Work of Fiction: This post revolves completely around a presumption that there was no hard cash till now and now the governments are coming up with a disruptive thing called "Paper Currency". Read the post and you will believe that yes, it could have happened.
LET'S BEGIN......................................................................
POST TITLE: "Hard Cash: Future of Financial Transactions?"
Recently, reports have emerged that governments of various countries are considering to introduce some sort of "Paper Currency" which can replace the way we make transactions. Sources say that just like cheques with limited validity, these will also be of a fixed value, but with infinite validity. So people can directly transact using these papers without having to visit any financial institution to ultimately validate the transaction. Economists suggest that this will increase the money flow in the economy as it will completely remove any third party involved in such transactions, just like cryptocurrencies did in the past. The best thing, it will even remove the need of and e-wallet company. And hence, ZERO transaction cost. Are you kidding me? You ask. The answer is No. Now before diving in the world of Paper Currencies, let us rewind the things of the past and see how the financial systems as you know today came to be.
THE BARTER...
It all began from the time when commodity was exchanged for a commodity. Basically the price of particular quantity a commodity was a particular quantity of another commodity. The system was quite dependent on demand and supply of the commodities in question. The other party should be willing to buy your commodity for transaction to take place. Another problem was lack of divisibility. For instance if I want to purchase 1 kilogram of sugar, how can I pay if I sale elephants?
THE MEDIUM OF EXCHANGE...
The problems with the barter system were real, clear and evident. Hence, to deal with the situation, people came up with something called a medium of exchange.
Gold was always considered to be precious. People started accepting gold as payments but they could not accept it directly since they could not verify the authenticity of gold and also the quantity of gold they are receiving, all at the time of receiving. This problem was easily solved by involving a third party to act as a mediator who accounted for all the transactions and kept a record of "who owes how much gold and to whom". But then there was problem of corruption by these mediators and they also started charging high fee for their services since almost all transaction had to go through them.
THE BIRTH OF FINANCIAL INSTITUTIONS...
After years of harassment by the mediators, people delegated the work to financial institutions created by the mediators who did their work with honesty and charged nominal fee. These financial institutions further appointed people to do the work of "transaction recording" and kept a close eye on the work of these people. Soon, the problem of corruption was majorly solved.
As time passed, these financial institutions started issuing payment notes to their customers so that they do not need the presence of the mediator at the time of executing the transaction. Whoever had the payment note, he could visit the institution within 2-3 days and execute the transaction finally. To prohibit any forgery, rigorous punishment was there in case some one tries to forge the payment notes. However, this caused a bigger problem in the form of double spending. Since receiver could not verify whether the person issuing the payment note had sufficient gold in his books maintained with the institution, many people were duped by the fraudsters.
CURRENCIES...
As time passed, governments started creating their own GOLD standard based currencies as Gold prices were volatile and supply of gold was also unknown. Even though gold is no longer used as a primary form of currency in developed nations, it continues to have a strong impact on the value of those currencies.
DIGITAL TRANSACTIONS...
With technological advancement, these financial institutions allowed us to transfer funds online but people still don't like a middleman. The main reason behind this is slow processes delayed transactions and high transaction cost especially in international transactions. The problem however reduced with the advent of cryptocurrencies. However, there has never been in the history, exclusion of a middleman or a transaction cost as even in case of cryptocurrencies, people had to keep their money in wallets which need wallet companies. The only time there was no middleman was the time of BARTER. Irony!!!
THE NEW THING...PAPER CURRENCIES...
Governments never wanted to exclude a middleman as they could easily regulate and by knowing who earns how much and who owns how much wealth. This thing as largely disrupted by the advent of cryptocurrencies and not all people held their money with wallet companies and some even kept in wallet companies beyond the jurisdiction of the country. So now in this modern world, governments are willing to provide liberty to people to transact in way that there are no transaction costs, which literally means that your money will have a complete value or more value than what it is today. Governments are planning to introduce a new system of making transactions possible by exchanging "Currency Notes". These currency notes will be just like payment notes or cheques but with unlimited validity.
Reports have suggested that these currency notes will be printed exclusively by the government appointed agencies and supply will be regulated. These will be printed on a special type of paper and will have some distinguishing security features so that these can not be forged. However, some experts have suggested that no matter how unique these paper notes will be, if someone successfully forges the same to an extent that these notes come in money circulation, the final holder who tries to take its value through financial institution will suffer a loss and also it would be next to impossible to trace the origin of the forged currency note.
A comparative study has been done on the pros and cons of the so called paper currencies in proposal:
Pros:
- No transaction cost
- Quick transfer of value
- No need to visit financial institution as these notes will have unlimited validity
- No risk dishonour as these notes will be guaranteed by government
- Problem of double spending is solved
- Complete elimination of any middleman
- Safe store of value
- No effect of any downtime or any technical glitches
- No risk of hacking
Cons:
- Forgery might be possible which may ultimately fail the whole idea of paper currencies
- Possibility of theft
- Possibility of loss of value if the note is lost or burned
- Governments will completely loose control of wealth of people
- Terror funding may ease
Now what the actual situation will be, whether hard cash will be disruptive or not, it remains to be seen. I don't now about you but I can't wait to actually hold a paper currency in my hand. Share you thoughts about what it will be like to have an actual paper currency in your hand. [ Really, share your thoughts in reply to "Share your imaginary thoughts here:" ]
If you are reading this line then for sure you enjoyed reading the possibility of what could have happened. Please resteem the post so that others can also read the post and explore the possibilities.
Thanks for reading.