Cryptocurrencies Vs Fiat Currencies

Cryptocurrencies vs fiat currencies

Cryptocurrencies were designed in order to replace the traditional fiat currencies and rid the world of all the centralized problems caused due to the usage of paper money.

Key Differences Between Fiat Currency and Cryptocurrency

The most notable flaw of the centralized methodology was exposed back in 2008 when the whole world entered a financial breakdown due to the practices followed by the banks.

With the aim of benefiting more from our money, one mistake by the banks cost us all dearly. This was when several people around the world realized the need for a decentralized currency that is not controlled by any centralized organization. Thus, Bitcoin came into existence in January of 2009.

Initially, this digital currency was not very popular and only a few computer nerds were using it.

Cryptocurrencies vs fiat currencies

However, after seeing its exponential rise in value over the next couple of years, more people started using this cryptocurrency and before long, this digital asset was in a position to question the hailing fiat currency.

But can it replace the fiat currencies that have been hailing since the 11th century?

How are Cryptocurrencies better than Fiat currencies?

Ever since cryptocurrencies rose in popularity, people have pitched these two economic assets against each other.

How are Cryptocurrencies better than Fiat currencies?

Even after 9 centuries, the fiat currency still has several flaws. However, due to its wide acceptance, we are forced to use it on a regular basis. The flaws of this form of currency are that a person never gets complete privacy while making any transfers.

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There are several restrictions imposed on the usage of cryptocurrencies as well. Additionally, with the centralized banks controlling the creation of new paper money, the assets of several countries have undergone a lot of inflation.

Thus, nearly losing all its value.

Cryptocurrencies, on the other hand, are free from all these disadvantages.

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The rate of creation of new cryptocurrency cannot be altered. This steady rate reduced the overall inflation of these assets.

Cryptocurrencies vs fiat currencies

As the usage of these assets is decentralized and anonymous, no one can keep track of all your transactions. Thus, providing you that extra bit of privacy while using your funds.

The amount of funds that you can transfer instantly from one bank is also limited.

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However, this is not the case for cryptocurrencies. Due to the decentralized nature of this network, there is no downtime for this system. With no such restriction holding you back and a network that never goes down, you will be able to transfer money at all time without any issue.

Advantage of  Cryptocurrencies

Cryptocurrencies truly shine when you want to transfer money across the borders.

Entry and Exit

Every single country has its own national fiat currency and in order to send funds across the border, you would need to pay for the currency conversion as fees. When this is combined with the actual cost of the transaction, the fee that you would need to cough up is extremely high.

Additionally, it takes nearly a week for the funds to get credited to the receiver’s bank account. This is not the case with cryptocurrencies.

Cryptocurrencies vs fiat currencies

No matter how much money you end up transferring, you would need to pay a miners fee that is usually not more than a dollar. As these transactions hardly take an hour to get confirmed, you will be saving a lot on the time taken as well.

Can Cryptocurrencies take over the world?

Many people have understood the flaws of fiat and have started to use cryptocurrencies.

However, in order to buy cryptocurrency, one needs to make use of fiat currency itself. Thus, fiat currencies are highly essential for the existence of cryptocurrencies.

Cryptocurrencies vs fiat currencies

Cryptocurrencies too suffer from many flaws. However, these are being actively fixed by numerous developers around the world. It took fiat currency to reach the point it is currently at and it took cryptocurrencies hardly a decade to pose a real threat to fiat currency. As more advancements are made to these digital currencies, they will eventually replace paper money.

 

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