and security of several Eastern European and Asian-Pacific nations.  Also, throw Brexit in there, and credibility for the Eurozone just went down a notch.  We may be on the verge of a world reserve currency in 50 or so years.  At the moment, the US will have to accelerate a new generation of entrepreneurs with greater access to capital so that it can continue to be an engine for innovation in technologies and economic growth.


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#8

Posted 17 August 2016 - 05:07 AM

At the moment, the US will have to accelerate a new generation of entrepreneurs with greater access to capital so that it can continue to be an engine for innovation in technologies and economic growth.

'Entrepreneurs' that's a funny way of spelling 'military research initiatives.'


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#9

Posted 23 August 2016 - 07:31 PM

I don't know why we just use cash for everything in America. When I was in Europe, a lot of places didn't take my card (only international chains and maybe one hobby shop) and you had to pay cash for about everything else. Why they did this I don't know, but it really made me remember the importance of having cash on you, be it for emergencies or whatever else.


Svip
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#10

Posted 23 August 2016 - 07:43 PM

When I was in Europe, a lot of places didn't take my card (only international chains and maybe one hobby shop) and you had to pay cash for about everything else. Why they did this I don't know, but it really made me remember the importance of having cash on you, be it for emergencies or whatever else.


Simple. Cost. Each credit card firm rents out its PoS (Point of Sale) to stores. So in order to accept Visa cards, you must pay Visa an annual fee.

As such, local stores are picky about whom they choose, because if they have to pick more, the price goes up. So they usually go with the card(s) most people in the immediate area has.

This is another problem with electronic transactions, it actually puts an overhead on small businesses, because the fees are controlled by the credit card companies. Cash, on the other hand, is cash.
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TaylorTheCreator
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#11

Posted 23 August 2016 - 08:07 PM

Electronic money is better imo, because from my personal experience my bills got stolen and ever since then i hardly use any real cash. 


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#12

Posted 23 August 2016 - 08:20 PM

I think the status quo is fine as it is. Cash for small transactions; things like getting some chocolates or cookies at the corner store. Electronic money for the bigger ones. I usually have both on me. It's much more convenient in India, where a lot of transactions are still cash, like public transport.

RogerWho
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#13

Posted 29 August 2016 - 03:56 PM

I don't know why we just use cash for everything in America. When I was in Europe, a lot of places didn't take my card (only international chains and maybe one hobby shop) and you had to pay cash for about everything else. Why they did this I don't know, but it really made me remember the importance of having cash on you, be it for emergencies or whatever else.

Warning, a gross oversimplificaton incoming. There are legacy reasons for this. The American economy has always been based largely on debt. It used to be common to get goods from stores and pay them later. The ever-growing economy could afford absorbing the losses for the non-payments. Hence the eventual evolution to credit cards (at first without any possibility to check the credit in real time). It was mostly about paying to businesses; person-to-person payments were limited to sending checks for a very long time, hence why PayPal became so popular so quickly.

 

The European economy on the other hand has been conservative and based on having capital. As a result, you have your money in the bank and you could always easily just send them to someone else without using checks and fuzz. Hence debit cards have always been more popular than credit cards (after they became technically feasible, since there need to be real-time checks), but since they don't offer that much advantage over cash, they haven't caught on as strongly as credit cards in the US. As a next evolution step, remote bank services such as internet banking have appeared much quicker here, further negating the need for credit cards or services like PayPal.

 

Of course it's quite balanced in the present but there's still some legacy which you can see in the details like that.

 

Myself, I don't mind using either, but it's also true that all that logging that comes with electronic payments makes me a bit uneasy. Fortunately it's possible to get a card with a fake name on the internet and pay for it with bitcoins if you want anonymity. But cash is certainly easier so it's nice to have the option.


SouthLand
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#14

Posted 29 August 2016 - 11:18 PM

Cash has also a good advantage. Money doesn't "disappear" from your bank account without you not knowing about it. For example, years ago i had a subscription to a Newspaper and it was 12€ monthly. One month, they charged me like 50€. I called and they told me that, this was an extra fee for next year. I had to fight back, and after a lot of wasted time and phone calls, i lost that 50€. They can't do that if you get your bills sent to your mailbox and you pay them on any postal office.


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#15

Posted 31 August 2016 - 01:55 AM

Why didn't you just initiate a chargeback?  Banks will protect you if the actions are unconscionable. 

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#16

Posted 31 August 2016 - 04:39 AM

Yeah good idea keeping your money in a paper bag under your mattress that way if there's a fire you're either broke or you run out onto the street with presumably several thousand dollars.

