– why do we need physical dollars and coins? Wouldn’t it be cheaper for the system as a whole to have the dollar be an entirely digital currency and wouldn’t this be better on the environment?


– why do we need physical dollars and coins? Wouldn’t it be cheaper for the system as a whole to have the dollar be an entirely digital currency and wouldn’t this be better on the environment?

In: Economics

You would be surprised how many people in the world are still ‘unbanked’. Places like Sweden are testing eliminating physical currency, and it would cut down on crime and be net beneficial for the environment. We are unlikely to see it in the next 50 years though in countries like the US or Germany due to a combination of privacy concerns and cost of roll-out.

Yes, but people are pretty resistant to change.

I mean, America can’t even get rid of the penny or switch to dollar coins instead of bills like other countries have without creating controversy.

Both of those moves, mind you, would save the government billions of dollars every year. And the taxpayers are somehow against it.

A lot of things just don’t make sense.

One of the more interesting and subtle things about physical money is that it seems to subconsciously trigger better ethical behavior at times. (See Dan Arielly’s *Predictably Irrational*) By extension, virtual money doesn’t trigger the same level of spending awareness, which in turn could end up manifesting more debt spending downstream, which could even possibly cause negative pressures on the environment as more people would then shift towards cheaper (and/or less safe) goods and products.

So, I’m not sure there is an easy answer on this one. I know I don’t have an answer. Sure, the Treasury would save on production, but how would it influence people’s economic habits? And how would we even truly measure that amidst all the confounding variables?

This is largely a political issue, the common counter argument is privacy. I can give you cash for a transaction, and it is a lot harder to trace that transaction back to me – you need some sort of receipt. Which is why receipts have become less popular with the rise of digital currency.

If you go straight to a digital currency, then you save money and carbon footprint (in theory, who knows how much more computing power or energy we would need) but you give up your privacy. Banks could pretty much track ever transaction, and because they are chartered by the government – the government reserves the right to grab transaction data for investigations.

Source: I run a data analytics department in a mid-size financial institution, and will often work with our compliance teams to ensure the FBI/IRS/OCC or whoever stays happy.

As a side note; this argument is not nessecarily mine, it’s just what I heard. I love using transaction data for marketing algorithms, I found a ton of success in my career by developing personas based on where and how you shop. But there is a trade off to personal liberty.. but maybe this could be solved using cryptocurrencies.. but those are problematic for their own reasons still.

Edit: i read some others reponses.. Unbanked really isn’t an issue here. I started my career with institutions targeted the “unbanked”. The supply side exists to bank them, it’s just they prefer cash and thus can’t make the business profitabitable without using predatory fees.

Also, many countries are already on the verge of making the transition already.. but their track records for personal liberty is not the best. India is set to switch to digital is they haven’t already.

Hypothetically, in a perfect world, there is no reason why we *need* physical currency. We have the technology, the hardware and software. A country that puts it mind to it could certainly do it. By logistically, it’s a nightmare right now. Not everyone has a bank or cell phone, not everyone is mental prepared for Vinmo. Plus, have you ever had a credit card machine go down when you’re trying to buy something and don’t have cash on you?

I have no doubt that one day we will live in a world of digital currency, but probably not today. No one wants to put the work in to make that change.

There’s absolutely no reason why it couldn’t happen, but it all comes down to trusting the system that creates it (all kinds of other money systems have been introduced in the past, with varying levels of success). If you don’t believe me, let’s see you be the first to trade your money in for a new system. I’m not trying to provoke you, just making a point. Cryptocurrency is doing way better than any other universal currency so your concept is strong, it just needs more time to gain acceptance. Or some other idea to usurp it.

We could switch, we don’t have to use physical money.

Some people say it discriminates against the poor. It’s hard to beg for money when it’s all digital. It forces people to use banks and the digital currency technology.

For 99.99% of human history going digital would not have been a possibility. It takes a lot more motivation, manpower, and resources to implement radical changes to a massive system like each country’s currency than the thought “this is probably good for the environment.” We might get there eventually.

As long as there is some currency that can’t be traced. I don’t want the banks and government knowing everything I buy. I think people should have the opportunity to make some cash on the side. If people can collect welfare then why can’t I work harder and make a little something just for myself.

A) It’s nice to be able to conduct commerce when no electricity is conveniently available.

B) Some people don’t like leaving a record of all their transactions. Everything done digitally is traceable, its all recorded. Cash transactions are not.