Everyone is buzzing about cash-free revolutions. Whether it’s cryptocurrency, bartering, or the sharing economy of Burning Man, the way we do business with each other is beginning to shift away from cash-only transactions.
In fact, there are entire zones of the country where alternatives like these have become commonplace. Portland, for example, has an entire underground ecosystem of local bartering, that relies on consumers and business owners identifying alternative forms of payment like volunteer hours, services, or additional goods. Similarly, Burning Man is known to have a unique gift based economy where people simply gift each other with what they need.
The emergence of alternative currencies, like Bitcoin, has shown that people need different methods to transact with one another outside of the traditional financial system. The trouble with digital currencies, however, is that they still require an initial cash investment. They also remain difficult to use for most businesses.
One of the reasons these alternatives are gaining popularity is because of the numerous constraints and pressures that are placed on businesses and consumers. To help people understand the way that commerce is evolving people are excited about a cash-free economy one first needs to understand the limitations of the current system.
The Problem With Cash
One of the big problems with cash is that it's a limited resource, and the only way to earn new cash is by gaining new customers. Quite a few businesses need lines of credit or other forms of capital to help grow their business but, lack the means to acquire it.
Many businesses, however, have leftover capacity, goods, or time that could be turned into capital if they had a way to monetize it. Bob Bagga, CEO and founder of BizX, a cash-free bartering network for business, explains, “In most cases, small to medium size businesses operate at around 80% their potential capacity. That means that 20% of their services or assets go to waste. Whether it’s an empty table in a restaurant, unsold ad-space, or unbooked hours of a general contractor, lawyer, or other service providers, most business owners would jump at the chance to close that 20% gap.” In many cases, this is because businesses lack the cash resources to reach new customers, or they don’t have the cash needed to scale their business.
The Evolution of Bartering
Bartering is perhaps the oldest form of commerce, but in modern day businesses, it has significantly different applications. For example, many community farms and co-ops trade volunteer labor for the exchange of goods. Instead of paying volunteers with cash, these businesses and cooperatives reward people with in-store lines of credit. The trouble with this method is it's difficult to scale and doesn't work for most companies.
That's why a new form of cash-free bartering has emerged that is more effective for both businesses and their customers. Bagga explains, “By giving users a cashless platform, on which they can transact with other members, we’ve been able to solve that problem.” Quite a few companies realize that by leveraging goods and services that are underutilized, they can new business with others who have the same problem.
How Cash-Free Solutions Create New Commerce
The fact of the matter is, as great as the cash and credit based system of fiat currency is, it has shortcomings that need to be tackled by cash-free solutions. These, being primarily, the need to create new sources of capital and reducing waste from unused goods or services. Bagga details, “We allows businesses to convert unutilized potential into new customers, and increased cash flow, all for nothing more than their incremental cost of goods sold.”
By creating new opportunities for businesses to grow, these cash-free innovators are helping drive local growth, and companies that take advantage of these solutions are able to scale to previously unattainable levels. As more cashless solutions emerge, we can expect a wave of growth in B2B communities.
The Future of Cash-Free Economics
So what exactly does a cash-free future look like? As solutions like barter based currencies, digital currencies, and sharing communities grow, there will be a decrease in the amount of unrealized potential and wasted goods. Essentially a cash-free economy has the potential to be fully optimized with very little value left on the table.
It will also help to flatten the hierarchical financial structures that prevent businesses from growing, and entrepreneurs from starting new ventures. As Bagga put it, “We want to help these businesses grow, and fuel a new wave of economic prosperity.”
By reinventing our economic system to be centered on value delivered rather than cash or credit exchanged we can achieve new levels of prosperity, enabling people to contribute more, while receiving exactly what they need.