In hindsight, it looks like a natural progression. After all, how much cash are you using in your day-to-day life? Your answer is probably, “not much”. Credit cards and debit cards are used to purchase nearly everything these days, whether online or in person.
Yet, cash was the prevalent form of payment in America not long ago. When I was a young adult, credit cards were just taking hold. Many stores had so-called “charge cards” back then, but those only worked at the stores which issued them. The worldwide dominance of Visa and MasterCard (then called BankAmericard and MasterCharge) was just beginning to emerge.
Cash is Almost Quaint Today
Today, it seems almost quaint, or old-fashioned, to use cash in person. Everyone expects you to use “plastic”. Although convenient, these cards have not made everything better, at least not for me.
I seem to have my credit card number stolen every 6 months or so. Every time this happens, it’s a nuisance, especially since I have automatic payments setup with several vendors. Each time my number is stolen, I need to call the bank to cancel my card. Then, I need to go online to each vendor’s site and change my automatic charges. These are monthly charges for my mobile phone service, my internet service, etc. This easily costs me two to three hours each time it happens. And, it can take several days or even a week to get a replacement card in the mail.
Recently, I was traveling in southern California when I got a text from my bank informing me that my card had just been used at an athletic clothing merchant, and shortly thereafter, with an airline. (Yes, I look at every credit card charge by text as they are charged to my card.) When I saw those charges, I thought “whoever’s using my card had better fly away somewhere where I can’t find them!”
The Hidden Costs of Plastic
When these little plastic cards work, they really are convenient. Yet, this convenience comes with many hidden costs. First, just 16 digits stand between you and your money. Along with the expiration date, that’s all that a criminal needs to steal your card. Fraud is amazingly simple with credit cards. So much so that a large percentage of the cost of using a credit card is spent on sophisticated anti-fraud programs that the bank monitors every moment of every day. After all, they are on the hook whenever cards are used fraudulently.
How hard is it really to memorize a 16-digit credit card number? Remember that the next time you give your card to a waiter or bartender!
Secondly, credit card costs merchants up to 3% of the total charge. Guess who pays? As with all charges, eventually we all do. Yet, where does this 3% go, and for what purpose? It goes to the financial services industry so they to provide “liquidity”, yet at what cost are they really providing this service?
In an economy, to really create wealth, you need to build, farm, or mine something. That’s it. Everything else is circulation, including all types of services.
Wall Street does no mining and no farming. And, a very small percentage of their money goes into building anything that really improves finance. I admit that they do provide liquidity and grease the wheels of commerce, but at what price really? The latest reports show that over 12% of the gross domestic product of the U.S. now goes to Wall Street! That’s much too high, especially in a $17 trillion dollar U.S. economy.
Wall Street Sucks the Money Out of Main Street
This money is sucked right out of “Main Street” businesses, especially small businesses that would otherwise reinvest that money in their business or take a large paycheck and invest it as consumers. And, it adds to the cost of everything we buy as consumers.
So, what’s the alternative? Of course, it’s bitcoin. And, it’s a range of other cryptocurrencies (cryptographic digital currencies) in their infancy. Bitcoin was created as an alternative to government-controlled money, and it’s closer to cash than to credit. New mobile apps make bitcoin easy to use in-person or online. And now, over 100,000 merchants worldwide now accept this new digital currency!
Bitcoin has launched the safest form of cash ever created. There’s no more easy-to-steal 16-digit credit cards numbers to protect. There’s no risk of bank or government seizures when your bitcoins are properly secured. And, big brother can’t easily track every purchase you are making as they can easily do with those plastic cards in your wallet.
New Apps, New Payment Methods
Cool new apps, like Apple Pay and Android Pay, are training people at large how to use the old technology of credit cards with new mobile based payment apps. After all, these “Old Pay” apps look cool on the outside, but still use the old-fashioned credit cards for payment.
Bitcoin is the real deal – mobile apps and real digital money. Thanks for training the population, Apple and Google!
The future of everything is digital, and that includes money. And, bitcoin is where I am placing my bet!
Marc Carignan is founder of The Bitcoin Tutor, a company dedicated to helping people learn about and profit from the future of money. To learn more, visit http://thebitcointutor.com.