We’ve witnessed a first-hand example over the past 18 months of a population widely flocking to digital currencies when the stability of fiat alternatives is greatly diminished.
Amid Venezuela’s economic catastrophe which has seen 187,000% inflation decimate the legitimacy of the Bolivar, the citizens of that country collectively moved to adopt cryptocurrencies such as Bitcoin en-masse, as the only viable way to ensure their financial protection.
In 2013, at a time when Venezuela’s inflation rate and only then reached a ‘mere’ 43%, 2 Bitcoins in total were traded for VEF on LocalBitcoins. By 2017, and as the economic situation and conditions in Venezuela deteriorated significantly, that number rose from 2 Bitcoins for the entire year, to 21,556.
9,000km’s away from the chaos of Caracas, Sweden is poised to make a similar move away from physical money, albeit under dramatically different circumstances.
The Swedish Kroner has seen a healthy inflation of roughly 2% in the past 12 months, with Sweden also having the 15th highest GDP in the world, and according to data collected by SafeAround, Sweden itself is the world’s 17th safest country in 2019.
With two such opposing situations both leading in the same direction, an obvious question presents itself:
What is the growing disconnect between the way that we have traditionally traded and saved, and technology-induced revolution in digital payment?
Fuelled in no small part by the increased adoption of alternatives such as cryptocurrency, it seems undeniable that the world is moving closer each day to becoming a globally cashless society.
A report from GS4 in 2018 paints a conflicting picture, however, where the study found that the use of cash is on the rise globally. According to their data, 79% of European point of sale transactions were made in cash and that “Cash is still by far the most widely used form of payment in all regions of the world and cash in circulation is growing”.
Trust, familiarity and a lack of technological complexity are the main factors that still reinforce the use of physical currency around the world.
Saying this, today there is increased digitization of not only western countries, but also much of the third world as well. At the same time, we’re seeing a gradual maturation of the technologies behind cryptocurrencies, and of the way in which they are viewed by the general public.
Much of what can be said about the transition from physical money to digital payment to blockchain-based currencies relates to the increased value that each upgrade holds. Were it not for the incentives of using Bitcoin for Venezuelans over the past few years, debit cards and online banking would have perhaps sufficed.
But there are distinct and compelling benefits for the use of virtual currencies in many use cases around the world, and as their influence and adoption continues to grow, we likely to see many more countries also moving in the same direction as the Swedes.