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The Almighty Buck Technology News

IEEE Spectrum Digs Into the Future of Money 292

Posted by timothy
from the amazing-kreskin-says-inflation-continues dept.
New submitter ArmageddonLord writes "Small, out-of-pocket cash exchanges are still the stuff of everyday life. In 2010, cash transactions in the United States totaled $1.2 trillion (not including extralegal ones, of course). There will come a day, however, when you'll be able to transfer funds just by holding your cellphone next to someone else's and hitting a few keys — and this is just one of the ways we'll wean ourselves off cash. In 'The Last Days of Cash,' a special report on the future of money, we describe the various ways that technology is transforming how we pay for stuff; how it's boosting security by linking our biometric selves with our accounts; and how it's helping us achieve, at least in theory, an ancient ideal — money that cannot be counterfeited."
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IEEE Spectrum Digs Into the Future of Money

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  • Freedom (Score:5, Insightful)

    by XanC (644172) on Thursday May 31, 2012 @11:38AM (#40167397)

    An untraceable method of paying for things has disadvantages, yes, but also serious advantages in limiting the power of government to see and control everything we do...

    • by StikyPad (445176)

      Government and corporations. But I repeat myself.

  • by XxtraLarGe (551297) on Thursday May 31, 2012 @11:43AM (#40167503) Journal
    A lot of people are starting to pay in cash again simply to get out from under the oppressive thumb of the credit card cartel. It also helps with budgetary discipline, which is why guys like Dave Ramsey [daveramsey.com] are preaching it to the people.
    • by h4rr4r (612664) on Thursday May 31, 2012 @11:54AM (#40167737)

      Does it pay 1% back yet?

      I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.

      Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.

      • by rubycodez (864176)

        until you get that notice in the mail that starting in x months, your card will carry an annual fee of y dollars

        • by h4rr4r (612664)

          Then I cancel it and move to another.
          Credit card companies need some percent of their clients to pay off the loans, to raise the value of the debt they hold and sell. I fill that role.

      • Does it pay 1% back yet?

        I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.

        Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.

        Trust me, the credit card companies aren't giving you that incentive just to be nice. Eventually, most people slip up. They miss a payment and then they're paying the default rate, usually 29.9%, plus late fees, etc., which more than makes up for the 1% they were paying out. Perhaps you're the exception.

        • by h4rr4r (612664)

          I pay it off each week.

          These people are not slipping up, they are spending money they do not have. Even if I maxed out my credit, my savings more than covers it. That is intentional.

          • by tepples (727027)
            That works unless your credit card company allows no more than two ACH payments per month. I seem to remember some Discover cards issued by GE Capital having that restriction.
            • by h4rr4r (612664)

              So cancel it and move to another bank and card.

              The moment I get charged a fee they will not eat, I am switching cards.

        • You're using it wrong, and you're using the wrong one.

          I've been late once or twice in the past 10 years. They have always credited back the interest and fees when I called. They give you that 1% because they're getting 2.5-3% from the merchant (which you're paying though markup, but they're not giving cash discounts, so...).

          I've decided that a lot of card companies much really suck. Chase, otoh, has been exceptionally accommodating for me. Questionable charge? It's gone in 24 hours and they take it up with

          • by zlives (2009072)

            in CA i have noticed a lot of gas stations will actually give you a discount for using cash or debit Vs credit card. I have started to carry cash once more...

      • by geekmux (1040042)

        Does it pay 1% back yet?

        I love taking advantage of credit card companies. Free 28 day loans and 1% back are great. I never buy anything on the card that I could not write a check for anyway, so I don't pay interest. I used to go to a mechanic that offered 2% off if you payed cash, so I did there.

        Many people like me are too used to getting either a discount or free short term loans to go back to using only cash.

