Friday July 31, 2020 |Notes

Digital commerce trend accelerates 'death of cash'

Many of the big tech firms reported earnings over the past few days, and the results have been incredible, especially given the general downturn in the economy at large. The digital commerce trend is accelerating quickly. There was a steady increase for two decades, then the pandemic spurred enormous growth. Now with more users and usage, the products and services will continue to improve, and the effects become self-reinforcing.

In tech, where network effects and economies of scale support faster growth with more usage, products generally get better with increased usage. A couple of examples:

  • PayPal/Venmo are more convenient when it's more widely used and accepted. Users beccome less likely to transfer out to another account when using it regularly.
  • With increased revenue, Shopify can spend more to develop better backends, build fulfillment networks, form integration partnerships, etc for the entire network of businesses. This in tern helps the businesses using the platform to benefit further

In Paypal's earnings report, they cited the coming "death of cash", partly in response to people not wanting to handle cash. It may be closer than many realize as the digital commerce trend accelerates. Somewhat surprisingly to me, cash and coins are barely taught in school compared to years ago, as I recently learned from my wife, a longtime elementary teacher.

Digital commerce is coming to dominate all of commerce. At the digital commerce trend accelerates, the 'death of cash', a term recently cited by PayPal, draws nearer. Dollars turn into digital currency easily and once digital, it's more difficult and unnecessary to go back in a less cash-based society.

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