Will Covid kill Cash?
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
Will covid kill cash?
Digital payments have been growing by leaps and bounds but will this health crisis be the final straw?
I have seen a lot of local businesses request that you pay digitally or in some cases no longer accept cash. Paying with cash is a far more intimate exchange than using a card. You hand the cashier money and they make change from a draw that is filled with cash from pervious customers. The clerk makes change and hands it to you. It is counted, put back in the customer's wallet and they leave with the money and any germs that may be on the money.
Some of the new apps and cards that you can just tap against the card machine reduce or eliminate the extra contact.
Collectively the federal government (Treasury, Federal REserve, DOJ) have been trying to limit and/or eliminate it for years. Will this be the event that is needed to end cash as we know it?
I would much rather risk getting a few germs on my cash than be at the mercy of a tyrannical government who can freeze a digital bank account whenever they see fit to starve a dissident.
@Jonathan R. I think the government will come in and spoil the party as soon as crypto becomes material.
As you said all money is trust. It seems to me it would be too easy for governments to shake that trust. What if the US government impose a new tax just like South Korea? new Korean law imposes 22% tax and requires all crypto traders to keep accurate records of activities and to file taxes. You know what happens when people don't pay taxes.
@Jonathan R. I think the government will come in and spoil the party as soon as crypto becomes material.
As you said all money is trust. It seems to me it would be too easy for governments to shake that trust. What if the US government impose a new tax just like South Korea? new Korean law imposes 22% tax and requires all crypto traders to keep accurate records of activities and to file taxes. You know what happens when people don't pay taxes.
I’m not sure how governments will react in the future, time will tell. It’s still very early days. I think a lot of hurdles have been met here in the US, cryptocurrency has been around for some time now. You can trade futures, and large institutional funds are offering several of the top 10 cryptocurrencies. I think a lot of people would be unhappy if governments intervened like they did when they banned gold for a period of time. It will drop at that point surely but it won’t be killed completely and will rebuild for there. The more likely outcome will be more regulation, which will be good. As for increasing the taxes on gains, that wouldn’t really surprise me. The dollar will likely lose value in the future, so I guess one could consider that a tax also to consider.
I like crypto over gold because it is easier to buy, store and trade. My mother told me once, “You either are a nerd or you’ll work for one one day.” I think the nerds are onto something. The public is losing trust with fiat currency. More trust is being placed on money of the people, as we are clearly seeing.
@Lesley Resnick
As long as we have a federal reserve are with holdings of 7 trillion. Dolla dolla bills are not goin anywhere.
They will continue to print money into oblivion.
@Lesley Resnick it is heading that way in breakneck speed. I thought it would take longer. I carry very little cash and most of my transactions are either debit or Venmo.
In spite of what Ray Dallio and others say, there will only be FIAT currencies going forward, barring a catastrophic event that eliminates 90% of the population and all modern versions of government.
Going back to the most basic level, people would carry around a sack of gold or other store of wealth and trade it. Then the gold standard was created. Someone holds onto the gold and issues you a piece of paper as a bearer note. I know economists and some politicians think the gold standard is a great idea and going off the gold standard was the beginning of the end. There is never a discussion of bad actor scenario. A government that refuses to freely exchange their currency for hard the asset backing it. Further, what if they just lie, we have enough gold to exchange every note, but in reality they do not. If there was a run on the federal reserve, there is nothing they could do to recover. Printing money with out gold to back it would be a crime and thus create a FIAT currency.
In my view all of these crypto currencies have a limited life. The day the DIGI Dollar or the DIGI Yuan is released there will be no market for the other cryptos except among criminals and speculators. The governments of the world are not going to give away control of the world's finance and their own economy. A large scale adoption of crypots will result in there no longer be a reserve currency, this would create booms and busts the world has never seen. Without the dollar as the world's reserve currency, WE WILL ALL SUFFER A LOSS OF STANDARD OF LIVING. If you think we are prepared to go to war for Oil, wait and see what will happen to keep the reserve currency.
COVID couldn’t even kill Trump.
In spite of what Ray Dallio and others say, there will only be FIAT currencies going forward, barring a catastrophic event that eliminates 90% of the population and all modern versions of government.
Going back to the most basic level, people would carry around a sack of gold or other store of wealth and trade it. Then the gold standard was created. Someone holds onto the gold and issues you a piece of paper as a bearer note. I know economists and some politicians think the gold standard is a great idea and going off the gold standard was the beginning of the end. There is never a discussion of bad actor scenario. A government that refuses to freely exchange their currency for hard the asset backing it. Further, what if they just lie, we have enough gold to exchange every note, but in reality they do not. If there was a run on the federal reserve, there is nothing they could do to recover. Printing money with out gold to back it would be a crime and thus create a FIAT currency.
