The world as a whole is slowly moving towards being completely cashless. However, there are still those small transactions that require a little paper currency. Where other countries might dream about a cash-free society, Sweden might be the first to make it a reality.
Sweden is already thought of by many as the most cashless country in the world. According to Sweden’s central bank, Riksbank, a whopping 85 percent of the country has access to online banking. More Swedes have access to making a payment via a card than with cash.
Year after year, the circulation of coins and notes in Sweden drops as its people make fewer withdrawals and more digital payments. Only two percent of the total value of transactions performed in Sweden are made with cash, and that number is expected to continue to decline. Some predict it to be as low as half a percent by 2020.
Eventually, Sweden could reach a situation in which its fiat currency is no longer an effective method to perform transactions. If this turns out to be the case, it would be in a situation in which no country has ever been in before.
How Did We Get Here?
It’s no secret that Sweden is quickly moving to become the world’s first cashless country, but how did they get to this point? Of course, technology played a large part, but there are other contributing factors as well.
Perhaps the single largest contributing factor is the explosive growth of a mobile application called Swish. This app gives Swedes the ability to receive or make payments via their mobile device. Users connect their bank account to their mobile number and have their money right at their fingertips.
Swish launched in 2012 and has been adding users at an exponential rate. The app now boasts over 6 million users, which is more than 60% of the population of Sweden. In December of 2017, there were 24 million private payments performed through the Swish app. It’s fair to say the app is a favorite among Swedes.
The app is particularly handy when needing to split a bill. For instance, when friends are eating at a restaurant, everyone can send their share to one person, who then pays for the meal. It only takes a few seconds and doesn’t require the use of cash or the headache of asking the waitstaff to split it up for you.
Swish is easy to use and make sending and receiving money simple. It’s so ubiquitous in Sweden, that it has become a verb. Much like someone will say “You should Google that,” Swedes simply say, “Just Swish it to me.”
Lack of Retailer Support
Another reason for the rise in cashless transactions is that retailers simply aren’t supporting it anymore. While technically they are required by Swedish law to accept the Krona, there are a few loopholes in legislation that provide exemptions. With technology moving to where it has, it’s possible to live in a major city like Stockholm and never need to use cash.
The majority of restaurants, shops, and banks in Sweden don’t mess with cash since their consumers don’t use it. Many retailers throughout the country have gone so far as to put up signs that let customers know they don’t accept cash payments.
Additionally, 97 percent of Swedes have access to a card, which makes it the most widely used method of payment. Combined with the fact that less than 20 percent of payments are made in cash, it’s easy to see why more than half the population of Sweden believe it makes sense to convert to a completely cashless society.
A unique factor in Sweden was when multiple organizations began to push for a cash-free society. Bus drivers, cab drivers, and bank employees, along with many other unions, were getting robbed for their cash. These organizations pushed for a cash-free society in an effort to protect their employees.
The resulting legislation created a dramatic drop in the use of cash. No longer did a person need to carry cash to pay for bus fare or a cab ride and this lead to a rise in electronic transactions. What was the result? Criminals had to look at other ways to make ill-gotten gains.
Let’s face it, using a card or mobile app is just more convenient than using cash. If someone pays in cash, a merchant has to process, store and deposit the cash into their bank account. Going cashless is also easier for average Joe, as you don’t have to deal with the nuisance of change. This means you don’t have to figure out what to do with that bunch of coins rattling around in your pocket.
With a cashless society, residents also have the benefit of not worrying about the logistics of paying their bills. Most people have a busy schedule and being able to use mobile payments is a massive timesaver. Users can easily pay bills, book transportation, and perform a variety of other functions right from their mobile wallet.
Transition to Cryptocurrency
In 2009, when Bitcoin launched, the intent was to offer an alternative to government-backed fiat currencies. The irony now is that governments plan to use the technology to release their own national cryptocurrencies.
This makes sense in many ways. Blockchain does decentralize control but the creator can establish rules for the issue of the digital currency. It’s also possible to have a blockchain that has a governing authority and centralized rules.
Establishing this type of blockchain would still provide easy transactions and security. At the same time, it would allow the issuing government to keep control over its monetary policies. More and more countries are beginning to view digital currencies as an opportunity. With many viewing them as potential replacements for national currencies, instead of competition.
There are countries, like Sweden, that are ready to make the transition to a national cryptocurrency. Here are some of the reasons a country like Sweden is ready to make the move, as well as some of the reasons it makes sense to do so.
If a country is considering a national cryptocurrency, then it first must go cashless. Sweden is as close as any country at this time. This is due largely in part to the percentage of residents that use Swish. It also doesn’t hurt that a large percentage of the population banks online.
Of course, cash is used for a small percentage of transactions, but those numbers are dwindling year by year. Having a cashless society is a large step toward implementing a national digital currency. If any developed country is on pace to accomplish this feat, Sweden is the one on the right track.
