Will digital currency become the new normal after the pandemic?

2020 was a strange year and for many months there has been much talk of ‘the new normal’ once things settle down.

What does a new normal mean?

There have been many changes thrust upon us over the last 15 months and although not all of them good, there are some changes that people will be reluctant to let go of. For example, with lots of people working from home for at least some of the last year, both employees and employers have recognised that this can work. Some large companies such as Google and GoDaddy have announced that their employees can work from home for as long as they like and it is likely that even smaller businesses will offer more flexible ways of working too.

We’re all now much more used to online shopping, home deliveries and shopping with small businesses. This trend is something that is also much more likely to continue as people have become much more open to this way of spending money and just how easy it can be.

The increase In popularity of digital currency

With lots of businesses forced to close, non-essential shops offering only click and collect services and people self-isolating, online commerce has increased massively since the start of 2020. Although many people have dabbled in online shopping in the past, the last year has meant that people have had to rely on online businesses much more than normal. This has led to people spending money online via debit and credit cards, PayPal accounts and even Cryptocurrency. It is thought that this way of spending money will continue as people realise how easy and secure it is to shop like this.

 Although physical shops do accept cash, they did this reluctantly during the height of the pandemic, with contactless payments a much-preferred method. In fact, at the start of the pandemic, the contactless limit for using a card in a shop increased from £25 to £45 to help limit the number of people using cash or having to use the keypad to input their PIN. In March 2021 this was increased again by the FCA to £100 per transaction.

 Ways of paying for items without having to handle cash have definitely become the preferred way for shops to accept payment and this isn’t likely to change any time soon.

 A look at Cryptocurrency

As well as contactless payments being more accessible, there has been a significant rise in the popularity of Cryptocurrency over recent months too. The media has covered a number of high-profile digital currency stories including when Bitcoin hit record highs and meme-inspired cryptocurrency Dogecoin also increased in popularity. It is the headline-making stories that have helped introduce Cryptocurrency to a wide audience. There are now a number of apps that you can use to trade various digital currencies and many even offer sign-up and referral bonuses to uses of them. PayPal in the US has also helped with allowing more people to buy, sell and trade

Cryptocurrency. - The online payment giant recently made Bitcoin accessible with your PayPal account. They also have options for holding, buying and selling Ethereum, Bitcoin Cash and Litecoin. They have yet to say whether they will expand this to other countries or across over digital currency options, but the likelihood is that they will.

What does this mean for physical cash?

Although we can still spend cash in more stores, there has long been a debate as to whether this is needed and whether it will continue. For many people, the idea of dealing in cash is one they like because it is the most untraceable method of spending money. Previously the only alternative to using cash has been to use a traditional bank, which means transactions are tracked and stored. For those looking for a more anonymous way of spending money Cryptocurrency ticks all the boxes.

Money Under 30 recently reported that non-cash payments in the US increased by an average of 5.3% a year between 2012 and 2015 and only around 7% of US households have no bank account at all. This means that not only are non-cash payments on the increase but that a majority of US households have at least one facility that would allow them to make a digital payment. As these households become more familiar with the ease of online banking, the next step up to using things like Bitcoin on a more regular basis seems likely.

Will digital currency become the new normal after the pandemic?

As we see the pandemic start to ease, we’ll all be making adjustments to life to allow us to get back to normal as much as possible. However, there are some trends that are likely to stick around and digital currency is likely to be one of them. As people start to use digital currency more, there will be less of a need for physical banks and cash points to visit. As these start to become harder to find, more people will be pushed to seek alternatives to spending cash.

The end of physical money has been predicted for a number of years so it is likely to be something that happens overnight. However, we’re most definitely in a technology-rich, digital age which means that we’re becoming more aware of alternative currencies and it is becoming easier to access and use these. As the younger ‘TikTok’ generation grows up, their ease with using digital currency will mean that they’ll expect this throughout all of their adult lives and this will most certainly contribute to the decline in using physical cash for spending transactions too.

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