Perhaps I’m missing something, but aren’t currencies mostly digital anyway?
I don’t actually know for sure, but surely the percentage of fiat money that exists as physical cash is pretty small? Similar for the percentage of transactions that happens physically.
But then how is it different from regular currencies?
Take the US dollar. It's mostly numbers in databases. Physical cash (dollar bills and coins) is a tiny fraction of the total amount of money in circulation. By now all major currencies are "digital", and most likely all non-major currencies too.
No, the overwhelming majority of money is purely digital. For example in 2009 the Bank of England issued £200 billion of quantitative easing, not a single penny of which was physical.
M0 is the closest economic measure of what you and I consider physical money though it does include some non-physical assets that can be quickly converted to cash. In the USA today, M0 is about 15% of the total money system.
Agreed. Most money is digital money held by banks and businesses. Even with paper dollars, something like 95% of the paper money supply is in $100 bills, which the typical American only rarely uses.
Most Americans are not representative of the most common uses of the USD when you weight things by payment volume.
Even without the physical infrastructure it might be cheaper to use credit cards. How much cash is lost in loose change after small transactions every year? I'd bet more than 2%
If the US government actually wanted to (mostly) eliminate cash, they could just stop printing currency, and wait for what's in circulation to wear out. That would take about 23 years [0]. As it is, though, only about 8% of all USD exists in physical form [1], anyway, making the USD largely a digital currency already.
good point. I was doing a simple "how many 'dollars' are in 'circulation' / population". of course, most money isn't money, it is, like you said, digitized debt.
most people globally do hold most of their savings in cash, many people are unbanked and physical currency is the only way they have to preserve wealth.
There are dollars that only exist as digital entries in the Fed's books and don't correspond to any physical printed bills. There is no fundamental "physical" backing for USD anymore.
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