How The Cloud Will End Money
Guest Post By Reanna Gutierrez
Future generations are going to have a very different understanding of money than we do. The move to plastic has already hinted at the possibility, but, thanks to the cloud, hard cash may very soon go the way of the dinosaur, which is to say, it will evolve and hang out in the sky.
The cloud is a colloquial term for a large scale computer network like the Internet, which facilitates data storage and communication in real time. It will revolutionize money because we are approaching a point where it, as a universally accessible data tool, can keep track of money better than hard cash can, and the world has been moving in this direction.
Most of the dollars in the US economy are already digital to begin with, and are backed by nothing physical at all. Not only are bank notes no longer backed with gold or anything else, digital money is not backed by bank notes. According to the Federal Reserve, there are approximately 1.2 trillion dollars in cash currently in circulation. To put that into perspective, the total US GDP last year was over 15 trillion dollars.
Now, a clever individual will note that GDP can be much higher than the amount of money in the economy since money can change hands many times in a year, and symbolize a lot of value that spends most of its time as hard assets, rather than in liquid monetary form. There are, however, almost seven trillion dollars currently being held in savings accounts across the US, six trillion of which will not be available if Americans all decided to empty their accounts.
This would be worrisome if it was 1928, but the year is 2013 and this does not present a problem at all, because you don't need a physical bank note to do business anymore. Digital payment has been a thing for decades now. Banks are, in fact, a primitive form of cloud storage. The bank itself is an infrastructure as a service (IaaS) provider that handles your financial data, basically moving around purely digital money from one account to another.
This digitization of money is helping to simplify things for regular people and lower the barrier to entry in entrepreneurship. Digital money will become inseparable from transactions. Your bank will be keeping track of every single transaction - every purchase and sale you make in your business - taking a huge part of the day to day paperwork of keeping track of sales and expenses completely off your hands.
While conventional IaaS providers are still more focused on IT hosting for the small business, cloud storage is making major inroads into the private sector. The only thing holding the technology back from ending hard cash in the past was the inflexibility of hard wired Internet access, the cost of the technology, and the inconvenience of low tech information technology. All of these hurdles are within our means to overcome:
- Internet Access is available wirelessly by cell phone in the developed world and will soon span the entire globe thanks to profit driven alternatives.
- Cost has been reduced thanks to advancements in manufacturing techniques and outsourcing. Now, 6 billion people now have access to a cell phone. Very soon, the remaining 1 billion will also.
- Convenience is no longer an issue. Digital payment can already be accepted anywhere using smartphones or tablet devices. The cash register exists only because cash still exists.
In a world where you can't assume that every customer and every seller has Internet access, cash will remain the versatile option. That world is ending, however. When we make the Internet accessible everywhere in the world and get an access device into the hands of of every living human being, cash will become a relic, whether we decide to do it consciously or not.
This is part one of a two-part guest post on the cloud and its affect on business. Don't miss part two (which will be posted tomorrow, but you can get a sneak peak by clicking the link): Digital Commerce and the Future of Small Business
Photo courtesy of Flickr
Reanna Gutierrez is the Product Marketing Manager for OneNeck, which offers hosted application management to mid-level businesses. Reanna enjoys learning and writing about the way that advances in technology are changing the way we do business. Her views are her own.