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What Is the Value of Virtual Currency?

I went to my local gas station and did something I never do – I paid cash. It made me think of two things:  one, how many dollar bills it took to pay for a tank of gas, and two, how rarely I carry cash these days. It’s easy and convenient to use “virtual currency” but will this technological trend change the perceived value of money?


My generation grew up in an era where people still paid for things with cash, but that won’t be true for my children’s generation.  Let’s look at a real world example of how virtual currency can be a mainstream part of our day. Jenny has each paycheck automatically deposited in her bank account so she never sees a paper check or has to go to the bank. While at work she signs into her Amazon account and buys a Mother's Day gift easily by just selecting the credit card they have on file for her. She orders her groceries online through Peapod and picks them up at the end of the work day. Even her credit card statement, which is how she is paying for everything, is automatically paid by her bank account because she set up auto pay. Jenny has never had to pay cash nor has she had to bother with figuring out the correct change for a transaction. Everything just ‘magically’ gets to where it’s supposed to go.

When grownups say to their children that they can’t afford something, it’s no wonder the child says something to the effect, “Can’t you just use your credit card?”  Teaching the value of money to a child in this digital age can be quite challenging. Our children are growing up in a world of virtual transactions, and this is before virtual payment systems like Bitcoin, ApplePay and the new Facebook Messenger App payment system have even gained widespread acceptance. Without seeing a tangible exchange of currency for goods, will this generation "feel" the value of an exchange?

I recently read an article where a parent brought home their monthly salary all in one-dollar bills to show their children the value of money. They printed their monthly bills and laid them in different places on the table. Piles of money were then applocated to each of those bills. Besides the mortgage payment and utility bills, they also allocated dollar bills for groceries, gas and other incidentals like a treat at Rita’s Water Ice. The children quickly discovered that they needed to sacrifice some of the incidentals in order to pay for grocery bills and gas, so the treat at Rita’s was out. 

The experience of tangibly exchanging currency for items each month can have a profound effect in helping children and even adults understand the value of money.  I'm not saying virtual currency is a bad thing, but it definitely provides a different perspective of value that will certainly affect the next generation.

Marc Fogarty, Audit Partner and a member of EisnerAmper's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

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