A Flip Of the Coin

Lighter, Faster

Cash is not nearly as obsolete as those all-stars of the antique money world -- the massive stone coins of the island of Yap, in Micronesia, some of which are taller than a person. But the market share of U.S. government-issued physical money, both coins and bills, is dropping -- from 21 percent in 2003 to an estimated 15.7 percent in 2008 according to the Nilson Report, the leading industry newsletter on consumer payment systems. Various electronic forms, including credit and debit cards, are expected to rise from a 42 percent share to 65 percent over the same period.

This matters because we didn't just wake up one day and throw away our cash. Changes in how we think about money have always produced upheavals in how we live.

The ancient world of barter -- trading so many chickens for a sheep -- was revolutionized in the Mesopotamia of the third millennium B.C., by the rise of standardized money. An entire warehouse of olive oil, wine or wheat could be transformed in value to portable ingots of silver and gold called minas, shekels or talents, reports the cultural anthropologist Jack Weatherford in "The History of Money." They also worked better than units of butter, an ancient form of money in Tibet.

We still hear the phrase "rich as Croesus" because it was his Lydian dynasty that recognized the need for small ingots worth, perhaps, a couple of days of labor. These lumps, about the thickness of the end of a thumb, were stamped with a lion's head to establish authenticity. Soon, almost anything could be valued in terms of coin, whether it be a rack of lamb, a poem, sexual services, a day's labor chopping wood, or taxes to the sovereign. Such markets yielded extremely complex networks of human enterprise, culminating in Roman times in trade throughout the known world.

In bulk, nonetheless, coins were cumbersome, and easily stolen or counterfeited. The Chinese pioneered paper money, but it was Italian bank money -- bills of exchange written on paper -- that in the 1300s dramatically improving the speed and safety of the flow of cash, according to Weatherford. Instead of hiring an armed host to move the weighty money over weeks or months, you could send a single messenger to transfer the piece of paper in days. The resultant explosion in commerce fueled the Renaissance.

In this timeline of barter to coins, and coins to paper, one can see the trajectory of cash's demise, however. If cost of storage, ease of transmission and trustworthiness of value matters, it's hard to beat electronic money.

In 1871, Western Union introduced the money transfer service that would ultimately become its primary business. The credit card revolution took off in 1949when, as Fortune magazine recounts the tale, Alfred Bloomingdale, the department store legend,and Frank X. McNamara, a financier, were having an appropriately plutocratic lunch at Major's Cabin Grill in New York. They found themselves short of cash. Out of this embarrassment was born Diners Club.

Computerized money produces the world we live in today. It may be hard to remember, but at the beginning of the 1990s, only 5 percent of grocery stores accepted credit cards. Now, you sign for your pomegranates. Similarly, travelers to distant lands no longer stock up on exotic cash. They are confident their money cards will meet their every need the instant they land, wherever that might be.

The next frontier is to delete even the plastic from our "plastic," says Tim Attinger, who describes himself as being in charge of ridding the United States of cash and checks. He is the senior vice president of product innovation and development for Visa USA. "I dream of a day when kids on the corner selling lemonade will take Visa payments," he says. "Not next year, but it can happen."

In Asia, it is already common to pay for things by simply waving your chip-equipped cellphone at a point-of-sale terminal, moving money with a beep as quickly as commuters sail through the Dulles Toll Road with an EZ Pass. Devices are being deployed in the United States that allow you to pay simply by pressing your fingertip to a scanner.

At that point, our bodies become our money.

Our money, our selves.