A Look into Digital Money
By Dr. Ignacio Mas
The rapid advancements in digital money and payment systems can be overwhelming, with established and new players enhancing convenience, safety, and robustness.
The Consequences of Dematerializing Cash
Cash’s tangibility is crucial; notes and coins are physical entities governed by norms. Transitioning to digital money requires abstract thinking, which can be challenging for underserved communities needing education to navigate virtual currency. However, many already engage with virtual money through informal practices like loans and community support.
Modern-Day Problems with Hard Cash
Cash has limitations. People in cash-centric societies struggle to connect with distant relatives for support. Their transactions are constrained by local financial institutions, which may need more visibility into their cash histories.
The Original Form of Money
As David Graeber notes in “Debt: The First 500 Years,” abstract accounting systems predate physical exchange tokens. Initially, money served as a unit of value, with payment and storage roles evolving later. Thus, virtual money is not new; it is the original form of currency.
People manage gifting complexities, which can be more abstract than digital transactions, fostering connections while potentially perpetuating dependence. Gifts carry various emotions and implications, illustrating their complexity.
Virtual Money is Ageless
These insights suggest that individuals embrace digital money when offered clearly and securely. Money is fundamentally information, and digital currency reflects a trend toward removing physical limitations. There is no reason to believe that abstract digital concepts should deter individuals, especially those familiar with informal arrangements. The challenge lies in formalizing finance and helping people adapt to quantifying financial relationships.
Sourced and extracted from “A taxonomy (strains) of digital money” – by Ignacio Mas.
