Following is a copy of an article in the Sunday, June 9, 2013 issue of the Star Tribune newspaper titled Bitcoin has more staying power than other digital currencies. Also attached is a pdf of an article from the April 1- April 7, 2013 issue of Business Week titled The Bitcoin of the Realm. Both articles are about Bitcoin which is a form of virtual cash. I have predicted for the last several years that the Internet would replace credit cards and that is happening in a big way today. I have also predicted that the Internet would ultimately replace cash. And Bitcoin is very likely going to be one of the major players among virtual money enterprises.
The advantages that are gained by transferring credit cards to smart device apps is the elimination of credit card processing fees (i.e. the middleman) and link you directly to a specific bank (the issuer of the credit cards.) This gives both merchants and credit card users a better and less expensive deal. And, in app form, it is more secure and much safer from harmful credit card theft.
You may think it is a stretch to leap from a very complex worldwide money system to a virtual cash system that is backed by nothing other than the willingness of others to accept it as payment for goods and services. You also have to understand that the most fundamental and basic commerce throughout the world is still done through barter. International trade for centuries was based on barter and began to change with the invention of coins. Originally coins were valued based on their content of precious materials, particularly silver and gold. Ultimately that led to the evolution of storage facilities to hold your surplus coinage which evolved into banking. And then banks began to pay depositors interest so that the bank could use what are called “footings” or deposits to produce more money to lend and to acquire hard assets (gold, silver, etc.) which would create additional value for added loan capability. The evolution of banks led to the creation of banks for banks. The creation of a Federal Bank for banks in the U.S. became a reality after the Revolutionary War thanks to the wisdom and insistence of Alexander Hamilton. His idea was genius and really allowed the newly established U.S. Government to borrow from major banks in Europe and Great Britain and to print money to pay its debts. Thus was born “the full faith and credit” doctrine that propelled the U.S. into becoming the biggest economy in the entire world in a little more than 100 years from its founding.