Although a lot of people active in the Bitcoin world have been saying this for a while now, it looks like digital currency pose a legitimate threat to replacing national currencies in their current form. That statement was made by Tony Richards, Head of Payments Policy Department in Australia during a speech a few days ago. The world of finance and payment is changing, and digital currency combined with distributed ledger technology are a driving factor.
The Changing Payment Infrastructure In Australia
Cheques have been one of the more common forms of payment in Australia for quite some time now, yet the usage of this medium has become less frequent. While there is no reason to think cheques will become extinct shortly, the numbers are declining year over year, which can be mostly attributed to the surge of electronic payment methods.
This accelerated decline in cheque payments needs to be taken into account properly. At an average decline of 13.5% percent per year between 2010 and 2015, it will not take much longer until this medium of payment is no longer being used. However, there will always be those who stick by cheques regardless of alternative payments, and the final nail in the coffin might take a few years to materialize.
What is equally impressive is how the usage of cheques is not declining as fast in other countries around the world. Regions such as the United States, France, And Canada are still seeing healthy numbers regarding cheque payments on a yearly basis. While this method of payment is still on the expensive side in terms of resource costs for financial institutions and merchants, it is being used far more often than people would give it credit for.
“As payment habits and processes become more digital and cheques continue to decline and become harder and more costly to use, there will be a requirement to transition cheques to more efficient and sustainable payment methods. The APCA Australian Payments Plan initiative will deliver a collaborative approach to ensuring more convenient payment choices are made available to all users of the payment system, prior to the identification of an end date for cheques.”
Cash payments are often touted as the most common form of payment these days, although this statement is not entirely accurate. At the same time, it is hard to compare the usage of cash to electronic payments, as there is very little data available. The most recent study on cash usage dates from late 2013 and indicated how cash payments remain one of the most important options for lower-value transactions.
Despite more recent information not being available to measure the usage of cash payments these days, there is a decline in the number of ATM cash withdrawals in Australia. Furthermore, point of sale transactions involving cash are becoming less popular as well. Contactless and traditional card payments, on the other hand, seem to be on the rise all over the country.
Enter Digital Currency And Distributed Ledger Technology
Tony Richards is not excluding the possibility of seeing traditional currency becoming extinct in its current form and having it replaced by a digital version of the Australian Dollar. Even though there are no official plans to consider this change just yet, the possibility can no longer be ignored. If this were to become a reality, Australia would follow Barbados in digitizing their national currency.
Bitcoin will, most likely, never be able to replace the Australian Dollar in current or digitized form. Due to the popular digital currency’s price volatility and lack of governmental and bank control, it is at the bottom of the list of candidates in Australia. But at the same time, Richards acknowledges Bitcoin should be praised for interest in distributed ledger technology.
“The Bank will be interested to see what proves to be possible and what proves to be problematic, as countries consider going down the path of digital currency issuance. Given the various cybersecurity and cryptography risks involved, my personal expectation is that full-scale issuance of digital currency in any country, as opposed to limited trials, is still some time away. And I think it remains to be seen if there is real demand for a digital equivalent of cash and what it might offer end-users relative to what will be offered by the various forms of real-time payments that are being developed in many countries through projects like the NPP.”
Issuing a digital Australian Dollar could take place on distributed ledgers while still being overseen by the central bank. Additionally, the verification and distribution of currency would be done by authorized entities, creating another example of how a private blockchain would look and feel. However, a digitized Australian Dollar would not entirely replace the current medium of money, but rather run in parallel.
Source: Reserve Bank of Australia