        Ah, but are you really getting money back by using credit cards in ANY way? Studies have shown that people spend on average considerably more (15%+) simply by paying with plastic vs. cash. The reason? Cash is actually painful to part with. Try it out on yourself sometime. Pretend all forms of payment are broken for a week and use cash instead. There is a psychological impact there that affects spending, so as much as these "cash back" benefits sound enticing, chances are you're probably still losing i

    • A lot of people are starting to pay in cash again simply to get out from under the oppressive thumb of the credit card cartel.

      But you still need to get under the oppressive thumb of the debit card cartel if you ever want to buy anything online as of the present.

      Dave Ramsey

      There are a few places where I disagree with his advice. For one thing, he advises never to go into debt on a car but instead to buy a beater car. The trouble with a beater is that it is likely to require so much costly repair that going into debt for a certified pre-owned car becomes worth it. For another, if one never goes into debt, then how is one supposed to afford a p

      • by h4rr4r (612664)

        How does going into debt make it worth it over a cheap car?

        What are the numbers here?
        I see good cars with no repair needed right away for $5k. I plan to buy a house in cash eventually, I will rent a tiny place until then. I might just continue to rent the tiny place though, probably cheaper than the taxes on a house anyway.

        • by tepples (727027)

          I see good cars with no repair needed right away for $5k.

          And a lot of people fresh out of school looking for a car because they need it to find a first job would need to go into debt for $5k.

          • by h4rr4r (612664)

            They could not use whatever previous method of transportation they used until they had $5k?

            • The previous method of transportation was likely a school bus and/or parents' car. This doesn't help the child get to work if the parents are also working.
              • by h4rr4r (612664)

                Then sounds like they should do what we did.
                Two people with the closest shifts share a car. It does mean one person will get there early and be picked up late, but still better than walking.

    • by J'raxis (248192)

      Not just the credit card cartels. The more the government wants to spy on people's bank records, electronic transactions, and so on, the more people will move back to physical cash.

  • by a-zarkon! (1030790) on Thursday May 31, 2012 @11:44AM (#40167539)
    Using a service-provider configured, jail-breakable device for financial transactions... Malware is already an issue on smart phones. Also, I guarantee that this "service" is not free. Everyone involved in the transaction is going to charge something. 3% to ATT or Verizon, 3% to the payer's bank, 3% to the recipient's bank, probably another 3% to some service provider/clearing house vendor, plus complete gov't visibility which means that all taxes are guaranteed to be charged. Yes, this may be simplified to the point where it's as easy as pulling $1.00 bill out of your pocket to buy your gum, but that $1.00 item is going to double in price to cover all the incidental charges. Call me a luddite, but I'm perfectly happy to stick with cash.
    • by boristdog (133725)

      You forgot the 30% that goes to Apple for all Iphone transactions.

      And since there will be no-lower-price payment contracts for firms who want to get the Iphone owner's business, all prices will have to increase by 30%.

    • Call me a luddite, but I'm perfectly happy to stick with cash.

      You're not a luddite. I try explaining the need for cash to my geek friends, but they're mystified about why anyone would want to keep something in "analog land". But basically, every system has slippage, whether it's a packet-switched network, or landing airplanes on aircraft carriers. Traffic engineers have found that, for example, if 3% of the vehicles on the road break the law by speeding or aggressive driving, it stops standing waves of vehicles forming near egress points, and actually improves the ent

  • by MickyTheIdiot (1032226) on Thursday May 31, 2012 @11:45AM (#40167549) Homepage Journal

    We often forget about the old lady factor...

    Cash and checks are not going to go away any time soon. We're going to have to endure the rest of our lives with the old lady filling out the check in front of us. It's probably best to talk about half lives. It will take entire lifetimes for their use to stop and they will still be used. Or the government will phase them out and people will bitch.

    • by h4rr4r (612664)

      Can we at least all agree that checks should be banned in the express lane? Coupons too.

