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Photo by covilha

As the digital and physical worlds become ever more intertwined, what does this mean for the future of money?

A funny thing happened the other day. My Cairo taxi driver took one look at the bundle of raggedy notes I was trying to give him, and asked if I had some coins instead.

But mere months ago, he’d have done everything in his power not to take coins, even if that meant committing the sacrilege of breaking a large note. Coins weren’t considered “real money”, and people looked at you like you were offering them a handful of scrap metal. Now, the coins are everywhere, and accepted without question.

When I told my housemate this story, he laughed. “In Korea,” he said, “we use our mobile phones to pay for things like bus journeys.” They hold their phones up to a reader when they get on, and the money is either debited directly from their bank, or added to their next phone bill. Same goes for buying things in some shops.

Now, I’m no hick – I even had a credit card, once – but I had no idea such magic was possible. It got me thinking on what I know about money.

What is money?

I know that “money makes the world go round.” We use it to buy stuff. And I never seem to have enough of it. (But that’s OK, because I don’t want much stuff.)

I also know we started off by bartering for the things we needed: two chickens for a bag of grain, or a sack of magic herbs for the latest model of ax. (Actually, we probably started off hitting people over the head with our ax and taking their magic herbs, but that’s a different story.)

Photo by zolierdos

Then we started using things like cowrie shells as money. By around 650 BC, the first gold and silver coins were being minted. They were valuable, because they were made from something considered worthy. This is known as commodity money.

And then, ever so slowly, things became complicated. Representative money came into use, where physical tokens with no intrinsic worth (such as a paper note) were used to represent a fixed amount of something worthy.

In other words, your paper money was valuable because it could, in theory, be converted into gold at the bank. But there was never enough gold to back up all the paper money in circulation.

Then, since World War II, fiat currencies gradually took over. Put simply, this is money that has value because the government says it has value, not because it’s intrinsically worth anything, or because it directly represents a commodity that is worth something.

It’s a symbol, an expression of trust, a way of keeping score and of facilitating trade without having to exchange any goods. Money doesn’t really exist, except in our minds. That’s brilliant. And absolutely terrifying.

The future of money

I don’t pretend to understand how it all really works. But on April 26th, The Future of Money and Technology Summit is taking place in San Francisco. This will “bring together the best and brightest thinkers around money” – from organisations with such arcane names as Entropria Universe, Zong, and Plastic Jungle – to “discuss the evolving money ecosystem”. And I don’t really understand what that means, either.

Photo by Uriel 1998

Except that the days of cash must surely be numbered. What’s the point of keeping the old, physical tokens that represent money? They just weigh down your pockets, and keep muggers in business.

For many of us, our money is already nothing more than a number on a computer somewhere, going up and down as we exchange goods and services. The cash machine is an unnecessary middle man.

It all becomes even more mind-bending when you consider the overlap between the “real world”, and the virtual worlds of online Role Playing Games such as Second Life.

You can use “real” money to buy “virtual” money to spend on goods and services in the game. And you can cash out your virtual money, exchanging it for real money. So what the hell is real money?

We already have mobile devices that can do everything short of making us a cup of tea in the morning, or rubbing our feet when we are tired. Hooking them up to our bank balances is the next logical step, and one that’s already being taken in countries such as South Korea.

Just chip us already

In fact, why not just chip us already? For years, the Baja Beach Club in Barcelona has been implanting a microchip into the arms of its VIP guests. This contains an ID number that is scanned to allow chipped guests access to the VIP lounges, and can be used as a debit account to pay for drinks.

As well as the convenience of ordering and paying for your drink simply by waving your arm, these Very Chipped Persons can kiss the uncouth wallet-tucked-in-Speedos look goodbye.

Now I’m not suggesting for a minute we are close to having all our personal information, including our bank details, embedded in our bodies on a microchip. Or that cash is in its final death throes. But it seems we might be moving in that direction.

To paraphrase the Cree Indian proverb about eating money: “Only when the last tree has died, and the last river been poisoned, and the last fish been caught, will we realise we didn’t need to chop down trees to make money.”


What do you think about a cashless society? Are we marching towards a better future, or does the very thought of it scare the pants off you? Share your thoughts below.

Financial Savvy


About The Author

Nick Rowlands

Nick lived in Egypt for six years, working as a tour leader, EFL teacher, city guide editor, and online guidebook writer. He's currently in San Francisco searching for his centre. He (kinda sporadically) blogs at Delicious Chaos, and you can follow him on twitter.

  • Steve

    If you want to look to the future of using your cell phone to buy things (otherwise known as mobile banking) you should look to Kenya. The cell phone company there are the leaders in mobile banking. It really is an innovative idea.

    Its hard to say if hard currency will ever fully be replaced by digital money, but the trend is towards less and less paper in your pocket and more numbers on the computer.

    You should also mention the debate about taxing virtual assets. The courts have even looked into it and, if I remember correctly, they made it clear that virtual assets are real and can be taxed. That really blurs down the line between real and imaginary, doesn’t it?

  • Kate

    This is really interesting. Money is kind of a figment of our imaginations. It’s a symbol we believe in, but have no control over. It is, in some ways fictional, but the lack of it affects so many people.

    I think about this a lot. I want for little, but I’m poor as can be (by US standards). Then, I deal in 2 types of currency – Argentine pesos and American Dollars. Your dollar goes further here. I would not be able to sustain myself for the amount I spend here in the US – that’s for sure.

  • Abbie

    Really interesting stuff, Nick, I hadn’t really thought about the lack of need for physical money although it kind of blows my mind when I find stores/restaurants that still only accept cash.

  • Alouise

    I use my debit card much more than cash or credit. Apparently Canadians have more debit/interac use per person than any other country, so I guess I’m helping that statistic. But using a debit or credit card it’s easy to feel like you’re not really spending money, since you can’t see the money leaving your account (until you get your bill and realize your poorness, or that’s how it is for me). So as convenient as virtual money and micro chips would be, I wouldn’t want them to replace paper money/coins. Plus as a traveler I always like keep a few small notes/coins of foreign currency as a souvenir.

  • Tim Patterson

    I’m investing in topsoil.

  • Turner

    I honestly thought the chip-in-the-arm would have happened by now. I mean, or some form of debiting that was unique to the individual (retina, DNA, or thumbprint scanning). The thing that scares me about that, despite its obvious efficiency and less reliance on material resources, is our continued dependence on computers. If we assign someone’s full identity to one computer chip, what happens when someone (and someone will) hack it, copy it, or corrupt it?

    An old discussion on the nature of money in Japan:

  • Justruss

    I can just imagine what the neo-cons and the ultra-right Christians will make of being chipped. There will be all sorts of blather about the New World Order and the ‘mark” of Revelation fame.

    The thing that puzzles me most is the amount of money reported to have been lost in this recession. Where did it go?

    Somebody please show me the line to get chipped.

  • juna

    this is just me with my wishful thinking.. i can’t help to think that a cashless society would encourage individuals to give less importance to money as it loses its tangibility. a shift to the more important things in life perhaps? i noticed that when i started using direct debit in transactions, i became less of an impulsive buyer!

    • JT

      The opposite would actually be true. Since there is no mechanisim to make you think about how much you are spending, spending practices will be worse than they are today. Impulse will go way up, because you always have the ability to spend.

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