 

You should just exchange it all for hundreds and keep it in a wad in your undies. Nobody will ever have a chance to steal it but I should tell you that it's unlikely some company will successfully take all your money for no reason if you leave it in the bank and your current solution involves the more pressing concern that someone will physically steal all your money and you'll have no recourse since it was just sitting in your house. 

 

Even if it was sent to your mailbox they would have charged you whatever fee anyway, so you would have had to either stop using the service or pay the money, which is what you're trying to avoid in the first place? It sounds like either it's legitimate or you just didn't complain hard enough. I would suggest you deposit all your money into the bank where cash is an abstract entitlement not represented by a physical object.


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#17

Posted 31 August 2016 - 08:15 PM Edited by Marwin, 31 August 2016 - 08:20 PM.

It's pretty weird to use cash here. The look I get if I pay by note is very much a "really? in 2016?" kind of look. I only handle cash when buying/selling things privately or getting paid for a gig.

 

What good is paper money other than avoiding the tax man? 

(and yeah I feel perfectly fine reducing my income taxed when the government is a right-wing one with a minister of finance who warns of sneak islamization and they spend all the f*cking money on expanding the oil industry because there totally isn't a big crisis going on hehe it's sustainable :- ))

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#18

Posted 14 September 2016 - 01:57 PM

As far as I fugured it out the bank isnt safe until you don't share any details with anyone.It can be under fraud's control at anytime with less effort.

Cash in hand is easy to get finish but doesn't matter as it is all his/her wish to save or spend it.

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#19

Posted 15 September 2016 - 04:05 PM

I can't stand banks because they always try to pull something. On my account they have this "over draft authorization signature verification" or whatever thing, which basically means if you signed it, and you try to make a purchase and have insufficient funds, they will cover the rest of the cost... And then fee you an outrageous 25 dollars for doing so. I have had incidents in the past where, without telling me this, automatic debit payments will be authorized to overdraft. So I would have to go down and get that settled, and they would "waive" it for me as if they were doing me some big favor. Then it happens again, on an actual debit purchase, and I have to go down to the bank and debate their policy with them to keep them from pilfering another 25 dollars from me. Then there's maintenance fees, transfer fees, etc. and so on. It's like a game to them to try and see how they can make money off you.

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#20

Posted 25 September 2016 - 09:19 AM

Cash will never be completely abandoned. While the most money today is being transferred electronically, because we are talking company to company payments, a large portion of consumer transactions remain in cash.

People used to say the same thing about gold standard. And it's true, you can still store some of your wealth in precious metals, and you can even get gold coins that are legal tender. But when was the last time you've used gold to pay for something? Or received gold as change at a store? Once you accept fiat money, abandonment of precious metals as tender is inevitable. And once you accept electronic payments, the end of cash is written on the wall. We just happen to be at the infancy of electronic payment. Like back when paper money was in its early days, each bill had to be backed by a gold equivalent. Today we have a concept of leverage on credit, because this is the only way we understand electronic payments. But it's only a matter of time before leverage also become a fiat. And once there is no longer a reason for banks to hold piles of cash, its use in every day transactions will also get phased out.

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#21

Posted 25 September 2016 - 09:28 AM Edited by The Yokel, 25 September 2016 - 09:28 AM.

I don't like the idea of getting rid of cash. It takes away control from people and basically gives ownership of everything to the banks. As if things weren't bad enough already when it comes to the banks. Why would anyone want to make it worse? If you can't preform any financial transaction without the approval of the bank and without them taking a cut that's basically like giving them a bit of ownership of everything you purchase. Banks become an unavoidable middleman with complete power over your finances. Without cash you wouldn't even be able to buy breakfast unless your bank says you can. It's a terrible idea.

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#22

Posted 25 September 2016 - 09:39 AM

Cash will never be completely abandoned. While the most money today is being transferred electronically, because we are talking company to company payments, a large portion of consumer transactions remain in cash.

People used to say the same thing about gold standard. And it's true, you can still store some of your wealth in precious metals, and you can even get gold coins that are legal tender. But when was the last time you've used gold to pay for something? Or received gold as change at a store? Once you accept fiat money, abandonment of precious metals as tender is inevitable. And once you accept electronic payments, the end of cash is written on the wall. We just happen to be at the infancy of electronic payment. Like back when paper money was in its early days, each bill had to be backed by a gold equivalent. Today we have a concept of leverage on credit, because this is the only way we understand electronic payments. But it's only a matter of time before leverage also become a fiat. And once there is no longer a reason for banks to hold piles of cash, its use in every day transactions will also get phased out.


I disagree. The difference between gold standard and paper money is not actually something that matters to consumers. In that regard, paper money is just more convenient, but beyond that they are basically the same.

