In the early days of cryptocurrency, there was some discussion of replacing money. Today, there's discussion of Central Bank Digital Currencies, modelled on crypto, replacing cash and banknotes. But all of these debates might be missing the larger story: the elimination of money.

As technology improves, the cost of switching between money and assets gets ever closer to zero. The interchange between CAD and USD is now close to zero (Wise). Cryptocurrency to cash can be under 0.25% (most dealers). Cash to stocks can be zero (Robinhood). Some assets have high transactional costs, like real estate, but the securitized version, REITs, are stocks that transact at near zero. All around us, the transactional costs are rapidly falling.

As the cost to switch between money and assets approaches zero, money itself has less and less meaning. When money is just a transition between asset types, it has much less meaning than when it's something that's held long term in a bank account or short-term in your wallet. Gold -> cash -> stocks or securitized Midwestern USA housing as a REIT -> cash -> euros -> EU stocks becomes a digital chain that reduces the meaning of money.

I've written a bit about this concept before, in the context of multi-currency, multi-asset wallets in 2021. Since that time, fees have decreased and inflation has increased, providing further impetus to eliminate money as it's been conventionally understood for generations. But it's also a return to the system that prevailed before the late 1800s, when all money was exchangeable into gold or silver. So in a way, the elimination of money is a return to how money was, but with new possibilities for storage other than gold and silver.

High inflation accelerates the transition away from money, because the people who hold money suffer essentially a user fee that's far, far higher than any other kind of asset. Gold adjusts in value automatically to the local value of any particular currency. An American stock that trades in Canada does so at almost the exact exchange rate between CAD and USD. So there's a huge incentive to remove cash and add assets. Software can do this automatically, switching cash to inflation-proof assets that have no ownership fee.

In a digital world of instant asset exchange, at near zero fee levels, money may lose the meaning it's held for so long. Perhaps money will serve only its pricing function and its taxing function, being automatically exchanged into other assets then back to cash. Some services already exist for doing this with gold, cryptocurrency, and other highly fungible assets.

While policy experts fret about the impact of a cashless society, they should probably instead be focusing on a money-less society. The impact of money not being a thing that is held long-term, but only a short-term transient between assets, is likely to be much more significant.

Inflation and technology will both accelerate the trend away from money. Essentially the practices of high-inflation developing countries, where employees rush to cash their paychques to buy physical goods like canned food, will be automatically implemented to the advantage of users. With inflation rates hovering at 3%-10%/yr in developed countries, there's already a strong incentive to do this. Technology and competition naturally drive down transaction costs, as has already occurred for foreign exchange and stocks. What's next? Will algorithms be automatically handling this in order to save users money by avoiding the fee of money?

The elimination of money may be closer at hand than people realize.