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Don’t bet the house on cash…The future favours Cryptocurrencies

We’ve recently lived through some turbulent times: COVID lockdowns, the heightened challenges of global warming, and an international energy crisis thrown in for good measure. But something equally profound has been changing across international markets, much more quietly and generally away from the front pages: so silently that you may have missed it. Just put your hands in your pockets…what do you find? Time was you’d fish out a handful of coins or banknotes; if you didn’t see them there, they’d be in your purse or wallet. But that’s less and less the case these days. In the United Kingdom, hard currency in circulation fell by 40% between 2012 and 2019, and it’s been falling ever faster since. In India, the equivalent figure was 28%, and even before the wartime vagaries of Vladimir Putin’s land grab, Russian currency in circulation fell by an astonishing 58%. What we’re looking at is a genuinely worldwide phenomenon…


The recent kicker for this exponential decline is reasonably clear: during the COVID pandemic (which neatly bookends our statistical snapshot), few, if any, of us wanted to handle cash, and those who did would find it hard to persuade a storekeeper to take it. Added to which, of course, driving everything forward was the inevitable dominance of card and contactless payments …year on year, contactless transactions in the UK increased by 46% in 2020, and by 106% since 2019, with a combined value of £165.9 Billion last year (


Does it matter?

So here’s the question: does any of this matter? Aside from that is from a simple nostalgia for cupronickel, clinking coins, and dog-eared paper…


Well, it does matter…it matters a lot, not only because tangible (fiat) currencies are on the wane but because their decline heralds a new day-to-day reality that we’ll all have to get used to. This will likely be one of the epoch-making events of the next decade… because cards and contactless payments are only a small part of the bigger picture.


We’re all increasingly buying online (for which a handful of coins and notes is worse than useless), and particularly with decentralised ledger markets growing ever more important (and set to grow more important still), cryptocurrencies are now ideally positioned to meet burgeoning levels of consumer demand that cash can no longer handle, which is where real revolutionary change will start to happen.


And don’t just take my word for it…


Central Banks take the lead

On Tuesday, the Bank of England announced the beginning of a four-month consultation process (, presaging the possibility that, before the decade is out, British consumers will be using a new Digital Pound (fondly known as Britcoin). And in the light of recent FTX-related events on the other side of the Pond, the grandees in Threadneedle Street were at pains to stress that, as and when Bitcoin hits the streets, the new State-backed currency will be as safe as cash. If all goes to plan, digital wallets accessed through smartphones and smartcards will become the order of the day.


As the Bank’s Governor, Andrew Bailey, put it this week (with some obvious justification): “The way we pay for things has become more digitalised, and the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability”.


It’s worth noting, too, that the Bank of England is by no means alone in its enthusiasm: the Indian Reserve Bank, US Federal Reserve, and the European Central Bank are all now actively exploring the feasibility of creating their digital currencies: sensibly planning for the day when an increasingly fragmented monetary system will finally witness the practical demise of cash.


And, of course, all of this is only possible because of the rapid pace of technological change, coupled with an ever more complex intermeshing of international markets across the globe: a process which has now seen cryptocurrencies become the all essential Yin to the Yang of online commerce. 


So, as the world turns ever more rapidly, don’t be too quick to bet the house on cash.


Executive Overview

Some revolutions happen quietly: and as this week’s events prove, the progressive demise of cash, and the increasing importance of cryptocurrencies, is undoubtedly one of them.


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Suchit Punnose

Suchit Punnose / About Author

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