In my view all of these crypto currencies have a limited life. The day the DIGI Dollar or the DIGI Yuan is released there will be no market for the other cryptos except among criminals and speculators. The governments of the world are not going to give away control of the world's finance and their own economy. A large scale adoption of crypots will result in there no longer be a reserve currency, this would create booms and busts the world has never seen. Without the dollar as the world's reserve currency, WE WILL ALL SUFFER A LOSS OF STANDARD OF LIVING. If you think we are prepared to go to war for Oil, wait and see what will happen to keep the reserve currency.
I agree with a lot of what you said but want to note cryptocurrency does not need to take over the dollar. The two can operate separately. I think when the dollar starts to crash, which it will due to the irresponsible money printing, they’ll peg it to the price of gold again to create more trust among sheep with their head in the sand and then they’ll keep printing again, and asset prices (like gold, cryptocurrency and real estate) will continue to grow.
Jeff, you post an interesting article about buying beer with Bitcoin. "15 Places where you can buy a beer with Bitcoins"
I must point out that the source is an obvious pro-bitcoin advocacy website. I wouldn't trust their opinion on the time of day, never mind the volume or legitimacy of retail establishments that accept bitcoin. Further, their English is misleading: "Bitcoins" implies more than one. With today's price is approaching $20,000 USD, I shudder to think about a beer costing two Bitcoins!
What establishment is seriously going to accept $10 for a beer today that might be worth $5 by the time they need the money to buy something else? Sure, maybe it'll be $15 next week, but we need to buy supplies now. People open a retail establishment to earn a consistent stream of income. If they wanted to speculate on widely fluctuating prices, they'd have gone into Forex.
I'm sure a closer inspection of those "15 Places" we'd find many are either no longer accepting BTC today, or they only did it as a marketing gimmick in the first place.
You might be interested in an article from a more neutral authority:
https://www.cato.org/blog/bitc...
Some interesting quotes:
--beginquote (italics mine)
Inflation risk and purchasing power volatilityIt is of course true that the history of fiat currencies is full of breaches of trust in purchasing-power stability. ...
However, Bitcoin’s fixed quantity path creates a different problem that inhibits its widespread use as currency. With the number of Bitcoins unresponsive to demand shifts, all the burden of adjustment falls on the price (purchasing power). As a result the market price of Bitcoin is enormously volatile week-to-week and even day-to-day. This makes it very risky to hold or accept BTC as a payment medium for monthly bills that are denominated in anything other than BTC (e.g. in US dollars, other fiat currencies, or commodity index baskets).
Satoshi wanted to create a payment system with greater privacy.... the way Bitcoin’s distributed ledger system shares addresses and size information about every transaction provides less privacy than would a design sharing less information. Bitcoin is not anonymous, only pseudonymous, and the pseudonyms can be pierced.
As far as making micropayments at negligible cost, the Bitcoin blockchain has turned out to be infeasible for doing so. It becomes quickly congested as it approaches the modest volume of 7 transactions per second.
--endquote
The 7 transactions per second (TPS) is interesting -- Mastercard can handle several thousands of TPS.
It also should be noted that newer cryptocurrencies can handle significantly more TPS than Bitcoin, more even than Mastercard and Visa, but we never hear much about any of those in the press. Only Bitcoin gets the public eye. Bitcoin is the poster-boy for cryptocurrencies, displaying both the good and the bad.
Now, there are of course other quotes in that article, which I'll leave for the reader to explore if so desired. And the Cato Institute is by no means against Bitcoin. They just point out a few flaws the advocates want to gloss over or ignore.
So, bottom line: speculative investment? Sure.
Buy low, sell high? Of course.
Use it instead of cash to buy groceries? Not in this lifetime!
@Lesley Resnick curious to hear from others on whether they have found Venmo to be an efficient way to collect rent checks/pay contractors/etc. Obviously weighs in favor of cash, not crypto, being the mainstay, but still accepts the accessibility and safety of distanced transactions. I’m sure there have been other lengthy threads regarding this topic too.
Thanks for sharing this interesting forum topic!
@Kyle Arendsen My bookie takes Venmo
After the many retail data and security breaches, it is my personal opinion that cash is now the most secure form of payment. People still love cash though. Probably always will. It is legal tender as well. However getting rid of cash might be done in stages. The penny may be the first to go. Canada stopped producing pennies almost 10 years ago. America may follow suit...someday. As far as rent goes, I would gladly accept cash while I still can.
