Technological Change of the Innovation Payment System

Abstract

This paper explores the process of technological change in the payment system. In particular, the study aims to gain understanding if Bitcoin would bring about a paradigmatic shift toward a cashless society. The analysis is based on the technology S-curve and Schumpeter’s model of economic development. It is interesting to see that the swing of S-curves is not strong enough to cause a paradigm shift according to the Schumpeterian concept of creative destruction. The study also compares Bitcoin with PayPal, a similar digital currency and major online payment system, to gain insights of the new challenge toward a cashless economy. The parallel S-curve trajectories of electronic money innovations signify a move from a cash-based economy toward a less cash society.