Cryptocurrency, or digital currency, was introduced to the world in 2008, when it was launched on the internet by an anonymous group of people. Ever since its invention, it has taken the world by a storm and has gained a good amount of customers and investors in recent years.
Cryptocurrency is technically a new product in the market and hence, has a very long way to go before it is accessed by all. But if you want to learn more about its basics and working, or how to buy and invest in the same, then you may visit Bitcoin Motion for all the latest information.
This new digital form of currency is now a hot topic of discussion in almost every country, as local authorities and governments are now concerned about its nature, and would like to make the same accessible to all without any risks. There is also a popular debate ongoing regarding the pros and cons of cryptocurrency and how it is going to impact the local currencies. By the end of the following sections, you would be able to understand if cryptocurrency is actually better than fiat currency or not:
Fiat Vs Cryptocurrency
Fiat currency is the local currency issued by the government or the top-most bank of various countries. These include paper bills, notes, and coins of various denominations. They usually vary from country to country. However, they could also be the same for a few countries as well.
This form of money has no value of its own, as its value is fixed and tenderized by the government of the issuing country. However, it does not, in any sense, mean that it is of no use, as this is the actual money used by every single person on this planet.
Cryptocurrency, on the other hand, is generated by computers and softwares, and is now getting recognized all over the world. It is controlled anonymously, making it almost impossible to track its origin. Moreover, the transactions are stored online in a database, known as the ‘blockchain’. Blockchain breaks down the transaction history into million little fragments and stores it in different encrypted clouds, making it one the devil’s job to retrace the same.
Governance
Fiat currency and all sorts of transactions done by the same require a medium of operation, and that makes it very visible and trackable. The blockchain technology gives cryptocurrency a slightly upper edge against fiat, as it is untraceable. It leaves no records of the transaction done, making you safe from all sorts of questions. However, there is a downside to this as well. If this technology is used to fund illegal activities, and there are a lot of them which you can think of, then it would become very very troublesome for the authorities and governments to trace this and get to the original criminal. This is one of the reasons why many governments are expressing a strong concern about the legalization of cryptocurrency.
Issuance
All cryptocurrencies are launched or sent to the online trading ledger through a process called ‘mining’, where new crypto coins are minted by users through solving complex mathematical equations. Users can also buy these coins from brokers online, who are mining and selling these coins for business. Of course, to buy this, you would require any state authorized fiat money, which are issued by the head of the state.
Cryptocurrency is not backed or supported by any government or issuing authority, thus it makes it quite a bit inferior to fiat money, which are 100% authentic and backed by the issuing nation. They both, however, are now being used as a form of payment for various services all over the world.
Trade
You can use both types of currency to trade in the stock market, there are no restrictions as of yet. However, there are slight variations in permissions and trade limits using the various types of cryptocurrencies available in the market, which depends from one country to the other. Apart from this, there are no issues and both are good to go.
Border Restrictions
Border restrictions are quite a common issue with fiat currencies, as they are not usually accepted in other countries. But sometimes, like in the European Union, the same currency is valid in a few countries, making it easier for the people to travel without exchanging money.
Crypto, on the other hand, is accepted in almost all parts of the world. Yes, concerns are there, but it is not completely banned as of yet. However, China has banned cryptocurrency and has restricted its people and citizens to indulge in any form of digital currency, but this is done to “control financial crimes and prevent economic instability”, according to the super power.
Stability
Crypto world is volatile, making it very unpredictable. Your investments might gain a great profit and sustain a major loss, all in the same within a few hours. Such unpredictable nature of the digital currency makes it very hard to trust, and hence is becoming a matter of concern amongst many users.
Fiat currency, again, gets an edge above crypto on this as fiat is completely backed by the government and is generally very stable. Your regular money does not lose its value overnight or within a week, it stays the same.
Conclusion:
Cryptocurrency is a relatively newer concept than the usual old, paper, fiat currency used by all. It is not a good idea to compare the two, as they are not the same. They both have their own set of pros and cons, and are a valuable asset. They should be used interchangeably, using either of the one when needed. This would reduce the stress on the banks and also help to improve the economy of the nations.
So if you are planning on buying or investing in crypto, make sure you understand all the concepts clearly, have done your research about the various aspects, and stay updated in this modern market.
