Pandemic boosts digital currencies – Is this the end of cash?

There is a scene in the well known British post-apocalyptic horror film 28 days later that described the future of cash. For those of you that don’t know the film, allow me to summarize. A young man, played by Cillian Murphy (best known for the Peaky Blinders series), wakes up in a hospital which is abandoned. When he goes out and walks around in London, it is completely abandoned.

He soon discovers that a deadly virus, which originated in an animal (in this case a monkey) has wiped out most of the world’s population in 28 days. At a certain point he does meet other people. One of them, played by Brendan Gleeson, recants how he tried to get to a boat to reserve a place off the British isles for his daughter and himself. He was sure to get a place because he had brought money… back when cash still mattered, he utters helplessly.

Danny Boyle’s flick is in no way a prediction of what the world awaits after Coronavirus, for that the R-nought of Covid-19 is far too small, but it gives a good indication of where cash might be headed.

Legendary hedge fund manager Paul Tudor Jones wrote an investment letter to customers last week. He entitled it fittingly The Great Monetary Inflation, as he discussed the future of money.

“COVID-19 is a one-of-a-kind virus that has triggered a one-of-a-kind policy response globally.”

“The depth and magnitude of the economic drop-off took modern monetary theory—or the direct monetization of massive fiscal spending—from the theoretical to practice without any debate. It has happened globally with such speed that even a market veteran like myself was left speechless.”

“The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be bitcoin.”

The use of digital payment systems has been on the rise for years, buoyed by companies like PayPal, Venmo and Square. This had been going on even before the coronavirus pandemic. However the lockdowns have made sure that cash is now looked upon as something which might be full of germs, whereas contactless paying via your phone is considered ‘clean’.

The Peter Thiel company PayPal even had its best day ever on May 1, 2020.

Gary Cohn, economic advisor to president Trump wrote an opinion piece in the business newspaper Financial Times last month, in which he stated: “the slow rise of digital currency has been given a gigantic boost by the pandemic,” before adding he hasn’t touched a single coin or banknote in his own wallet for the last month or so, “instead relying exclusively on electronic payments systems and credit cards.”

It will become hard to pay anyone off the books, but many of us are indeed left to wonder: is this the end of cash?

1 Comment

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