With Square’s Card Case announcement and today’s Google Wallet event, consider this moment to be the point when wallets will start disappearing. Practically speaking, cash itself is the thing that will go, when people will no longer rely on physical manifestations of fiat money and instead have it conveyed and managed in a single, summative, number.
Imagine: debt, investments, and cash will all be online! We’re now in a world where we can measure our “spending capacity” so easily. But beware of the trouble ahead: identity theft, personal finances, and out-of-control spending are just a few of the risks. That’s what will happen when we start reducing the “transactional friction” that’s currently embedded in our way of life.
The right solution to handle the obsolecense of cash is to give consumers a physical alternative. And I don’t mean printing more money with a different ink; rather, a standalone device that can represent your money aside from a given institution or being networked. It should be a physical object, tied uniquely to some asset. It can be a vault in its own right, embedded with value. I’d envision something like the RSA hardware tokens, used to implement two-factor authentication, to ensure that your money stays with you and you alone. And for goodness’ sake, make sure the battery life is robust! Imagine if you’re just headed to your local coffee shop, and your “wallet” runs out of power. If that local coffee shop doesn’t have an AC adapter for your device, you’re out of luck!
The point is that cash has a lot of advantages that we take for granted: standard value denominations, physical security, intermediary-less (for the most part), and universal transference. If the world moves towards a cashless society, we have to ensure interoperability, security, and usefulness of our electronic currency.
Conclusion: If cash disappears, something just as easy and tangible needs to replace it. And for anyone who asks: No, it can’t have a “low battery” warning!