Will money disappear and what will replace it - Research Paper Example

The first debate of the possible disappearance of money was started when plastic money in the form of credit cards began taking rook. Now, there are expectations that hard cash will disappear and be replaced by plastic money (Bkatayama Para 1). The debate has now changed and now it is speculated that both plastic money and hard cash will be replaced by other forms of cash. Mobile cash Smart phones are becoming a big part of people’s lives every day. In many economies, SIM cards in mobiles phones have been linked to owner’s bank account which means that the owners of these phones can access their money in the bank directly to carry out everyday payments such as in shopping malls, paying utility bills and other payments.

This is something that has spread even in the underdeveloped countries such as in Africa. In east Africa for instance, Kenya was one of the first countries in the world to use mobile banking offered by a cell phone network operator called Safaricom. This mobile phone money transfer allows users to deposit money, withdraw and most importantly pay directly from the phone. The phones don’t have to be smart phones since what is necessary is the SIM card which is registered in the name of the owner and then linked through a mobile network to the bank.

This service, although originally offered as a standalone service without the involvement of banks, has now been linked with banks and users can now have a direct link to their bank accounts. This kind of money transfer continues to grace many economies around the world and users like the advantages of mobile money. The main advantage of mobile money is that a person does not have to carry hard cash with them or numerous credit card and debit cards. Due to increasing popularity of mobile money, it has been speculated that by the year 2020, hard cash and plastic money will have been replaced by mobile money (The Week).

There are however those who dispute this argument and postulate that it will be difficult to replace hard currency and plastic money. Some of these reasons include; Huge investment in cash and plastic money The argument is that that are too many organisations that have invested too much money in the system for hard cash and plastic money and they will not allow this form of cash to disappear because its disappearance would mean that they would lose their investment. Apart from this, the most formidable argument that has been given for the impossibility of hard cash and plastic money disappearing is the fact that most people will remain paranoid of new forms of payment and will prefer to pay using the traditional means.

For instance according to (Fratianni, Salvatore, and Savona 515), the central bank can prevent the disappearance by setting high reserve rates and also stabilising its monetary policy. Advantages of hard cash Although hard cash has its advantages, it also has its advantages. A major good thing is that it is anonymous. One problem with digital money such as mobile money is that it always leaves a “paper trail” and therefore, some people may find it intrusive in terms of their privacy. More than fearing for their privacy, the other main concern that most people will continue to have is the issue of security of their money.

Most people fear that digital money may not be very secure because sometimes it may only take a few clicks or a just a swipe for a thief to take all of a person’s savings. Although security has been tightened around virtual money systems, previous instances of people’s accounts being cleaned by hackers remain a big challenge in convincing people to use virtual money. Some have also argued that just in the same way that notes did not replace coins and plastic money