Electronic money brings whole new advantages and disadvantages to the equation. It's almost completely different. Electronic money provides a detail trace of transactions for each user, data that can be used for targeting ads, positioning stores and whatnot, all by the usage of a surveillance society owned by private industry. You think you should fear the government? No no, it's corporations you should fear. Well, fear the most.

Electronic money is also reliant on certain things being operational. If you have cash, you can always pay with cash. Even if the power is out, the phone lines dead and you can't get a signal on your phone.

Not really a doomsday scenario, because it does happen from time to time. And the more reliant we get on electronic money and electronic things in general, the worse it's gonna feel whenever the power is out.

Moreover, like with everything that has computers in them, current implementation is pretty shoddy. And as such is ripe for targeting in ways to steal your money. Now cards have a wireless chip on them that with an app on your smartphone can be scanned from another pocket and a transaction can occur. Sure it's not much per transaction, but if you get enough walking down a crowded street, it can add up.

Indeed, because electronic money is so much easier and convenient to steal, you don't even have to go outside, you can just steal from people's online bank accounts, than regular cash; handling cash these days is also a lot safer. Primarily because they've made cash transports pretty safe.

Just as I hope - perhaps in my naïveté - that one day people will realise what horrible an instrument Facebook truly is (that is, providing vital social infrastructure to a private corporation, where we have no legal say in administrative changes and giving a lot of private information to private companies), I do hope that people begin to realise to be more cautious about electronic money, and demand more security.

Now I am not against electronic money. But it has some inherent disadvantages that I do not believe are possible to solve. The solution is for cash and electronic money to co-exist. A new invention doesn't have to replace an old one. We didn't stop going to the theatre after they invented films.

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#23

Posted 25 September 2016 - 11:18 AM

Paper money had all the same problems. It's easier to falsify, meaning there were all sorts of scams involving it. After all, if someone pays you with a fake bill, you still get effectively robbed. And it doesn't work if the government collapses, which isn't as common these days, but still happens from time to time and used to be far more common. It displaced gold despite these problems.

Electronic money doesn't have to be traceable or bound to a specific corporate entity. I'm sure most of it will be, but the replacement for cash in situations where you don't want it to be will still be electronic. A crypto-currency of some sort or another.

For general public, privacy of their electronic accounts will be no issue for the same reason why Facebook remains being popular. You might not like it, you might think it's wrong, and I'm not even going to argue with you on that, but fact remains that it keeps happening. If by some odd miracle people will start becoming more careful about their private data, this will simply offset the equilibrium between traceable electronic currency and untraceable electronic currency. By no means does this necessitate use of paper money, even in this unlikely scenario.

We are already seeing multiple attempts to overcome the existing problems. Even if the power goes out, you can still use your phone. Most methods still require a wireless connection, but this can be overcome with dedicated hardware to keep track of transactions. Any place that can take credit cards using tablets these days could be taking payments with all power and connection lost with minimum modification. And if you keep track of transaction with your personal device as well, this can actually be made more secure than paper money.

In the long run, there is absolutely zero reason to keep cash. It is not more convenient in absolutely any scenario, including personal payments. If need arises to split the check, for example, I'm already seeing phone-to-phone payments displace handing over cash. It's way easier to type in $12.23 into the phone than count it off from your wallet. Neither is cash inherently more secure. Weakest point in both is the user, and unlike credit cards, when you use cash, you accept 100% of liability if your money is taken from you.

Most importantly, electronic money has already taken over majority of exchanges despite your fears. Everyone has bank accounts these days, and nearly everyone gets payed via direct deposit. Nearly everyone has credit cards with all sorts of features, wireless and otherwise. There are problems, but it's not stopping these things from expanding.

In practical, day to day situations, the only reason cash is still around is because most people don't know how to exchange money with each other using phones, and because there are still occasional businesses that don't take credit. None of your big reasons factor into it, and the real reasons for cash are quickly going away.

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#24

Posted 25 September 2016 - 12:47 PM

I don't dismiss that a lot of the issues with electronic money can be solved. In fact, I wouldn't be surprised if electronic money becomes a dedicated device the size of a credit card rather than incorporated into the phone as it is today. The amount of things a smartphone can do these days makes each function a little less convenient for it to be there; it makes it harder to find.

But I am not seeing crypto-currency taking over in the foreseeable future. Right now they are being dismissed as hobby projects by governments, but sooner or later they will take them seriously, and when they do, they will fight against them. I have a hard time seeing governments coming down on the side of crypto-currency. State-sponsored credit card companies will become the necessity to maintain a state control over money in the future.

