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When digital is down

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I watch the world through the lens of the network, and have noticed that China is leading the world with digital currencies. The digital yuan is ready for release in time for the winter Olympics and a CBDC is likely to be launched in China before anywhere else. So why are Chinese consumers swapping potatoes as currency instead of apps?

Xian residents are exchanging cigarettes for cabbages, dishwashing liquid for apples and sanitary pads for vegetables.

It’s when the system breaks down. I often wonder about this question: what do we do if the system breaks down? What do we do if there’s no WiFi? What do we do if the electricity doesn’t work?

The issue here is physical versus digital. What do we do if the digital is not accessible?

I’ve had this issue myself. Doing a book launch a few years ago, I was taking payments via a handheld device. But the location had no WiFi and the device didn’t work, so no book sales. Customers frustrated, me frustrated and no solution.

We talk about online to offline, but what if there’s no online? Is there a work around?

Of course, yes, it’s called cash.

It reminds me of my trip to China a few years ago. I got to hotel and there was no restaurant, but there was a supermarket next door. I filled my basket and got to the counter and presented my MasterCard. No, the store person indicated. It’s not accepted. They don’t take Chip & PIN. They only take QR & app. Problem then is that I cannot use the app as I don’t have a Chinese ID. So, they tell me they take cash.

I go back to the hotel and ask for the nearest ATM. It’s a short walk and they show me where to go. I go there and put my card in, but it’s rejected. Why? Because most Chinese ATMs are for domestic Chinese bank cards and not international cards.

That day I starved.

We believe we are so advanced and digital, and we take the network and power of and to the network for granted, but what if it stopped and disappeared? What would you do? Do you have a disaster recovery plan? I don’t mean for your company, I mean for you? Do you keep cash in the mattress, under the bed? Do you hold backup services? If you dealt with a digital only bank and it wasn’t there, do you have a bank with a branch you can use?

It's interesting to watch that, as we advance unsteadily towards being purely electronic, we don’t think about the consequences of power outages, loss of access or digital down.

I’m not advocating that you should stop using these services. I’m just saying that there will always be moments when digital is down and to have a backup plan. Maybe buy lots of potatoes or, more intelligently, always make sure you have some cash. I’ve got cash that would support me for a month in a drawer of my house. How much cash do you have? How many potatoes?

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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