When you take a look back in history, trade routes were established using a desirable commodity such as opium, silk, and tea. Payment since the time of Jesus Christ would be in the form of a precious metal like silver. The Gold Rush made people travel through dusty conditions across America to get a bit of the dream. During World War 2, a Japanese General hid gold bars in a Philippine mountain region, and people are still hunting for Yamashita’s treasure.
Money forms change for practical reasons. Gold presents a lot difficult to carry, and cash became the way to pay. Using cash to make a payment transaction built the foundation of banking institutions. There is a need to store cash for safety in vaults. For security while being transported, money bags are loaded into armored vehicles. Moving and saving cash have related costs, such as needing a bank building and several employees. Yet, the banknotes still have to be stored even if it is no longer circulated as digital payments.
No longer is money backed by gold. What we have going around is paper money known as fiat money, which is backed by the government. No longer is there any currency that has the gold standard. Money gains value because of trading, and the demand determines the value.
What is the future of cash?
Many nations are not ready to integrate a digital payment infrastructure. A few payment terminals in a bustling city does not indicate that it will turn into a cashless society anytime soon. Banking institutions and other financial companies still store and make cash transactions. Yet, in certain countries like Sweden, the electronic payment systems are streamlined in such a way that a person no longer has to use cash, as all they need to transact is in their mobile device.
Electronic payment methods make life so much easier. You can use debit cards, credit cards, make bank transfers, online payments, transfer money instantly, and direct deposits. The business or individual can be far away, and they can get their funds immediately, as electronic payments travel much faster than cash.
Using cash is a traditional way of making payments. A lot of people are perfectly comfortable with money transactions. As electronic payment transactions are increasingly more available worldwide, there are still millions of people who will not give up cash as the psychological effect of holding it is strong. The widespread practice of exchanging cash for services or goods is integrated as a habit. Some payments and accepting funds give us joy, while other payment transactions make us feel pain or nervous.
Money, when kept, paid or received, triggers emotions. The emotional experience when money is exchanged and when it is stored in places like a piggy bank is one that is not easy to discard. As alternative payment methods are put in place, there will still be those who prefer cash but can accept digital money when the excitement of spending taps their emotions or receiving payments. Being emotionally detached to the funds online can make money have less value to a person, because of the form.