WILL SMART BANKNOTES BE THE CASH OF THE FUTURE?

Imagine that all banknotes have a chip in them. That's inevitable, anyway: Banks will soon want to make it possible to determine whether a note is valid or not withabsolute certainty. Imagine further that the banknote has some kind of short radio interface through which it can communicate with mobile devices. That's not far-fetched, either:Many items in the supermarket already do, after all, in the form of RFID tags. Finally, imagine that the banknote's appearance changes when the chip is turned off: Its inky colorturns to grayscale. Soon these three technologies will all be printable directly on thin, flat surfaces.

With that setup, you'll be able to transfer value from your banknote directly to your bank account. You want to deposit a $20 banknote into your account? No need to go to abank branch or ATM: Just wave the banknote in front of your mobile phone and have the $20 transferred from the banknote to your bank account. Your bank balance increases by $20,the state of the banknote's chip is changed to "no value," and the note itself is visibly grayed out.

But that doesn't mean you should throw the value-depleted banknote away: You might want to use it to withdraw money from your account later. Wave a gray banknote in front ofyour mobile phone, and transfer $20 back into it from your digital bank account. The state of the note's chip changes to "valid," and it recovers its full color. Now it canfunction as a normal banknote, and everyone will readily see it's a valid because of its color.

With such a system of smart banknotes, everyone could take the matter of cashing in and out into their own hands. Your phone truly becomes a personal ATM.

This proposal brokers a peace agreement between digital and hard cash; it lets some people keep their money habits if they can't or don't want to change, and the rest of us whoprefer our money in the cloud can operate totally digitally. Moreover, the specialized logistics, cost, and security risk of cash transport and storage disappears.

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Smart banknotes will be the cash of the future(https://qz.com/1381266/smart-banknotes-will-be-the-cash-of-the-future/)