Even Bitcoin transaction have problem to be traceable, although it requires an effort. Cash of the future may not be reminiscent of today's equivalent, but there will be some. Indeed, it might even be something that is easily exchangeable to electronic money. Like redrawing from an ATM to a separate cash card, that allows you to purchase as with a credit card, but without been traceable (of course, how can they truly promise that?). And once you've emptied it, you throw it out.

I am well aware that the majority of transactions today are done electronically, even if we ignore corporate transactions, which is almost exclusively electronic due to the amounts. I am also well aware that Facebook remains popular. But I think it is too early to predict whether or not that remains the case.

If cash is to be abandoned, it will not be in our life times.

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#25

Posted 27 September 2016 - 09:31 AM

I don't know why we just use cash for everything in America. When I was in Europe, a lot of places didn't take my card (only international chains and maybe one hobby shop) and you had to pay cash for about everything else. Why they did this I don't know, but it really made me remember the importance of having cash on you, be it for emergencies or whatever else.

It depends where you are in Europe, a lot of stores in The Netherlands accept international credit cards. The supermarkets here even have rows for people who want to pay with credit cards so they can pay faster and those rows are less crowded.


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#26

Posted 07 October 2016 - 07:59 AM Edited by RogerWho, 07 October 2016 - 09:16 AM.

Crypto-currency combines the advantages and disadvantages both of physical and electronic money: anonymity and no bank oversight like with cash, but also instant transfers like with e-money, but still can get stolen without identity theft like with cash.

 

I wish I'd have bought a couple of bitcoins back in the day. I think this is the stuff that's the actual future of cash, while bank-backed electronic money will mostly remain as it is, separate.

 

In fact, there was a project to create physical bitcons, i.e. "engrave" a bitcoin value into a physical chip, at which point the value would stop existing in the virtual world and couldn't be transferred back. I don't remember the details exactly and am too lazy to look.

 

Either way, the real difference between gold, cash, e-money and crypto-currency is who exactly acts as a central authority and how much oversight that authority has. I.e. whether it's just to set the value of the money compared to other forms, or to acknowledge every operation etc.


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#27

Posted 07 October 2016 - 08:00 AM

Except that bitcoin is not actually anonymous, since the entire transaction log is public. Also, bitcoin transactions are not instant. They usually take several hours, unless you pay fees to get them transferred quicker.

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#28

Posted 07 October 2016 - 10:33 AM

They are anonymous in the sense that they are not tied to a particular person since you don't need to use your real identity.

 

Of course if that's the issue you can be just as anonymous with traditional eletronic money since you can buy a rechargeable credit card on ebay over TOR, pay for it with bitcoins, have it delivered to some warehouse and recharge it also with bitcoins or something.

 

As for the speed, okay, my bad. Either way any issues that has to do with technology, including e-money and crypto currency, are always dependent on the implementation and may be resolved with the next generation.


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#29

Posted 07 October 2016 - 11:33 AM

Well, I forgot to mention that cryptocurrency is definitely a thing of the future, but Bitcoin is not it. The fact that the transaction log is public means that you cannot have identifiable transactions, that will be paramount to financial institutions, they need to be able to confirm who sent what to whom.

As such, Bitcoin was never going to replace physical money nor electronic money, because banks and other institutions would never be interested in such a system.

But alternatives are emerging, where transactions can be precisely as public or as anonymous as one wants. This will make these alternatives palpable to banks, because it will allow them to have transactions that they can confirm without having all the other banks knowing about them. Banks what private but verifiable transactions. Which is completely reasonable.

Bitcoin's design requires the transaction log to be public, and therefore the transactions are intended as being anonymous. But really, they are pseudonymous. They are as anonymous as my nickname on GTAForums is. Some investigation should easily reveal the sender or recipient. See this answer.

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#30

Posted 07 October 2016 - 01:32 PM

I'm pretty sure you can make any transactions completely untraceable back to you if you care enough. Buy a smartphone and an anonymous prepaid card using cash, turn it on only when you're out in the countryside where there are no security cameras and do any transactions there. (Leave your regular phone at home and don't use a car with GPS.) Good luck tracing that :D

 

As for banks, well my point about bitcoin was exactly that banks wouldn't want to use it much, which is why it's an ideal evolution of cash, but not a replacement for the regular electronic money.

 

Another interesting thing about crypto-currencies is that they are truly global. Governments have their currencies on fairly short leash and can use them as leverage against other countries. Banks and investors of course play into that as well. Even large companies are largely dependant on currency conversions. Lots of Japanese manufacturers rely on the YEN-USD rate for their profit margins more than their actual sales. It's an insanely complex model which gets completely killed if a global currency takes over. The old dinosaurs don't want that.





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