Based on the provided context, cash abstraction refers to the process where physical cash, considered a very concrete form of currency, is replaced by less tangible, more abstract methods of payment. It is an example of the broader concept of financial abstraction.
Understanding Financial Abstraction
Financial abstraction is the phenomenon where currency evolves to become less concrete and more abstract. This means moving away from physical money towards digital or conceptual representations of value.
As the reference states:
Financial abstraction is the phenomenon where currency becomes less concrete, more abstract.
Cash's Role as a Concrete Baseline
In the context of financial abstraction, physical cash (like banknotes and coins) is highlighted as being very concrete. It is a tangible item representing a specific value.
Examples of this are the shift from cash, which is very concrete...
The Shift Away from Cash
The move from cash to other payment methods is presented as a prime example of financial abstraction. This transition signifies currency becoming less physical and more abstract. Therefore, what can be understood as "cash abstraction" is this specific instance of financial abstraction involving the move away from concrete cash.
Examples of More Abstract Currency Forms
As currency becomes more abstract, it moves through various stages, increasing in its degree of abstractness. Examples of these forms, which are less concrete than cash, include:
- Debit cards: Represent funds held in a bank account electronically.
- Credit cards: Allow spending against a line of credit, a purely abstract concept.
- Electronic transfers: Services like Venmo and PayPal move digital representations of money between accounts.
- Cryptocurrency: A decentralized digital currency relying on cryptography, representing a highly abstract form of value.
The progression from cash through these examples illustrates the increasing abstractness of currency within the phenomenon of financial abstraction.
