Invisible, Weightless Money

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The exchange of money has developed in numerous ways over human history. At one point, people traded clay tablets which signified an amount of crops to be paid at the end of the season. Eventually, coins became popular. Then came paper currency and in the past fifty years credit cards. The general trend has been to make transactions as simple and weightless as possible. Recently, the race has begun to make money completely weightless, using today’s and tomorrow’s technology to make it happen.

One method being implemented is payment using smartphones or portable chips on rings or cards with Near Field Communication (NFC). This allows people to tap smartphones against a terminal through a contactless transaction to make a payment. The good news: most new phones (not iPhones) already have NFC technology. To take advantage of NFC payments, a person just has to set up a virtual wallet with a service like Google Wallet. iPhone users that can’t use NFC because they don’t have the hardware necessary in their phone can use other options like the Square Wallet app that doesn’t require a physical tap. The idea is that in today’s world a wallet won’t be necessary anymore, because most people already walk around with smartphones which can just as easily serve as wallets.

Another recent development is the use of virtual money like Bitcoins. Bitcoins is a currency that exists solely in digital format, and can exist on anything that can hold digital memory. This could take a long time to be used commonly by people because at the moment Bitcoin transactions are too complicated for most to understand. They will probably never be used widely beyond investments or transactions for illegal goods, because like cash, Bitcoins cannot be traced. Unlike cash, they have the potential to be transferred online across the globe. Also, because Bitcoins aren’t controlled by any central bank, the value of a Bitcoin fluctuates in large amounts which might turn consumers away. As I write this post, the value of a Bitcoin is at 350 USD, but it could drop back down to 250 tomorrow.

There are a few hurdles that must be crossed before the use of these new technologies becomes widely accepted. First, one of the major concerns with being dependent on virtual currency is security. Anything that is digital and connected can be hacked. If there is anything that people like to keep more secure than anything else, for good reason, it’s money. Additionally, using these new technologies has to be introduced into the common consumer’s habits, which may be difficult considering how attached many are to their credit cards. Old habits die hard. However, I have faith that in the next ten years many of those currently using credit cards will be using alternative forms of payment. But, If the credit card users don’t convert, the new generation of consumers will probably swoop in to pick up the invisible payment market. People questioned the introduction of the credit card half a century ago. Plastic to invisible shouldn’t be too big of a leap now.

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