  • almost all people with cash businesses do it for the tax benefits. accepting traceable payments mean they just increased their costs

    its happening slowly but only because physical purchases like magazines at news stands are going digital and cash businesses are going out of business for lack of things to sell

    • by geekoid (135745)

      oh noes, I'm so worried for the people operating illegally.

      • by dzfoo (772245)

        Paying cash implies an illegal transaction? That is highly presumptuous, and wrong in the majority of cases.

              -dZ.

  • by Janek Kozicki (722688) on Thursday May 31, 2012 @11:48AM (#40167617) Journal

    So it's another article about bitcoin. Well I just wonder how this will turn out. So far it didn't die.

    And I wonder if namecoin will come useful after IPv6 will be used widely. Heh, will IPv6 be used? We hope so. How would you DNS such a giant IP space? Maybe namecoin will come more handy that usual means...

  • this has been "coming soon" for ages now and is unlikely to succeed.

    1 Not EVERYBODY has a SmartPhone
    2 Carriers treat this kind of thing as a MUST BE OUR VERSION thing
    3 and want to get a cut of every transaction somehow (i would bet by at least making the info into a 8 step 50Kbyte per step process)
    4 you need some way of transfering funds to UnKnown (and UnRecorded) persons (yeah i know anti-terror/anti-moneylaundering regs are a good thing but im talking about $50 range stuff and lower)

    So what you would nee

  • As the ieee.org link suggests, and even helpfully illustrates, I agree your right hand would be optimally convenient for our "Biometric Wallet", to enabl^H^H^H^H^Hsimplify all buying and selling.

    Or maybe your forehead, so you have a second alternative so you know you're free to choose your personal preferences.

    Oh wait.
  • I saw a demo in bangalore. You run an app in your android phone, and create a barcode to give out a small sum, small as in 1 rupee ~= 2 cents. The other guy has the same app that reads the bar code. Money gets transferred from one bank account to another.
  • Barter System (Score:4, Informative)

    by ciderbrew (1860166) on Thursday May 31, 2012 @11:56AM (#40167783)
    You know the Barter System is still a good way to do some business and non taxable :) Example - A friend did his plumbers website for a small bathroom installation.
    • by J'raxis (248192)

      Or the next step up from barter, using precious metals or something else that has intrinsic value, as a medium of exchange. That avoids the classic problem with barter, that you have X and need Y but can't find someone who has Y and needs X, but has most of the advantages: It's still outside their system of surveillance and taxation, and it holds value against inflation unlike cash.

    • I dunno where you get your accounting advice but bartering IS taxable. The thing is you are also more likely than ever to have to pay taxes for such things.

      http://www.irs.gov/businesses/small/article/0,,id=187920,00.html [irs.gov]

  • .... when they can even create a web page that formats properly on Firefox?

    Anyway , people have been predicting this since credit cards came along. Hasn't happened yet - its just a wet dream of various financial organisations so they can get that small fee everytime we use their device to pay and so they can track us. They don't like cash because in normal day to day life its untraceable.

  • by gestalt_n_pepper (991155) on Thursday May 31, 2012 @11:57AM (#40167805)

    How cute! I mean, who *doesn't* want their every financial transaction tracked and analyzed by the government and a few thousand corporations trying to sell you something. And of course, technology is so reliable! I'd trust my every dollar to that bastion of security, the cell phone. I mean, who wouldn't!

    Excuse me, I have to go mop up some of that sarcasm that's been dripping all over the floor from somewhere.

    • by geekoid (135745)

      You does care? what do you care if some analyzes you purchases? It just means better data on what consumers are buys. When talking about ads, the ads that will be presented to you will be more likely to be relevant.

      This has been implemented pretty damn successfully in Japan.

