December 3, 2012
I rarely carry any cash at all. One of the few exceptions is when PCGS goes to the Members Only Show in Las Vegas where many taxis doggedly refuse to take anything other than cash. But for all intents and purposes, I'm already "cashless". It's not just plastic, but I'm now scanning my phone at Starbucks to pay for a coffee. Think about it: It wasn't that long ago that the sentence "I'm scanning my phone to pay for a coffee" would have seemed absolutely baffling, but this is indicative of the breakneck pace of change we're going through.
This brave new world of digital transactions has sparked a wave of innovation, ideas, as well as pitfalls and problems. And what does this all mean for the world of coin collecting?
One idea has come from the Royal Canadian Mint with something called the "MintChip". Which is designed to allow the user secure, anonymous transactions through the means of a microSD card or a USB stick in conjunction with any number of devices and apps. It sounds nice, but the idea is still in its infancy. It's hard to say how vulnerable it would be to hackers. It's hard to say how anonymous it will actually be when it relies on trusted brokers (to add and redeem the MintChip value), trusted software (from any number of developers) and proprietary hardware. It's hard to say if such a thing would even be adopted or accepted by the general public as well. The idea of digitizing our transactions is a given, but I feel it needs to be an organic free market process; not a new way of conducting basic transactions that's foisted upon the public by a government that expects it to use it. But I do applaud the mint for making efforts to stay relevant in an increasingly cashless world, even if the microSD cards they propose to use will probably be made in China.
On the other end of the spectrum, one Peer-to-peer digital currency out there is called Bitcoin. It isn't backed up by a hard currency (unlike the MintChip which is backed by the Canadian dollar), so the value is determined by its users. Thusly the Bitcoin value can fluctuate wildly. Despite this it has been widely adopted on the internet as a means of conducting transactions through an anonymity network called Tor. However, it's because of this anonymity that has made Bitcoin the currency of choice when it comes to purchasing illegal drugs online, making donations to activist hackers, and who knows what else. I'm sure this works well for the black market, but I don't see this being widely adopted by the general public when it comes to getting my Venti Americano in the morning.
Another weakness of Bitcoin that the MintChip idea is designed to avert is something called Double Spending, whereby a Bitcoin(s) are spent and are spent again before the previous transaction or transactions have been confirmed.
Sweden is well on its way to becoming the first completely cashless society. Some stores and even some bank offices there are beginning to not accept cash. Those are for bigger transactions or course, but what about the small things? Well, even bus fares and the church collection plate are now digital in Sweden. This seems to be a more naturally occurring process for the country, even though there are elderly folks and people in rural areas where the change is a bit slower.
Although there are now less bank robberies in Sweden due to the changes, cybercrime is most assuredly going to become an increasing problem. While coins and currency were not impervious to security concerns, counterfeiting operations are a lot less inconspicuous and stealthy than a hacker sitting at a laptop in any location. That's what I feel governments should focus on; not on creating new means of electronic commerce and new potential security holes that come along with it, but creating and enforcing security measures for electronic commerce.
So where does that leave the future of coin collecting? The Royal Swedish Mint has officially closed its door, and what small amount of coinage that is needed is now outsourced. That certainly seems ominous. However, Sweden was never really known for its modern coins to the extent that other more populous countries like Canada have been. With that in mind, and I know this will be a bit controversial, and I know the more conservative US Coin collector will not like hearing it, but I think part of the answer is producing more Non-Circulating Legal Tender. Yes, yes, yes I can hear you saying you don't want the US Mint to become another Royal Canadian Mint. But think about it: This has been a down year for the RCM; it's eliminating the cent, it's more cheaply producing the 1 and 2 dollar coins this year, sales of bullion Maple Leaves have stalled. In short revenues and profits are down in 2012. However, its collector products are up. Way up by 42.7%. It's profitable. It's selling. It's generating interest in coins in a country that's in the process of eliminating them from circulation. That's the important thing.
Whatever the fate of the cash and coins in our pockets may be, I'm confident that there's still a bright future in coin collecting.