My personal assessment of the situation, from someone that finds cash extremely inconvenient, and the cash I do have will sit in my money jar for years before I use it.
# Digital
Disadvantages:
- Possibility of a major provider going down (VISA and MasterCard both have recently) and leaving you stranded for a day
- Increased risk of fraud and scams
- Easy tracking of money
Neutral:
- Harder to pay for illegal items without risk (drugs, prostitution, etc.), possibly fewer to less of those things
Advantages:
- Contactless payments are fast and convenient
- Large money transfers from bank to bank
- Insurance on money up to £85k (UK) if the bank goes bust
- Ability to buy and sell different FIAT currencies quickly
- Need to carry fewer things, on the bleeding edge in a big city you don't even need a wallet or card, just your phone will do
Mitigations:
1. Have multiple banks with different providers, one VISA, another MasterCard, etc. The chances of two going down simultaneously is very low.
2. Use a credit card for purchases and never use a debit card online. Credit cards are protected from fraud and you won't be on the line to pay for fraudulent purchases
# Cash
Disadvantages:
- Lack of security, if you hoard cash and you get robbed, that's on you.
- Cash rot: If you keep it around for a long time and it's no
longer legal tender, it's possible you will reach a point where you will never be able to exchange it (UK)
- Possibility of getting fake cash. £50 notes in particular are not accepted in many places.
- (personal) more to carry, coins are a real pain and can pile up quickly (we really need a £1 note or something)
Advantages:
- Easier to give people money in person
- Arguably easier to budget
- Easier to buy illegal items safely
# Digital
Disadvantages:
- Possibility of a major provider going down (VISA and MasterCard both have recently) and leaving you stranded for a day
- Increased risk of fraud and scams
- Easy tracking of money
Neutral:
- Harder to pay for illegal items without risk (drugs, prostitution, etc.), possibly fewer to less of those things
Advantages:
- Contactless payments are fast and convenient
- Large money transfers from bank to bank
- Insurance on money up to £85k (UK) if the bank goes bust
- Ability to buy and sell different FIAT currencies quickly
- Need to carry fewer things, on the bleeding edge in a big city you don't even need a wallet or card, just your phone will do
Mitigations:
1. Have multiple banks with different providers, one VISA, another MasterCard, etc. The chances of two going down simultaneously is very low.
2. Use a credit card for purchases and never use a debit card online. Credit cards are protected from fraud and you won't be on the line to pay for fraudulent purchases
# Cash
Disadvantages:
- Lack of security, if you hoard cash and you get robbed, that's on you.
- Cash rot: If you keep it around for a long time and it's no longer legal tender, it's possible you will reach a point where you will never be able to exchange it (UK)
- Possibility of getting fake cash. £50 notes in particular are not accepted in many places.
- (personal) more to carry, coins are a real pain and can pile up quickly (we really need a £1 note or something)
Advantages:
- Easier to give people money in person - Arguably easier to budget - Easier to buy illegal items safely
Did I miss anything?