      I also not you don't compare you 'disadvantages' to the pros.
      someone steal your cash, too bad, so sad. Some steals you phone, you make a call and the phone is no longer able to access your account. And it will be likely that if the do ma

  • Cash is like the paper ballot -- it has some advantages that are very difficult to replicate with high tech. The advantages are in fact due to the simplicity and inefficiency of the system. The good thing is that with money, people can individually make the decision about when to switch
  • Smart money will undoubtedly become too smart by half. Exploits, hacking, etc. etc.

    Cash is king.

  • by geekoid (135745)

    "money that cannot be counterfeited."

    lulz. Yeah, no one will figure out a way to copy bits, are attack a verification process.

    Personally I can't wait to not carry cash. OTOH, this will cause retailer to incur an additional cost. And the default of 'you need to pay a fee to make a transaction' annoys me.

    Maybe if you could charge retailers a fee to use the system, and it was controlled by the Federal reserve we would solve that problem.

    • by PPH (736903)

      Personally I can't wait to not carry cash. OTOH, this will cause retailer to incur an additional cost. And the default of 'you need to pay a fee to make a transaction' annoys me.

      Cash costs retailers (and banks) something to process. Having to sort, transport and store bills and coins isn't free. But traditionally, many of these fees are hidden from the customer.

      One of the big motivating factors behind cashless transactions has been to minimize these costs. To the bank. Banks want to get customers used to coughing up a few cents per transaction. Fear the day when this changes from banks recovering their transaction costs to a profit center.

  • Does this mean panhandlers now need cell phones?
  • I do not like the way people are saying physical cash should be extinct, it's a good way to not live beyond your means, as in if you don't have the notes/coins then you can't do/buy X, especially if X is not an essential part of living.

    When all your money is just numbers on a screen you feel some detachent that lessens the distinction that it's actual money being represented by those numbers, especially in the case of debt through credit cards and loans.
  • There will come a day, however, when you'll be able to transfer funds just by holding your cellphone next to someone else's and hitting a few keys

    Don't you mean:
    "There will come a day, however, when passers-by will be able to transfer funds from you to them just by getting kinda near your cellphone and hitting a few keys."

  • "... and how it's helping us achieve, at least in theory, an ancient ideal---money that cannot be counterfeited."

    And money, and an economy, that is absolutely, 100% controlled by the government.

  • Cell phone theft is on the rise. That trend will only increase if the phone becomes a substitute for cash.

    In any case, I don't go along with the idea of having all my eggs in one basket. I don't care to be helpless if I lose my cell phone. Not that using a cell phone for financial transactions is an intrinsically bad idea, just that the idea needs a fair bit of refinement. And I don't think the "substitute for cash" idea is a credible starting point. There's a lot to like about cash. For one thing,
  • Electric Engineers: Developing new ways to rip us off! The fraud possibilities make me drool.
  • Of course the banks want this, especially when they are getting a cut of every single transaction in the form of comissions or service charges - a taxation privilege previously reserved for governments. And of course governments want this because it is much easier to keep track of who is making what and enforce income tax reporting better, not to mention the ease with which funds can be frozen or seized.

    However I think the price both in service charges and loss of privacy are far too high. Unfortunately m

  • Money, hell -- let's rethink debt.

    Debt: The First 5000 Years by David Graeber [wikipedia.org]

    Wikipedia doesn't go into Graeber's theory about the origin of money (coinage). In short, coins got invented as tokens representing the amount of food a soldier needs to survive for a given period of time. The army enslaves neighboring peoples, using coins to keep track of food requirements; conquered peoples are expected to provide food in return for coins. Enslaved by soldiers, people are kept enslaved by debt.

  • Yes, it is disorganized and there is no Cash Central or Head Ham. You cannot determine how much of the cash floating around is in US or in foreign countries, how much people are packing or amount "banked" under Sealy Posturepedic. Although Federal Reserve Notes are sanctioned by the government but they don't "breakdown" like electronic systems. If Wells Fargo, BofA, Paypal, etc. servers go down, everybody goes down. Unlike if someone were to loose a suitcase full of cash, it is not going to impact others (e

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