Everything is being taken over by 'Enshittification'.

The rapid shift towards digital payments, driven by the coronavirus pandemic, its future implications, and the impact on traditional currencies.

The world stands amid a substantial change in how we transact; a rapid move from physical cash to digital payments. This phenomenon is partly driven by necessity as the coronavirus pandemic unfolds, bringing with it a robust effect on global economies.

As governments and experts grapple with curbing infections, hand-to-hand exchange of physical cash, a potential virus transmitter, significantly reduced. It accelerated the already- growing interest in digital transactions. Across the globe, businesses and consumers, traditional and digital, have had to adapt to no-contact payments.

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The central and commercial banking systems have taken note of the shift towards digital transactions. Some, in response to prevailing circumstances, have even dropped money-printing altogether and have fully embraced the digital trend. Suddenly, e-payment, once an option, has now become a necessity.

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Digital payment giants, including PayPal, have significantly benefitted from this trend. Individuals and businesses alike now frequently use digital wallets. However, the swift migration to digital platforms came with its fair share of challenges to these major players.

As digital transactions increase, questions concerning its sustainability, safety and reliability arise. Specifically, the issue lies in the scarcity of physical currencies and the dependent trust in traditional banking systems. The economic implications of a fully digitized transaction landscape come to the fore.

As central banks respond to the tilted transaction trend, new concepts emerge. Digital currencies are not new. In fact, Bitcoin's invention threw this concept into sharp focus a decade ago. However, the pandemic-fueled transaction shift opens up discussions about central bank digital currencies (CBDCs).

CBDCs have a clear advantage: monetary policy enforcement is easier and more direct than with physical cash. However, executing digitized central bank policies come with unprecedented challenges. The traditional role of banks could entirely be upended by CBDCs.

While the impulse to hoard cash in uncertain times is a human instinct, digital currencies rewrite this narrative. In emergency situations, such as a pandemic, central banks could set negative interest rates with CBDCs, thereby deterring hoarding and encouraging spending, stimulating economic activity.

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While digitization poses existential threats to traditional currencies, they do not immediately replace cash. Their implementation comes with significant hurdles, not least of which is trust. Central and commercial banks have to strike a fine balance between privacy and transparency to effectively embrace digitization.

Cryptocurrencies also have an influential part in this digital transaction transition. Digital wallets and mobile banking apps have sufficiently matured to transact cryptocurrencies such as Bitcoin. However, they come with their unique challenges.

Despite its potential, cryptos typically avoid regulation and often align with illegal activities. They also show significant volatility in value. Despite these setbacks, serious dialogue about the use of this new class of digitized currencies continues unabated.

Libra, Facebook's digital currency undertaking, epitomizes a private sector attempt to create a digital currency. While it faced sweeping criticism from regulators across the world, its concept of a 'stable coin' holds merit, offering an exciting prospect in the digital currency world.

The disruption caused by digital currencies does not stop at the commercial banking level. The implications for global power balance could be profound. The US dollar stands as the de facto global currency. A major switch to digital currencies could dethrone it.

In its place, another global digital currency could take over, resulting in significant power shifts. China already trials a CBDC, which, should it garner international acceptance, could significantly shift power.

The country's success in creating digital ecosystems that seamlessly integrate digital payments in everyday life is well documented. Its ambition to establish a digital currency further underscores China's aggressive push to innovate within the financial realm.

A fully digitized financial framework has desirable attributes. Nevertheless, the shift from fiat currencies is a monumental task. Despite the prerequisite infrastructure largely being in place, it invites many questions.

The shift's impact on global trade, how it would influence power dynamics, and what role cryptocurrencies like Bitcoin would play are all vital questions. Equally critical are privacy concerns, how digital currencies would get regulated, and potential threats to our traditional banking notions.

The shift towards digitization, largely fuelled by the pandemic, is hardly a surprise. It is practically inevitable. Because of technology, people no longer need to line up in banks or at cash machines.

However, the deluge of uncertainties surrounding it necessitates intentional dialogue. As the world continues to adapt to these changes, what remains certain is that the move towards digital payments is just the beginning.

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