Things will be back to normal in 2022-23 (assuming there isn't a concerted Big Reset plan). This is like any other virus - only 2 options, 1. the suceptible die out and 2. herd immunity. Even if cases are overestimated (Most common Covid PCR test using an absurd 47 PCA cycles - manufacturer and scientists agree that above 25 cycles a PCR test is invalid), and every country tabulating Covid-19 deaths differently, this eventually works itself out. It just depends how long people continue to believe/comply with governments' policies based on faulty/incorrect data or perverse incentives.
@Alvin Sylvain
Silver has natural antibacterial properties. Hopefully the same is true for viruses.
@Theresa Harris and what if they no longer accept cash animal skin was a common currency in the past. Try buying gas with rabbit fur and let me know how that goes. Things change and tragedy is always used to push someone's agenda. I have been hearing about the global currency and eliminating cash especially coins for a long time. Seams to me like a perfect excuse to do just that.
@Lesley Resnick
I see COVID killing cash if the government starts their free cash programs back up. As we all know, huge government spending leads to inflation. Add the lock downs in the mix, now you ended production. I guess going digital will put cash over the edge socially but economicly I see inflation ending the dollar. Of course, this is mere speculation...
It's interesting how different the US is than countries like China where mobile payments are the norm. WeChat Pay and Alipay both have ~1 billion users each. Even panhandlers in China are cashless and use QR codes. China largely went from cash to mobile payments and skipped credit cards.
Using cash in our system is changing more folks don’t use cash at all. It has several factors but none the matter the slow grind is heading towards less cash. How long tell we go cashless is unknown. In my stock portfolio I am buying stocks based on this idea.
I am currently also ready to take position in Bitcoin I am tip toeing in. More of a world currency making world trade using a world currency sounds like a possibility. I may lose it all don’t play with the milk money.
Cash was dying a slow death to begin with. But Covid definitely accelerated it. I barely use cash at all these days. I wouldn't say Covid is the cause though, physical money was going the way of the Dodo. Covid just gave that process a shot in the arm.
Steve Morris, if you think the government is going to sit idly by and let bitcoin flourish, you are deluding yourself. All central banks are now in the process of developing their own cryptocurrencies. Once they are introduced, bitcoin and all other private cryptocurrencies will be banned. The government does not like competition.
@Theresa Harris and what if they no longer accept cash animal skin was a common currency in the past. Try buying gas with rabbit fur and let me know how that goes. Things change and tragedy is always used to push someone's agenda. I have been hearing about the global currency and eliminating cash especially coins for a long time. Seams to me like a perfect excuse to do just that.
Good luck with that. Let me know how your campaign goes.
There is still a huge hurdle for Bitcoin broad acceptance. Sure, a small portion of the population has embraced it, but the general public is much too cautious to use it as a currency for common payments and banking.
Remember, perception is reality. Today’s broad perception of Bitcoin is that it’s like buying a stock the value of which fluctuates widely.
Daily worldwide transactions in Bitcoin are minuscule compared to transactions in any other currency. Until it gets broad support it will continue to fluctuate wildly. Sure, the trend continues to be up. But few people are willing to see any significant part of their finances that they use for any short term purposes, like rent/food/heat/clothing, to have that type of fluctuation.
Just my $.02...
"So long as all digital finance leaves a computer trail that can be easily followed by law enforcement and divorce attorneys, people are going to have a use for cash."
Ever hear of Bitcoin?
Right. Let me know when you can use Bitcoin at the local Pub to buy a beer.
I see Bitcoin ATMs in the hood now. I was shocked when I saw the first one at a gas station in the hood. Won't be long before they pop up in the liquor stores in the hood. I am in L.A.
For those saying "NO", Covid has taught me one thing...Never say never. Things can turn how we never thought possible. I went into a bakery yesterday and they had a sign saying "no longer accepting cash." It's possible.
I have seen those also. I'd be curious to know if anybody has ever actually tried using one.
There was some mention of getting rid of pennies. I don't know if you've heard, but Canada is ceasing production of pennies, saying it costs more than it worth.
https://www.cnn.com/2012/03/30/business/canada-penny/index.html#:~:text=Canada%20is%20ditching%20production%20of,country's%202012%20budget%20released%20Thursday.
There is definite change coming to the world of cash and its scary. Bitcoin seems to be something that is not going anywhere and its becoming more common. Coinstar (the change machines that give you bills for a fee) are switching to being able to use and buy bitcoin at them. Also as others have said, a lot of places are stopping taking cash. A lot of local coffee places are doing this namely.
Really scary times right now... it may not directly affect real estate but it still will affect A LOT of other things In life. This is going to be another robbery of privacy. Being anonymous with cash should be a right.