Digital Payment: Dethroning Cash As King

Asia Blockchain Review
July 21, 2020

As humanity continues its battle with the Covid-19 pandemic through a host of measures such as social distancing and regular disinfection, the fact that the corona-virus can survive up to 9 days on surfaces has raised public concerns with regard to the possible transmission of the virus through frequently-touched day-to-day items such as cash i.e. banknotes and coins.

In a capitalistic world where cash is king, it is perhaps a tad ironic that cash which is generally considered to be the king of our modern times is being viewed with skepticism as a possible virus transmitter but a new king may be emerging in the form of digital payment.

Digital Payment: Cashing in on the Dangers of Cash 

As part of its efforts to allay public concerns in this regard, the Bank of International Settlements (BIS) has in April 2020 published a bulletin in which it highlighted scientific evidence which suggests that the risk of corona-virus being transmitted through cash i.e. banknotes and coins is low when compared with other frequently-touched objects, such as personal identification number (PIN) pads at automated teller machines (ATMs).

In this connection, the Covid-19 pandemic has highlighted the fault lines of the conventional cash-based financial ecosystem which requires the withdrawing of banknotes from ATMs and the exchange of coins as instrumental representations of smaller denominations.

As pointed out by BIS in its bulletin, PIN pads at ATMs are made of non-porous materials i.e. steel which results in the users of such pads being exposed to the risk of coming into contact with the corona-virus.

Other than the risk of corona-virus exposure, the lock downs imposed by governments around the world have rendered it implausible for cash-based transactions to be carried out.

It is in this context that digital payment has emerged as a fortuitous benefactor from the trail of spoils left by the Covid-19 pandemic whereby about one in four (27%) of small businesses in the United States (U.S) are already reporting an increase in the receipt of digital payment since the escalation of the pandemic.

When money was introduced about 3,000 years ago as a replacement for the barter system, even the most visionary human could not have been envisaged that there will come a day when the digital revolution would turn money into being mere numbers on a screen.

No doubt financial technology (Fintech) has brought about much convenience by heralding an era where banking transactions can be carried out at the click of a button.

However this modern day convenience comes at a hefty price with digital financial transactions fraud being estimated to have resulted in losses amounting to US$31.3 billion in 2018.

In the new normal post-Covid-19, the use of digital payment is set to break new grounds thereby presenting a potential gold mine for financial fraudsters. As an intrinsic part of the Fintech ecosystem, blockchain wallets are set to come to the rescue.

Blockchain Wallets to the Rescue

Blockchain wallets refer to digital wallets which are are used to store the public and/or private keys of the holder which in turn can be used to track the ownership of, or to receive and spend cryptocurrencies.

The technological supremacy of blockchain wallets lies in their use of cryptographic encryption to warrant fool-proof authentication. In simple terms, blockchain wallets neutralizes the risks of financial fraud through the pairing of private and public cryptographic keys to allow cryptocurrencies to be transferred under the cloak of total anonymity.

This is because it is mathematically impossible to derive the private key which grants ownership to cryptocurrencies from the public key which is used for identification purposes on the blockchain network.

Coupled with the absence of any centralized data storage for financial fraudsters to target, the use of cryptographic keys by blockchain wallets may mean that it is the end of the road for these fraudsters.

Given the immense potential of blockchain wallets, it is unsurprising to note that there are indications that these wallets are starting to become mainstream.

A notable development in this regard is the acceptance by investment banking giant JP Morgan of two leading digital currency exchanges i.e. Coinbase and Gemini Trust as its customers whereby this is an unprecedented first.

Further proof of blockchain wallets going mainstream is the integration of Gemini Trust cryptocurrency exchange services with the blockchain wallet services of technological powerhouse Samsung thereby allowing Samsung Blockchain Wallet users to connect to Gemini’s mobile application to buy, sell and trade cryptocurrencies.

Digital Payment as the New King

If cash is king, then the Covid-19 pandemic has created a rather paradoxical fear of touching the king. Nonetheless, cash is king for a reason and that is to make the world go round.

Regardless of whether we are living in normal times or in times when there is a raging pandemic, there is, and will always be, a never-ending need for goods and services, particularly essential ones, the obtaining of which would not be possible without the making of payment.

In the age of the new normal post-Covid-19, perhaps blockchain wallets may be the technological generals which can dethrone cash and instill digital payment as the new king of our modern times.

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