Online Transactions Simplified
One of the key benefits of developing a national cryptocurrency is the required infrastructure. Electronic banking systems are difficult to establish, maintain, and secure. This is especially true for corrupt countries. The answer? Using blockchain, which offers an open source alternative to the existing financial infrastructure.
Blockchain makes payments, transfers, and transaction tracking much simpler and transparent. Fortunately for Sweden, this doesn’t require much of a step. The country is already used to making transactions either online or via their mobile device. Those already using online methods of payment may not even recognize a transition to the blockchain technology behind a national cryptocurrency.
National Debt Reduction
There are plenty of reasons to create a cryptocurrency which is tradable on the open market. However, if a country like Sweden can develop a national cryptocurrency which is listed on a major exchange, then there’s a good chance the coin’s value will grow.
If the currency sees enough growth, it could help to reduce the national debt of the issuing country. This doesn’t only work from a national standpoint, either. Residents who are in debt could see the value of their coins go up and use it to pay off their own balances.
The ability to easily exchange currencies is a major reason it makes sense for a country to have a national cryptocurrency. Consider the implications when compared with a country that does mostly cash transactions. Exchanging fiat currency is a headache. Usually, money is lost during the exchange thanks to transaction fees.
If currency exchange is difficult for individual users, imagine the difficulties for international companies. A large company may be less likely to do business in a country that performs high levels of cash transactions. This is because handling cash costs time and money to process. However, if the country had a national cryptocurrency, then transactions between businesses and clients would be standardized, simple, and completed entirely online.
Using a technology that provides easy, fee-free transactions will appeal to almost anyone. It’s easy to see why countries are eyeing up blockchain as the future of currency. A national cryptocurrency can also help reduce debt and simplify transactions.
Sweden’s National Cryptocurrency
Many countries have yet to decide how to approach digital currencies. Some, however, have already established a national policy on how to move ahead. One of those countries, of course, is Sweden. The country’s national bank has recently suggested that it plans on creating a national digital currency referred to as E-Krona.
But before we get too far into discussing Sweden’s national crypto, let’s talk about another cryptocurrency, Kryptonex. The issuers of Kryptonex put out an announcment that Sweden was indeed on its way to launching a national cryptocurrency. However, instead of using the E-krona, the nation was going to use Kryptonex. It was a lie.
The purpose of Kryptonex is to convince you to deposit your money with an unlicensed broker. They are targeting people to make deposits and then taking their money. People are falling for this scheme because they believe Kryptonex is the official cryptocurrency of Sweden. But it’s not.
If you take a look at the home page of the Swedish national bank, you’ll find an interim report for the real E-krona. The story involving Kryptonex seems to be completely fake news.
Now back to the E-krona.
As discussed in the previous section, Sweden is ready for the transition to the E-krona. Primarily because the country rarely uses cash. Compared to other developed countries, Sweden is the most cashless. You know it’s true when retailers discourage cash transactions.
Even though Riksbank, Sweden’s national bank, is pushing for a national cryptocurrency, the implementation may not happen all that soon. Some see it happening within a few years, while others think it will take at least another decade.
No matter when it occurs, it’s clear that Sweden is at the forefront of a monetary revolution. It was the same when the first banknote was offered in Sweden some 350 years ago. It’s the case now as Sweden can boast a nearly cashless economy. It lends itself well to having the first national cryptocurrency.
As interest in the use of cash continues to diminish in Sweden, the chances that the E-krona will succeed grows. With the national bank involved, it’s easy to imagine a national currency and payment solution being easily developed and implemented.
However, and whenever, Riksbank decides to start using the E-krona, it will need to be multi-faceted. Its accessibility, acceptance, and utility are all important components of the proposed national cryptocurrency. People need to be able to use it for both large and small transactions.
Of course, technical and economic shortcomings prevent the coin from being released too soon. Cryptocurrencies as a whole have experienced their share of difficulties. This is apparent in the scalability problems seen with both Ethereum and Bitcoin. Additionally, Swedes will want to know that their currency is secure. After all, what good is a national cryptocurrency if it can be hacked and stolen?
Despite these challenges, Riksbank is pushing forward with the E-krona as a national digital currency. Currently, the national bank suggests that the E-krona would be an alternative to cash payments and would not replace cash overnight.
Not If, but When
Each year, more and more countries explore the possibilities of cryptocurrency as a national digital currency. They want to determine the potential of blockchain technology, and how it will impact the future of trade and money. It is clear that Sweden is leading the charge when it comes to financial innovation.
Without a doubt, Sweden is in the pole position to become the first cashless society. Cash is a dwindling form of payment in the country. With advances in technology, Sweden has made paying with a mobile device or card simple and easy. It’s not hard to see that Sweden could quickly and easily implement a national cryptocurrency. The transition would be simple due to the vast majority of citizens being already familiar and comfortable with digital transactions.
We think it’s likely that Sweden will be the first developed country to adopt a national cryptocurrency. Really the question is not if it will happen, but when?