Friday, December 16, 2011

The Demise of Paper Currency

Will digital currency one-day replace paper money? It may sound like something out of sci-fi, but it might not be as far-fetched as it sounds. Consider that consumers already rely heavily today on credit cards and online services as Paypal to pay their bills. They swipe credit cards at the fuel pump when filling their cars. They order movies online through Paypal. They even purchase their burgers and fries with gift cards pre-loaded with currency. When you look at it this way, we're really not that far away from ditching paper and coins for digital dollars.

The Bitcoin revolution?

Bitcoin has been around since 2009 and is a peer-to-peer digital currency.
It can be used to purchase products and services online. The technology behind Bitcoin is considered to be impossible to hack, which eases most security concerns.

Bitcoin isn't technically a legal tender and for that reason many, if not most, retailers outside the Bitcoin user database will not accept it.  It's very possible another alternative digital currency may pop up and over take Bitcoin, becoming more mainstream compared to the innovative Bitcoin.

The digital currency model

There are many advantages to ditching paper money. You can’t lose it, you don’t have to worry about having exact change, and there is no need to replace damaged currency, which saves time, energy, and funds.

Digital currency can be more secure than paper money, too. When you are robbed as you are walking down the street, you have little chance of recouping the money. However, if someone steals your credit card, it's easy to cancel the card, safeguarding yourself financially. The same scenario could easily exist with your digital dollars.

Holdouts

Of course, not everybody is going to be sold on digital currency. There are still individuals today who don't use credit cards and who have never banked at an ATM. They prefer to deal with their transactions the old-fashioned way with paper money that they can see and feel. Then again, paper money?

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